It has never been a good time like now for the mortgage business, as the demand for housing has grown incredibly due to the thrust on work from home across most industries. Most Americans are considering where to live to suit working remotely. In addition, the all-time low mortgage rates provide highly favorable conditions for the mortgage business to flourish that draw public attention toward better mortgage stock. Incidentally, the time coincides with the most anticipated event of the stock market, Better.com IPO that has been under discussion through 2021. Better.com is a digital platform that provides mortgage lending, homeowner insurance, and title services. The company founder and Indian origin CEO Vishal Garg floated the company in 2016 after experiencing tremendous difficulties obtaining a mortgage for buying a home. He intended to provide the simplest mortgage solutions for first-time homebuyers.
Why take an interest in better mortgage stock?
As it is one of the best times for mortgage business, investors have been closely tracking the progress of Better.com IPO as the company announced in May 2021 about going public by the end of 2021. The company chose to go public via SPAC) merger riding on the back of the particular purpose acquisition company Aurora Acquisition. Most people prefer to call it the Vishal Garg better mortgage company has done massive business in billions of dollars by bringing down fees and commissions to zero. Better Mortgage was on track to achieve its goal of making homeownership simpler, faster, and more accessible by providing services in mortgage financing and refinancing, home insurance, and real estate. The post-equity valuation of the newly merged company would be $7.7 billion. According to the company’s projections, the revenue should be $5.1 billion by 2023, with a profit of $1 billion.
The cutting edge of Better.com
So, how did Better.com get the better of its larger competitors who, despite using technology supported by growing interest in home buying, failed to make the mark? Although the company offers standard products like mortgage insurance, it removes almost all barriers to entry for prospective home buyers. By using advanced algorithms, the company accelerated the process of closing home-buying deals to bring it down to 21 days from 42 days, the industry average. The company also drastically brought down the fees and processing charges. According to the claims of better com CEO, digitizing the home loan process helps minimize the insurances of bias against minorities in the approval process for mortgages.
More positives for the company
Going by the company’s performance, it is clear that things are working as per plan as it is drawing more people towards online Mortgages. The company has changed the long-standing notion that it is tough to get a mortgage because of numerous fees and the lengthy process. In 2020, its loan value crossed the mark of $24 billion, recording a 490% growth year on year. By the same yardstick, its insurance business grew 855% in 2020, real estate transactions grew 471%, and homeowners insurance increased 300%. Since its inception, the company has received solid backing from investors like SoftBank and Ally.
The company’s approach in helping home buyers with simpler and faster mortgage solutions is sure to strike a chord with younger digital-savvy Americans between 22 and 40 years. According to the National Association of Realtors, this is the biggest group among home buyers.
The anticipated risks
Instead of placing blind faith in better.com stock, it is advisable to consider its risks. Better.com thrived on the low-interest regime. Still, once the interest rates are back to normal, it would impact the refinancing business. In addition, housing market issues like delayed new home construction will expand the gap between demand and supply. It can push up housing prices, and despite low mortgage rates, the exorbitant housing price could crush the market.
The dismal performance of the Rocket Mortgage stocks despite the company’s inherent strengths should be a red flag for those showing interest in better mortgage stock. Moreover, the controversies about Vishal Garg creating an unhealthy work environment that led to lawsuits, it is better to wait and watch before putting in your money.
