And while it’s not the lowest rate in the marketplace — Rocket’s current 30-year fixed rate is 7.125% — there’s no customer-burdened markup.
“We offer this option on all of our conventional or FHA or VA products. There’s no markup,” Banfield said. “We are passing this back to the consumer as we try to do outreach to make sure that people know what their options are.”
Banfield also confirmed that there is no cap or end date presently set for the program.
“We’re going to run it as long as it makes sense, and if we need to make adjustments at a later date, we will, but right now, there’s nothing planned,” he said.
“We want to recognize those who can make their rent payments on time,” he added. “And that’s when we came up with the rent rewards idea. If you were to look across the country, the average rent is somewhere around $1,800 a month. And so, that means our contribution toward closing costs is just under $2,200, and we are taking that back out of effectively our revenue and giving it back to the buyer.”
Banfield said Rocket is playing the long game with renters and has customer longevity in mind.
“I would think any reasonable lender is going to look at the lifetime value of the client, and we just think with what’s unfolded since the pandemic in the way people might be renting — either for flexibility or because they feel like they’re trapped by it — that this is a path toward thinking about homeownership and generating generational wealth.”
Mike Cush, a freelance mortgage startup consultant, said that Rocket’s investment in renters will likely trigger future refinances too.
“Renters often think they should get credit for paying rent, and Rocket is doing that. Will they likely make it back on some cross-sell or the next loan? Yes. Will this customer leave them mid-process? Nope. Kudos to Rocket. They are selling what people are buying,” Cush said.
Others in the industry have attempted programs similar to Rocket’s. American Financial Resources (AFR) has DPA Advantage, which is designed to provide buyers with down payment assistance in the form of a grant equal to 2% to 3.5% of the home’s purchase price.
DPA Advantage, however, is offered by a governmental entity and can only be used with the FHA 203(b) standard program or an FHA renovation program offered by AFR.
