Mortgage fintech Lower has joined the ranks of lenders offering a
The company announced the introduction of Mortgage Pass, intended to serve pre-approved borrowers in their attempts to land a home while providing certainty to sellers that the sale will be completed. With the initial rollout taking place in Lower’s home base of Columbus, Ohio, the company expects to add additional markets, including Chicago and Florida in the coming months, according to Lower’s CEO and co-founder Dan Snyder.
As in other similar programs, a qualified borrower, once approved, can secure home financing from Lower and shop for a home as they would in a typical mortgage transaction. Lower would then make an all-cash bid to a seller on behalf of the borrower once a property is found as its client closes and transfer the property to the buyer when the financing is complete.
The homebuying landscape of the past year, characterized by bidding wars and
“We’re sitting on billions of dollars in pre-approvals. And we're literally watching our customers not win homes,” said Dan Snyder, CEO and co-founder of Lower, in an interview with National Mortgage News.
Consumers making all-cash offers in 2021 were four times more likely to win a bidding war, according to Redfin, with buyers sometimes offering more than list price. In April, the National Association of Realtors reported that cash purchases accounted for
“We're going to try to do this both direct-to-consumer, and we're going to also distribute it to our local brands and our local branches so that they can use it with their local Realtors,” Snyder said.
Unlike some cash-backed programs, which require the borrower to go through a designated agency, “the Realtor doesn't have to give up their money, and they don't have to give up their customer.”
Rather than simply serving as a one-off transaction, Mortgage Pass is anticipated to be an entry for borrowers who ideally come back to Lower for other services down the road once they see its benefits, Snyder said. The program comes with an extended rate- lock period if needed, and should rates drop, Lower says it will reduce them for free.
“We're going to release new features for the customers that are pre-approved for our Mortgage Pass product,” Snyder said, referring to it as a “holistic” platform. “Once you buy your home through us then in the future, you can refinance at a discount. Or you can take out a home equity line at a discount.”
While fintechs were among the first businesses to bring the concept to market, the all-cash product has seen a steadily growing number of new entrants since early 2021. Traditional retail lenders, including Evergreen Home Loans, American Financial Resources and Guild Mortgage, have come on board with their own cash-down products. And in May, wholesale lender Homepoint announced a
Following a Series A raise of $100 million last year, Lower has embarked on several business and growth initiatives in the past 12 months, including the appointment of
