Mortgage "Upgrade"

Financing

My lendor, Rocket Mortgage just reached out to me about a "Mortgage Upgrade". I've never heard the term before so I'm assuming there is much more behind it than meets the eye and they would be getting something out of it. I know others have had horrible experiences with them, but I honestly had a great one when we purchased our home. No issues at all and they were significantly cheaper than any local bank or credit union.

Does anyone have experience with this or can provide more insight into what exactly this is going to be? I haven't replied back yet as I wanted to get more information to better prepare myself first.

in RealEstateby luthi3n_-

86%

30d

joholla8

214

30d

They are just going to offer you a refinance option or a HELOC.

it’s unlikely either would be a good deal at the moment. They are hurting for business right now.

I get letters from my lenders monthly asking me to tap my equity and they go straight into the shredder.

Wtfjushappen

110

30d

I know, like I'm going to refi or borrow when I'm at 2.75...

bonzombiekitty

30d

I greatly enjoyed shortly after I closed on my house, interest rates went up then back down a tick. When it went down a tick, my mortgage company sent me a letter claiming that since rates are down, it's a great time to refinance. The letter included an estimate of the savings on my monthly payment.

My savings? Negative $200.

eileen404

🍰

30d

Gotta love the autogenerated mailings. It's like the coupon Nissan sent us for our leaf's oil change.

Ch1Guy

28d

I love the ones where they desperately need your car as a trade in.....

Ozi-reddit

30d

hhahaha

[deleted]

30d

They wrote it sneaky

User deleted comment

30d

SpecialSet163

30d

That was the cost of money.

Ok_Cartographer_6086

30d

Rocket doesn't do HELOC they only do cash out refis

scarybottom

30d

EVEN WORSE :(, now you are paying higher rate, longer, on a higher balance.

Ok_Cartographer_6086

30d

Yep - really bad idea right now. I just know because I was looking for a HELOC and checked with them. I'm 3 years into a 15 year @ 2.3% - never touching that!

atreyulostinmyhead

30d

Nope, unfortunately they've started sound HELOCs. They've got some really weird way to qualify you too.

kirbyhunter5

30d

They actually do Home Equity Loans, not HELOCs.

Second lien but it’s a fixed amount not a line of credit.

dodekahedron

30d

What is the difference between a home equity loan and a HELOC

I thought a heloc was a home equity loan?

DanvilleDad

30d

Heloc revolves for 10 years (like a credit card) and is interest only, then terms out typically over a 15 year period. Home equity loan generally amortizes from the get go.

dodekahedron

30d

Yep. Just confused me more.

I know to stay away unless a major home repair is needed. I'll figure it out then haha

knocks on wood

DanvilleDad

30d

So heloc you can borrow, repay, borrow, repay, like a credit card and you only pay interest on what’s borrowed. At the end of 10 years, anything outstanding gets converted into a loan that has a 15 year repayment term with even payments.

A home equity loan is a lump sum of cash taken out at origination (like a mortgage) and has fixed payments over (usually) 15 years.

If you have substantial equity in your home, it’s nice to have a heloc. I have one, haven’t ever used it, but nice to know it’s there if ever needed. Usually doesn’t cost much if anything to put one in place, for example my lender did a “desktop appraisal” where they just looked at comps and the estimate of equity in my home and gave it to me.

Competitive_Show_164

30d

Thanks for this explanation! How do interest rates look in both scenarios??

DanvilleDad

30d

Don’t have recent data points, but generally think an equity loan is priced slightly inside of of equity line of credit … banks like scheduled amortization

Jmkott

29d

Depending on your baking relationship, typically Prime or Libor +1. I haven’t looked in a while but it was usually 1-2 points higher than a new mortgage rate. And it’s variable. I’ve had mine as low as 5% but it would probably be 9-10% now if new mortgages are 7%.

TerpZ

29d

My HELOC is in the 9s I believe

Jmkott

29d

They are both based on Home Equity. But one is a “loan” like your mortgage. Fixed amount borrowed, fixed time period to repay. You can’t borrow more without a new loan.

The other is a “line of credit”. Think of it like a credit card, but it’s guaranteed by the home equity so the risk is lower and thus lower interest. You can borrow any amount up to your credit approved credit line and pay off multiple times and usually only required to pay interest. Typically they are good for 10 years, but i had one left open as long as I used it occasionally.

You can typically convert a “line of credit” balance into a “loan”.

SU13LIM3

29d

They do HELs. It's a second lein and not revolving.

siamesecat1935

30d

I look at it as similar to letters I get from my car dealer; we WANT your car, and we can get you into something nicer and newer. Um yeah no.

SoftwareMaintenance

29d

Typical marketing crap

siamesecat1935

29d

Yup. For a while I got letters from a Honda dealer, about my Accord. At that time, I drove a Camry. Hmmmmm

herewego199209

30d

Yeah I am actually getting them every other week to re-finance. No fucking way.

57hz

30d

The Heloc is not a terrible option. It’s variable rate so it’s no worse than what people who got one 2 years are paying on theirs.

SeaUrchinSalad

30d

I kept getting calls about refi until I literally laughed at someone and said "never I'm at 2.5". No calls since

Investorandfriend

30d

I got a call from a guy yesterday asking if I’d like the option to have cash in hand for a refinance! I literally laughed and said with these rates?! His reply was “yeah… I understand…” nothing else.

CinephileNC25

30d

I feel bad for their social media manager. They’re posting ads all over fb for helocs and so many people are commenting on the absurdity

twoferjuan

30d

Monthly? We get them almost daily.

joholla8

30d

I don’t check my mail that often lol.

damandamythdalgnd

30d

What do you think

The only way a lender would want you to do something if you already have business with them is that it benefits them monetarily

luthi3n_-

30d

Oh, absolutely. I'm fully aware of that. Part of the reason I reached out. But if it benefits me too, with no negative impact, even if it benefits me slightly less than them, I couldn't care less how they benefit.

Toledojoe

30d

Here's where they get people. People think short term instead of long term. "We can lower your payment $100 a month!" But instead of paying for 25 years (if you are 5 years into a mortgage), you are now paying for 30 more years.

Many people think, "this benefits me" and do it because they are only thinking short term.

FwogInMyThwoat

30d

Not only that, but because mortgage interest is amortized you are paying a SHIT TON of interest at the beginning again just to have a slightly lower monthly payment for a longer time. The math makes absolutely no sense - people lose an incredible amount of money doing this.

luthi3n_-

30d

Ya, that was front of mind too. I'm not going to extend the length of the loan at all and will make that clear to them. This is our 2nd home we've owned and the lender for our 1st home tried getting me to do that.

Toledojoe

30d

Hopefully you are able to do what I did a couple of years ago. I had a 30 year mortgage at 4.75 percent I had been in a little over a year. Rates dropped and I got a 15 year mortgage for 2.249%

Payment went up around $130 a month, but I will pay hundreds of thousands of dollars less over the life time of the mortgage. And if we sell before it is paid off, we will have so much more equity than if we had stayed with the 30 year.

Competitive_Show_164

30d

Hmm i never quite understood this. Why pay to refinance when you could just pay double the amount (or any increase over the payment)- thus saving in refinancing costs AND tons of interest??

Toledojoe

30d

Because that interest would still be higher doing it that way at 4.75 percent vs the 2.249 percent I got. Cost a couple thousand in refinancing fees but made that up quickly

Nope_______

29d

You don't see how cutting your interest rate in half benefits you?

Competitive_Show_164

29d

No, I don’t. Not when I have to pay thousands of dollars to do so. I can just as easily send double the payment to accelerate the payoff - thus cutting the interest earned. If I have a 30 year loan but decide on my own to pay it off in 15 years then I save on refinancing AND interest.

Hot-Highlight-35

30d

It’s not even the term being extended it’s the discount point fees. There has not been a big enough market swing for a “good” rate to make refinance possible.

They will lower your payment $300 a month let’s say, but charge you 3 points to do it that get rolled into the loan amount. $300 a month saved but 15,000 in points added to your principal amount.

The_Doctor_Bear

30d

I had my local credit union offer me a refi that in their ad was a better rate than I had, no initiation fees, I asked them to quote me on a term that would be basically neutral for me. Might have been plus or minus a year I don’t remember. Anyways they gave me a quote the monthly was a little lower not a lot but I did the math across the whole loan and I was going to end up paying like an extra $5-$10k.

I’m asking their rep where that comes from? What is the math that makes a shorter loan with a lower interest rate cost more than I currently owe?

She had absolutely no response just blustering about their automatic calculator spits out whatever number.

….. ok pass… sorry your algorithm decided I get to pay $10k for whatever privledge of working with you and you can’t even explain why? Ridiculous

scarybottom

30d

It will not benefit you. For a refi to make sense, you need to drop AT LEAST 1% interest, or .75% and drop PMI. Rates have not dropped. Look at your current rate. If the offer is not AT LEAST 1% less, it won't be worth it (and I honestly cannot imagine it is for anyone at this stage). Also, it won't be wroth it unless you stay in that home for 3+ more years. Otherwise it is just costing you $$$. Wait until the fed actually drops rates, then re-examine.

rootcausetree

30d

I’m sure your heart is in the right place but you’re wrong. That may be a decent rule of thumb but it’s not a good way to make a big financial decision.

It can make a lot of sense to refi for as little as .25%. And there are many loans where saving 1% in rate is a bad financial decision.

scarybottom

30d

Yeah it's a refinance offer- refinance at a higher rate and pay the fees for the privilege. I get these kind of offers DAILY from my servicer. I just delete.

cozidgaf

30d

Yes it's so frustrating. It's like everyone wants a piece of your pie. Money grabbing greedy selfish corporations. GTFO

Ok_Cartographer_6086

30d

Sometimes it feels like i'm the only person who had a good experience with Rocket Mortgage. I refinanced a few years ago and it was seamless, transparent and highly automated. I refinanced to a 15 year @ 2.3% and never had a problem.

OverallVacation2324

30d

I had a good experience with Rocket. They were the ones to call me when the interest rates were rock bottom. I refinanced for 1.9%. And literally the interest rates shot up the next week and never came back down again.

luthi3n_-

30d

I haven't done a refi with them, but did a mortgage last summer and the process was great. They were quick and responsive about everything. Didn't have to drive anywhere, most everything was digital and they were ready to close very quickly and we were left waiting for the title company to verify everything. That was the biggest pain.

KatieSu1

30d

Me too! We had an absolutely wonderful experience with them. I sometimes wonder if we had a good agent on a good day and got lucky.

PorcelainPunisher1

30d

I had a great experience with them too! Did a refinance on my place, and bought a vacation place as well, when rates were super low. I was an escrow officer at the time, so had my company take care of title/ escrow, but things were quick, communication was great, both closed on schedule.

The only thing I don’t like about them is every so often they call my with the “mortgage review” calls.

ArmadilloNext9714

30d

My brother also had a similar experience. Refinanced to a 15yr mortgage at an absurdly low rate without buying points. He had no issues with the process; it went quite smoothly.

ObviousSpaghetti

29d

My original purchase was and my refinance is through Rocket Mortgage. I refinanced to a 15-year, 2.25% mortgage when rates were down. Never an issue, fast and seamless.

Ok_Cartographer_6086

29d

Base on the wide spectrum of experiences in this thread I suspect strong borrowers with good credit get routed one way and others to another more predatory department. That would make sense to me why some people compare them to payday loan companies.

I told them that if this turned out to be a middleman system where I ended up working with some random bank it'd be a deal breaker.

Struggle_Usual

30d

Same here! I had absolutely 0 problems with them and I like that they keep the servicing of their loans since they have a decent website.

Ok-Bass-4687

29d

I had a great experience with Rocket also 🤷

Reasonable_Active617

30d

There are only two things you can do with a mortgage: 1. Pay it off and 2. Refinance. Calling it anything else is marketing.

Longjumping_Food3663

30d

Second mortgage is growing now. You can get cash out but keep the good rate.

rootcausetree

30d

You’re right, but in fairness you can sometimes 3. Modify 4. Recast 5. Assume and probably more

EddieLeeWilkins45

30d

hmmmm, how about we call it 'Mortgage Upgrade To First Class'

Realistic-Weird-4259

30d

Our current mortgage is with Rocket and we've done several refis in the past on other homes with them. I've found them to be very, very easy to work with and nothing resembling a nightmare. Our current loan is under 2.25% and we're not refinancing or taking out a HELOC unless ABSOLUTELY necessary.

Due to my husband's and my ages and the fact that we were forced out of the home we'd planned to retire in, we have zero shits to give about the length of the loan. Even when younger I never worried about it. Either I'll die with the loan or it'll get paid off when we sell the house.

Work the numbers. If the numbers work for you, do what's best for you. If they don't work, do what's best for you.

Cutiepatootie8896

30d

I’d rather burn the house down and rebuild with my bare hands just out of spite before I ever have to refinance my 2 percent mortgage lol.

Realistic-Weird-4259

29d

My very first home in '91? 13.5%

You can pry my 2.25% OUTTA MY COLD DEAD HANDS! I'm a little jelly of that flat 2% you're rockin'.

Britinvirginia_1969

30d

Please don’t fall for this. As they said in Star Wars, “It’s a Trap”!

huskerdev

30d

It’s rocket mortgage. They are coming to fuck you without lube.

InternationalFan2782

29d

They want you to do a cash out refi

69stangrestomod

30d

Rocket is aggressive with refi and home equity loan sales. I also have hd great experience with them, but I told them to absolutely quit calling me to refi until they were gonna give me 2%.

Someone told me that when you opt out of sales communications, they flag your loan to be sold off, but it’s been a year with no problems for me.

Also, anytime you get into your portal and click anything related to pay off/refi, they call shortly after.

dodekahedron

30d

Rocket used to call me every 6 months to talk about refinancing.

I just realized I think they haven't bothered me in years now. Wonder if that means my credit is shit and they know it. I don't know. I've got all the things I need and don't check my credit.

Cutiepatootie8896

30d

I saw an ad lately along the lines of “Do YOU want to pull cash out of your home but want to do it the financially RESPONSIBLE way so you only have ONE mortgage instead of two? REFINANCE WITH ROCKET MORTGAGE!!!!!!!”

Like what. Who the hell would want to “refinance” right now with rates the way they are? (Unless they are stuck on ARMs or somehow got an 8 percent rate and are not able to get 6ish which even that I doubt?). Like I’m not understanding why they’re advertising “refinancing” as the better and more “responsible” option over a HELOC if someone really needed to pull some equity out………

Longjumping_Food3663

30d

You’d be surprised. Lots of people who need to refi (divorce buyouts, new job, other life circumstances) or want cash to pay off other debt. 8% is more attractive than the 15-25% personal loans and credit card debt.

There are enough people out there in those situations to make it a viable business strategy to market that way.

Rocket is doing lots of Second Mortgages now instead of HELOCs. That saves the great rate on the first mortgage but gets the cash out.

Cutiepatootie8896

30d

Oh interesting. I guess you’re right and that does make sense! But what’s the benefit of a total refinance (I get the divorce buyout obviously but say in order to pull out equity because you need cash) or even a “second mortgage” over a HELOC?

Longjumping_Food3663

30d

There are lots of scenarios where folks with high debt loads can benefit from a refinance. If the math makes sense. Lots of people aren’t super responsible unfortunately.

But the second mortgage isn’t a HELOC it essentially allows you to pull out cash without doing the variable interest rate a HELOC has.

It is quite popular and Rocket pivoted to them to take advantage of the way interest rates are right now.

victorvictor1

30d

You haven’t told us anything about it. It’s like you said “I got a letter with the words ‘offer inside.’ Can anyone tell me what the offer is?”

tonidh69

30d

I just ignore it when they send me stuff too. All i could think was, why would I do that fir a higher rate? The answer is I wouldn't. Just chuck it

Electrical-Bus-9390

30d

7% rates isn’t exactly when u wanna do a refi

Ferd-Terd

30d

I like my local credit union. They have an office in my town and know my name.They service there mortgages

Havin_A_Holler

Industry

30d

If it didn't move more money out of your pocket & into theirs, they wouldn't have reached out.

SpecialSet163

30d

Trying to sell u more. Walk away. Rocket is more expensive than most.

nofuxgiven86

30d

Avoid Rocket mortgage at all costs. Their origination fees and points they charge are similar to a pay day loan. Please shop around and don’t use those criminals.

mkosmo

30d

It's not criminal to be expensive. You have the option to go elsewhere. Nobody is making you do business with them.

nofuxgiven86

-1

30d

Their business tactics preying on people who aren’t financially smart is criminal IMO. But keep telling yourself that working there.

mkosmo

30d

lol I don’t work there. Not even in the same industry.

I just don’t expect the government to mandate coddling.

Struggle_Usual

30d

I used them for my last mortgage and their costs were substantially lower than anyone else. Just compared them for a loan I'm taking and only a local credit union could beat them. So it very much seems like it's a your mileage may vary situation.

Cutiepatootie8896

30d

If you’re kind of lonely in life though, go ahead and visit their website and enter your info. They will call you 3 times a day without fail for the next 9 months…..

pm_me_your_rate

30d

Assuming they mean refinance but using an old computer industry term when you swap out faster parts in your pc.

Simply means refinance for lower rate. Fed is seeking to lower fed funds rate 2x this year which will put downward pressure on on mortgage rates.

In fact rates are going to drop this morning.

Any-Panda2219

30d

Powell this week said rate hike more likely than cut for June meeting. Doubt they will lower rates at the July, September, and November meetings given it’s an election year. That leaves only the December meeting for a possible rate cut.

pm_me_your_rate

30d

Interesting- how did you interpret the exact opposite of what was said??

Powell says it's unlikely the next move is a rate hike

Federal Chair Jerome Powell ruled out the possibility that the next policy move at its June meeting will be an interest rate hike.

https://www.cnbc.com/2024/05/01/fed-meeting-today-live-updates-on-may-fed-rate-decision.html

Edit: also add that the jobs report further bolstered sentiment that rate cuts are coming .

It's why the market is up 400 pts right now.

Electrical-Bus-9390

30d

It’s called a refinance and it’s def not something u wanna do right now or at all if u locked in a good rate on a 30 fixed unless ur able to and ready to do a 15 year term which will almost double the payment and again I can’t imagine that u got a rate higher then the current one so how it’s an upgrade is beyond me lol

Valpo1996

30d

Nah if you are ready for a 15 year just pay more on the prin of the 30 year. Rates are way too high to refinance now.

ChiefKene

30d

Unless they plan to eat all the fees, discounts and whatever else they want to charge… I just don’t see how this makes sense lol. My thought is they will try to get an application and credit check from you. Pray you have some debt that are higher interest and throw you a cash out refinance option.

Sometimes cash out refinances make sense, especially if the personal has too much high interest debt. But if you balance your book and manage your debt already; makes no sense right now. Especially at current rates

HillS320

30d

Not sure what your current interest rate is or the exact terminology of the letter. 8 years ago when we purchased our home we had an FHA loan with a 4.75 when we first closed. 18 months later we got a letter for our mortgage company offering us a “streamline mortgage”. It read something like because you’ve made all your payments on time you qualify to lock into the current interest rate which was 3.5, no credit or employment check needed, no money brought to the table. We were like wth. We did it, he didn’t have to bring any money to the table but it did put 5 months on the back end of our mortgage and then we ended up getting a check in the mail 30days later for 2 months mortgage back.

We were offered the same thing another 18 months later but didn’t up just refinancing to a 15yr conventional loan so we could drop our pmi and were able to get a 2.3% interest rate. Not sure if what their offering isn’t something similar to the “streamline” but that for us was great.

Tess47

30d

I read (and believe) that lenders will be offering deals to people with 3% loans. Maybe this is part of it.

If you have a smaller sum left on your mortgage and the reach out to you to pay it off- negotiate.

clce

30d

Having have you actually looked into what the upgrade is? If you've got a good rate seems unlikely they're going to give you something even better but if you're curious, you could ask what the details are.

StupendousMalice

30d

Just trying to upgrade your interest rate.

UndercoverLender

30d

10y = 4.5%. I wouldn't do any type of financing unless you're an investor etc.

QuitProfessional5437

30d

What upgrade are they offering you?

MuchDevelopment7084

30d

It's a marketing tool to get you to refinance your mortgage. Probably with a cash out option. Don't do it.

bblll75

30d

They want you to refi and pull cash out. Thats it. There is nothing more they can offer

Out525xc808

30d

I work there. We’re trying to sell you a new loan to consolidate debt. It might make sense if you have a ton a debt

leinad_reyem

30d

Or they’ll give you something interest only. Maybe depending on your previous rate it may be less monthly but with no amortization.

Main-Inflation4945

30d

I only recently bought and am already receiving letters from my bank about financing my next home.

dwinps

30d

It is a sales pitch, unlikely to benefit you

No reason to reply

bigevilgrape

30d

They are constantly sending me stuff for refis and hlocs. They are just trying to get more money out of you.

liacosnp

29d

It's a lot like those "I want to buy your house!" come-ons: a way to make money. We keep getting unsolicited offers in the mail to buy our house for literally 2/3 of its market value.

ExcitingAds

29d

I do not know. But I would be careful about catchy words like upgrade.

MK_King69

30d

Your first mistake was using rocket mortgage

Quiet_intr0vert

30d

Not sure if anyone else had a similar poor experience with Rocket Mortgage. Initially everything was fine as I was giving them my info for quotes. Once I got the quotes they called me and asked that I lock in with them on the spot. I told the agent I need sometime to analyze the two quotes and discuss with my business partner(one with points and one without points). The agent’s demeanor changed instantly and became extremely aggressive. He demanded that I lock in right on the spot, and claiming that I’m playing games and not serious.

Opposite_Yellow_8205

-1

30d

Quicken should have been forced out of buisness the first time they destroyed the housing market. I wouldn't give them any buisness...

J_Dom_Squad

30d

Yeah dude they didn't destroy the housing market FYI

EddieLeeWilkins45

30d

You'll likely pay loan origination fees.
Keep in mind, if you do refi, even at a lower rate, you'll start over with a 30 yr payment. So if you've paid 3 years, you only have 27 years remaining. Not a huge factor as most money goes towards interest anyway, but something to consider.

I agree with poster joholla8, probably a HELOC offer

NeverPostingLurker

30d

Rocket has great customer service, their LOs aren’t paid commission in the same ways as traditional LOs.

I have no idea what they could possibly offer you at this point given rates, but I guess why not talk to them for 10 minutes?