In real estate, few things are more agonizing than going through the mortgage process while trying to secure a dream home before someone else does.
It takes 41 days on average to go through the mortgage process, during which anything can happen — including someone with a cash offer swooping in to seal the deal before you. Vishal Garg knows what that’s like. He and his wife, who was pregnant with their second child, lost out on a home while they waited for the bank to complete their mortgage.
“The process took over 60 days,” Garg told Built In. “It was so bad that we ended up losing the house we were going to buy to an all-cash bid ... Here I was all excited about the life we’d live in the place and it’s gone.”
That experience proved foundational for Garg. After losing out on his home, he used his experience working in fintech and what was supposed to be the down payment for his home to fix what he felt was the broken mortgage lending experience. Those efforts became Better.com, which he officially launched in New York in 2015.
“This was a trillions-of-dollar industry that the internet forgot,” Garg said. “It’s phones and faxes, not machines talking to machines.”
Better has grown exponentially since its launch. On Monday, the home financing company announced that it has raised $160 million in Series C funding. The round will allow the company to add more than 400 people to its sales and technology teams by the end of 2019.
Garg’s goal is to help the average home buyer.
“We want to help the person buying a home in Albany, or Rochester or Syracuse buy a home, not just people in the Upper East Side,” Garg said.
The traditional mortgage lending process involves going to the bank, filling out reams of paperwork and waiting — lots of waiting. It also includes a bundle of fees, which can cost the home buyer thousands of dollars either upfront or in the form of a higher interest rate, Garg said.
Through Better, users are able to complete the entire financing process online, including title policy and home insurance. Rather than work with a loan officer, home owners are connected to a marketplace of 32 of the largest mortgage lenders. They are able to get pre-approved for loans and lock into an interest rate immediately without any fees.
The process cuts the average approval wait time in half, to 21 days, and because there are no fees from working with a loan officer, it saves people on average $3,000 in upfront costs, according to the company. Where the company makes its money is from investors competing for the mortgages, Garg said.
“We’re helping people afford a better home because we’re able to give them a better mortgage,” Garg said.
Since launching in 2015, Better has grown three-times year-over-year and processed more than $375 million in loans a month, according to the company. In this year’s second quarter, it reached a new high-water mark funding $1 billion in loans.
We’re helping people afford a better home because we’re able to give them a better mortgage.”
That’s also coincided with massive company growth. In the last year, Better has added 550 employees and moved its headquarters to 7 World Trade Center.
With this Series C round, the company has raised a total of $254 million. Activant Capital, Ping An Global Voyager Fund, Ally Financial, Citi, AGNC, Healthcare of Ontario Pension Plan (HOOPP) and American Express Ventures joined existing shareholders Goldman Sachs, Pine Brook, and Kleiner Perkins in the round.
Despite his mortgage company’s massive growth, Garg is still a renter. When he started Better, he made a vow not to buy a home until he could go through Better. Though his company operates in 40 states, the company’s application is still awaiting approval from New York’s Department of Financial Services.
“As soon as we launch in New York, we hope to lower mortgage rates by 50 basis points or more,” Garg said. “So we’re just waiting and super excited.”