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Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

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Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#231

Post by [deleted] »

mrep wrote: post #193
mbesto wrote: post #191

Earlier quoted context omitted.

I grew up in Chicago and love Chicago, so I'll try to say this as politely as possible - don't expect your property to hold any value in IL. Anecdata - I have friends that lived there for 8+ years, then moved to the south in the last 2 years and their property value barely budged.

Yep, when I was shopping for a condo 2 years ago, basically every place I looked at was selling for the same price as when they were brand new 10 years ago. Good thing though is it is way more affordable than the west coast.

[deleted]

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#232

Post by sokoloff »

pjc50 wrote: post #104
runeks wrote: post #59

Earlier quoted context omitted.

> My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? To fix your monthly payment for the next 30 years. Furthermore, with a fixed rate mortgage you can benefit from interest rate volatility since you can always buy back the debt at par. In practice this means you can: 1. Take out a fixed rate loan for $n at x% 2. If the rate doubles (to 2x%) you can re…

> To fix your monthly payment for the next 30 years. Sure, but .. nothing else is fixed for those 30 years? Not your salary, the price of fuel, your place of work, life circumstances? And you're paying a premium at the start for this. It's more apparent in the UK where you can choose how long you want the fix for and see the interest rate you're offered go up. > you can benefit from interest rate volatility since you…

The differences are apparent in the US as well. The bank is making offers to a broad population without knowing their life plans. The borrower has a better idea of their individual life plans. I was buying my “lifetime home” 15 years ago and so took a fixed rate. When I first refinanced, I still had the same plans. When I second refinanced, I still had the same plans.

Even among fixed rate products, there’s an option to buy down the fixed rate. Those usually have a point in the future where all choices are about the same, shorter favoring not paying points and long favoring buying discount points (this crossover point varies over time by current and expected rates, but is in the 4-8 year range typically).

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#233

Post by xwdv »

mtlynch wrote: post #194
xwdv wrote: post #178

Earlier quoted context omitted.

You don’t actually have to invest at all. Over time inflation makes your payments cheaper and cheaper. By the time you reach the end of your 30 year fixed mortgaged in the year 2052 you’re still paying in 2022 dollars which is probably less than half of what the average mortgage in 2052 is. If you invest on top of that and get some small decent return you come out even more on top.

But if the situation is that in 2022, you have enough cash to buy a house outright or get a mortgage and invest your cash, you still do have to invest your cash to benefit from the mortgage. If I have $300k in cash today, and I want to buy a $300k house, then I can get a mortgage and let inflation shrink my mortgage payments, but it's also shrinking the $300k I have in cash. I don't see how you can profit from the mo…

You don’t need to really beat your mortgage rate, you just need to beat the inflation rate which is easier. As your income adjusts to inflation overtime, your mortgage becomes easier and easier to pay off and makes up a smaller percent of your expenses.

Some index funds though might beat your mortgage rate anyway, so it’s even better.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#234

Post by gadflyinyoureye »

afavour wrote: post #223
gadflyinyoureye wrote: post #206

I use to be a shareholder of Rocket. Then I tried to get a mortgage with them. I'm self-employed. I make about 200k/year. I had 0 debt (I paid off my house the prior year). I had 20% for up to 350k. I had an 812 credit score. When I applied they asked for my P&R statements for 2 years. The current year showed a $400 deficit (which was due to charitable giving). They said that I was losing money.Therefore I was too gr…

It’s not rare for large volume companies like this to fail on edge cases. I’m sure they have an algorithm to calculate rates and risk and there was little anyone could do to change the output. I imagine it wasn’t designed with the self employed as a high priority. I’m not convinced any of that means they are destined to fail.

My issue is that they have apparently no wiggle room or advance underwriters for the loan. They have a lot of employees that don't do data entry (because the process does that for you), that don't really think, that do take up money to be paid to be the voice on the other side of the phone. Given this, they could probably reduce staffing by another 10%.

As times get tougher, the edge cases will probably become a lucrative section of market. Rocket's been troublesome before. I doubt they have the capacity to pivot (given, again, their apparent lack of skilled brokers/underwriters).

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#235

Post by fpo »

refurb wrote: post #217
francisofascii wrote: post #165

Earlier quoted context omitted.

Isn't that because Canada has much lower property taxes than the US? So you have the same effect that you see in California, where low taxes drive up prices.

I don't think spending $6,000 less in property taxes each would justify a $500,000 increase in price.

The math gets trickier when you consider monthly payments. At very low interest rates an extra 500k borrowed might only increase monthly payment by ~1500 which can be partially offset by $500-1000 less in property taxes per month depending on the municipality in Canada compared to US.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#236

Post by halfmatthalfcat »

doctoboggan wrote: post #170

My wife and I will be moving to Chicago soon and we intend on buying a house when we get there. How screwed are we by the current housing situation and interest rates?

Me and my spouse just bought in Chi. There's decent condo inventory in the city proper (West Loop, River North, LP, Lake View, even into Wicker/Logan) but SFHs in the burbs are slim pickins, especially in desirable neighborhoods (North Shore/Evanston, along the BNSF and UPW).

You've got to be ready to overbid (our first SFH got overbid by 70k), "best and last", and deal with 5+ bids per house.

You can find stuff away from public transit/no walkability but then why move to Chicago at that point?

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#237

Post by redshirtrob »

Has anyone actually used Rocket? Every time I (or a friend) have looked at them they have higher closing costs and wanted multiple points to close the mortgage.

I was able to do way, way better by going with a local bank, as did my friends.

The only thing I can figure is they are better for folks with "good" (not "excellent") credit and can maybe close the loan faster.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#238

Post by Raidion »

mtlynch wrote: post #194
xwdv wrote: post #178

Earlier quoted context omitted.

You don’t actually have to invest at all. Over time inflation makes your payments cheaper and cheaper. By the time you reach the end of your 30 year fixed mortgaged in the year 2052 you’re still paying in 2022 dollars which is probably less than half of what the average mortgage in 2052 is. If you invest on top of that and get some small decent return you come out even more on top.

But if the situation is that in 2022, you have enough cash to buy a house outright or get a mortgage and invest your cash, you still do have to invest your cash to benefit from the mortgage. If I have $300k in cash today, and I want to buy a $300k house, then I can get a mortgage and let inflation shrink my mortgage payments, but it's also shrinking the $300k I have in cash. I don't see how you can profit from the mo…

This makes a lot of assumptions about interest rates, but it holds up.

Buy a house (with mortgage) for 4%. Inflation is 5% a year. Invest the money in real assets (literally anything diversified).

Your mortgage price goes down in future dollars because of the delta between interest rates and inflation.

Even if inflation isn't happening, mortgage rates tend to be fairly low risk, so any diversified bucket of assets has a historical return greater than the mortgage rate, especially over a 30 year period.

If you bought a 13% mortgage in 1984 (highest), in 30 years, S&P returns 11% by 2014, so even if you never refinance, during the highest interest rates you're only down 2%. If you refinance at basically any time in the 90s/00s you're way ahead.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#239

Post by simulate-me »

nsteel wrote: post #228
simulate-me wrote: post #202

Earlier quoted context omitted.

In the US, you can refinance your loans. Essentially taking out a new loan to pay off your old mortgage. The new loan has the new market interest rate. In the US, you’re typically allowed to pay off additional principal without any penalty, so you can end a loan by paying off the outstanding principal without needing the pay the remainder of the interest on the loan.

As I understand it, it's this refinancing that leads US citizens in the UK ending up with a surprising US capital gains bill after they re-mortgage their UK property. And we also (normally) have ERCs in the UK so as usual, the rest is the worst of both worlds. Ideally one could renounce the citizenship, oh wait...

The IRS does not consider a refinance (even a cash-out refinance) to be a capital gain. The IRS also allows for 250K (500K if married) of tax-free capital gains on the sale of a primary residence. Maybe you misunderstood your friends’ situations.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#240

Post by sokoloff »

afavour wrote: post #223
gadflyinyoureye wrote: post #206

I use to be a shareholder of Rocket. Then I tried to get a mortgage with them. I'm self-employed. I make about 200k/year. I had 0 debt (I paid off my house the prior year). I had 20% for up to 350k. I had an 812 credit score. When I applied they asked for my P&R statements for 2 years. The current year showed a $400 deficit (which was due to charitable giving). They said that I was losing money.Therefore I was too gr…

It’s not rare for large volume companies like this to fail on edge cases. I’m sure they have an algorithm to calculate rates and risk and there was little anyone could do to change the output. I imagine it wasn’t designed with the self employed as a high priority. I’m not convinced any of that means they are destined to fail.

Exactly. If I had a choice to invest at arms-length at a company who had good underwriting standards but loaned only based on liquid assets and W-2 income or in a company who very carefully underwrote loans by looking in careful detail at every applicants’ unique situation, I’m more inclined to invest in the former.
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