Navigating the world of mortgage lending can be one of the biggest challenges for homebuyers in today’s market, and because of this, Jason Hartman discussed a new option in mortgages with Jason Van Den Brand, the CEO and Co-Founder of Lenda mortgage loans. The pair covered how Lenda’s online mortgage platform differs in a positive way from the current standard of the mortgage market that many homeowners are familiar with.
As well as covering the features that Lenda mortgage loans has to offer, the two also discussed how technology is impacting the financial world, how business ventures have become simplified, the future of interest rates, and the benefits of the US real estate market.
Things Are Only Going to Get Better
Jason Hartman begins the podcast by announcing that Episode 1000 of the Creating Wealth show is just around the bend. He offers his thanks to all of his listeners and the great reviews they have left for him on the listening platforms they use, as well as those who have come to his live events.
There are a couple of live events on the horizon with the only Creating Wealth event of the year taking place on May 19th in Philadelphia, PA. This is the first time that the event is being held in the Northeastern part of the country. The week following, Memorial Day weekend, the Venture Alliance Mastermind trip is set to take place in New York City. Hartman reminds listeners that if they’re planning to attend the Venture Alliance event, you can attend as a guest if you do not yet have membership.
On Memorial Day, the group plans to visit Brighton Beach and Coney Island for a refreshing bit of history and tradition to wrap up a three-day weekend of learning.
The hotel room block for the Creating Wealth event is expiring soon, so it’s important to take care of your room reservations as soon as possible. For more information on these events, visit www.jasonhartman.com/events or www.venturealliancemastermind.com
Mortgage Financing and Lenda Mortgage Loans
Hartman explains that he is going to be discussing mortgage financing in this episode, specifically with Lendra mortgage loans, but it will be done in a way that’s different from the usual. He is going to be covering modern web-based approaches to mortgage lending. He states that he is not necessarily advising listeners to run out and choose this method, but he wants to cover the option.
Consider your pains in investing, ones that we all have and know this. It’s going to get better for us, Hartman says. Why? Because it’s an amazing time to be alive. There are so many tools and technologies transforming our world. Investment real estate is the most historically proven asset class in the world, and all of the pains and problems associated with it are slowly getting better and easier.
Hartman mentions how hard it used to be to invest in markets that were far away. Now it’s possible to do so, but these investments come with new challenges. With his company’s services and the technologies available, the process is getting easier. In the past two weeks, Hartman explains that he has been halfway across the world, from Sweden to Florida and from Florida to Puerto Rico and back. He looked at several properties, and during that time he was using websites and online tools.
The Absorption Rate of Technology
He refers to augmented reality, and gives the example of Pokémon GO, a game that was massively popular a year or so ago. He mentions meeting with Kevin Harrington, one of the sharks on Shark Tank and the founder of As Seen on TV, in Tampa where he shared information on the absorption rates of technology. Compared to prior decades, the rate of adopting new technologies is much faster.
Hartman explains that he’s considering moving to Fort Lauderdale, Florida and that during his search for homes in Florida and Puerto Rico, he met with realtors but also relied on augmented reality. He explains that even though it isn’t as cool as Pokémon GO, using the various tools he used to research properties was an amazing help. He could learn about and understand each property he was interested in from the palm of his hand.
Today, he notes that he is going to be sharing one more of these tools, one option out of several that are coming this way. These new technologies are set toward making real estate easier, better, and more efficient.
Convenience and Business Start-Up
Hartman adds that he has spent a fair amount of time traveling and one of the new practices he’s adopted is having something he needs shipped to the hotel he’s staying at. For example, he explains that he recently forgot his computer charger at home, bought a new one online, and had it shipped to his hotel. He was able to pick it up at the front desk shortly afterward.
He explains that we take advantage of these conveniences and points out that people can start businesses for very little now. He mentions the book The $100 Start Up, and notes that while he has not read it, the concept is amazing. It used to be that in order to run a business, an owner needed to have a Microsoft license for every single seat in the business, and now most of the resources are available cheaper or completely free on a cloud platform.
He states that he is also thinking of these things in terms of property management. He has commonly complained about Wall Street and notes that Commandment 3 of his investment commandments is, “thou shalt maintain control.” When a person lets go of that control, they open themselves up to several problems. He explains that with his company’s properties, this happens to a lesser extent, but it happens, usually in the property management side.
He advises listeners to consider self-management but explains that it is not for everyone, and it isn’t perfect. There are a lot of options to consider, though. When done properly, self-management can be easier, better, and maybe even cheaper. There are great managers out there and there are those who are difficult. Sometimes it’s better to do it yourself. With technology, managing properties from a distance is achievable.
In one of these technologies, Homee, through a smartphone application, an owner can send a repair person to a property, and they can send a video or take a picture of the repair. The photo or video is geo-stamped to the location. The repair person can’t cheat or show photos of a different location. It’s as good as being physically there for the repair.
The US has a Special Market
Hartman reminds listeners that income property is not only the most historically-proven asset class in the world, and it’s not only the most tax-favored, it’s debt-friendly. In the United States and possibly the world, income property is one of the best creators of wealth out there. The US in particular has a special market. Our financing is better, and we’ve got better offerings in many ways.
What are Lenda Mortgage Loans?
Hartman welcomes and introduces Jason Van Den Brand, the CEO and Co-Founder of Lenda. The platform is used for getting purchase money and refinancing properties. Hartman states that Van Den Brand has some good insights and his company is using technology to make life easier for investors and traditional homebuyers.
When asked what Lenda is, Jason Van Den Brand explains that Lenda helps consumers get an honest home loan online. It’s a single place to shop and compare, as well as managing your home loan. Lenda’s technology helps homebuyers in thirty minutes do what most banks take two weeks to do. It saves both time and money.
He states that while Lenda mortgage loans doesn’t finance nationwide, they are expanding. The company started in 2014 in California, and the first expansion included Washington, Oregon, Texas, and Colorado. The second expansion included seven more states, the most recent being Florida and Georgia.
He adds that Lenda is a licensed mortgage company and states that they do not broker their deals. It can be considered as somewhat of a Lending Tree 2.0, with Lenda keeping the process online and allowing applicants to transact with them, while Lenda helps complete the loan for them.
What’s Going to Happen in the Market?
Hartman mentions that many people are worried about rates going up, that the Fed is tightening, and times are changing.
Van Den Brand agrees that they are and notes that he has seen the state of the market based on data and traffic. A lot of media is suggesting that applications for mortgages are declining. He has actually seen an increase, which could be due to volatility in the market. If rates go from 5% to 4% quickly, people are going to wake up and grab at the opportunity. If the rates are going up, people are going to want to jump in before they increase any further.
Rates are going to increase, but customers will still continue to purchase homes. People are looking for a better experience, and now they have this platform, he says.
Hartman adds that he too has noticed that when rates go up, it creates much more urgency in the market. People are moved by the fear of loss more than the need for an opportunity.
Van Den Brand notes that when rates are going down, people tend to sit on the sidelines thinking that they will continue to drop and eventually they will swoop in at the lowest rate. He states that when he asks people about why they have not applied for a home loan, they often say that it’s a pain to get one, and they are not looking forward to the process.
He explains that his technology helps people go from sitting on the sidelines to getting their Lendra mortgage loans application done fast. It’s a 30-minute application, and the loans close in 15-17 days, which is three times faster than traditional loans. There is a portal on Lenda to manage the entire process.
When Hartman asks if the Lenda mortgage platform collects documents or makes them easy to manage, Van Den Brand specifies that that is part of the purpose. More importantly, though, it tracks which documents are needed. He asks listeners to think about the last experience they had buying a home, when someone always calls at the last minute needing a document or letter done. This is always noted when there’s very little time to comply. Stress levels spike, and people get worried because they don’t know if they’re going to get the house.
He adds that his technology has predicted algorithms to help determine what’s going to be needed. Customers will find out what they qualify for, rates they can have, and fees to face. The application is dynamic and asks different questions for W2 and self-employed people. It also covers credit scoring and what documents need to be signed from a regulatory standpoint. It’s all online, all on the site. Customers will have an account to keep track of everything and will receive a notification when they’re approved, and the site will let them know when and where to sign their documents.
He notes that there is even a new part of the program that allows the final signing online without the use of a notary. Instead, the program uses digital signatures and a webcam to determine identity.
What Does Lenda Mortgage Loans Offer in Terms of Type?
When asked if Lenda brokers loans and what kind of loans the company offers, Van Den Brand explains that Lenda is not a broker and that the company actually banks the loans. They offer typical Fannie Mae and Freddy Mac products as well as some that are outside of that type of window. If you’re buying a primary home, secondary home, investment property, or vacation home, all of those loans can be done. Lenda mortgage loans can also do an FHA-type loan. It’s the same experience for customers, as Lenda is dedicated to getting the right information, the right price, and the right timeframe.
He states that licensed mortgage professionals are available to talk to if needed and they’re each compliant with requirements for the state they work in. There are always people on staff that can answer questions. There has to be a licensed professional on the other side of every transaction, and he adds that 80-85% of customers talk to someone in the company when they have questions.
What Do You Need to Get a Rate Quote?
Hartman states that he wants to make sure that the option for investment properties is available on the site, because it appears to be set up for traditional loans, which is the most common sort in the market.
Van Den Brand clarifies that investment property loans are available and offers an example on how to access the quotes. He states that if you’re looking for a $120,000 purchase price with $30,000 down in Pennsylvania, Lenda will ping the market and find out what you qualify for in that state. Rates can be different in some places, so customers will not receive blanket statements. Four pieces of information is needed to generate a quote, and the type of property can be selected after the first couple pieces of information are collected.
He advises clicking on Advanced Options once on https://www.lenda.com/ and click “Investment Property” in the menu. The quote will then apply to that sort of loan.
Hartman states that it’s about time someone makes this process easier. He adds that he can get a loan on a car or plane and can get approved easily on depreciating collateral that moves. Homes are not so easy, and the process usually takes thirty days to be approved for appreciating collateral that’s in one place.
Van Den Brand explains that in a lot of ways, this is why his company got started. He wondered how he could get to a point in lending that can get buyers the capital they need to buy a home. When his company first started, he states that they were completing loans in fifty days, which is the standard for mortgage loans. As technology developed, they moved forward into thirty-day closings. Last week, they broke a record with only thirteen days in the loan process.
He notes that he’d like to get to a place where it’s being done faster, but as of now the government says that there has to be ten days at least for a waiting period. He adds that he’s hoping to get to that minimum this quarter and then converse with legislators next quarter to get some of this process moved along even faster. He thinks that with enough demand, it can be done.
Loosening Regulations in the Mortgage World?
Speaking of regulations, Hartman mentions Dodd Frank and how President Trump wants to get rid of or at least soften the program. He notes that the market has corrected but is now over-corrected and wonders if we are going to see any loosening in the mortgage world.
Van Den Brand states that he thinks that there will be some loosening and adds that we have to remember as a country that things got way out of control from 2000 on to 2008. The course has corrected, and we have proven that we can grow and appreciate home values to guidelines that make sense. Companies have been pushing forward with technology-driven models and with what we’re getting into, we’re underwriting and having it make sense.
He asks if we really need two years’ worth of W2s for every mortgage application? Do we need to analyze every 1040 if we can get the information straight from the IRS? His vision is that in the future, a customer can put their thumbprint into their phone, the data will be pulled from the print, and the customer will see if they qualify quickly. It’s years away but coming.
Does Lenda Have Fees?
Hartman mentions that there is a great deal of fees lenders require, some of which are garbage fees, and asks what Lenda charges by comparison.
Van Den Brand states that Lenda does not charge fees. When you bank with Quicken Loans, there is going to be about $2,000 in junk fees, and Lenda has none of those. Their fees will always be zero. Because of their technology, the loans can be produced much cheaper. Customers don’t have to pay someone a commission. The interest rates are lower as well, and combined with no fees, this saves customers up to $50,000 over the life of the loan compared to Wells Fargo or Quicken Loans.
He explains that his company makes money by selling their loans to a secondary market and getting paid premiums for the servicing right. In the future, he hopes to have the payments made to Lenda itself, because it’s what customers have said they wanted. He hopes to have this accomplished in early 2019.
In closing the episode, Van Den Brand states that we are going to see interest rates rise, but people are still going to purchase loans. People are always going to be buying and selling homes.