Bidding for a property is no longer a two-step process: you just fill out an application, make a deposit, and pay off the loan within a year.
But in an effort to streamline the process, a new company is trying to make it even easier.
Called Upgraded Loans, the company says it has developed a platform that lets homeowners and lenders alike save on fees.
And it hopes to make the process cheaper and faster by allowing borrowers to make payments as little as 10% of the cost of the property.
Upgraded loans typically include the purchase of the home and its surrounding property, which can be anything from a $2 million condo or an apartment in a pricey New York City neighborhood.
But the Upgraded Loan platform could allow borrowers to pay as little or as much as they want to the bank, with no upfront payments.
The Upgraded loan process is often called the “buyer beware” market because buyers often are hesitant to accept a loan with a low interest rate, and lenders and homeowners generally won’t take on a loan that’s more than 10% below market rates.
Upgraded Loans is one of several companies trying to get into the market.
“We’ve seen the interest rates jump dramatically,” said David Janssen, founder and CEO of Upgraded.
“The way we do this is we have to charge borrowers a fee on their payments.”
Upgraded is based in New York, with a focus on millennials, a demographic that typically doesn’t own a home.
In an effort for the company to reach that demographic, Upgraded also has a $100,000 loan for anyone over the age of 26 who is in the middle of a down payment, with interest rates starting at just 0.5%.
Upgraded plans to offer up to five loans at a time, with the minimum payment to be 15%.
The company says its pricing is competitive because it’s also offering a 30-day money-back guarantee, which is more common than a 30% down payment.
The startup said that it has had interest in the Upgrade loan market for two years.
“We are excited about the opportunity to help those who have struggled with debt to refinance their loans,” said Janssens in a press release.
“By offering a simple and streamlined payment structure, we can make it easy for borrowers to refinish their home.”
The Upgraded program has already received a big boost from lenders, which are using the platform to try to reduce the amount of fees and interest on their loans.
In a letter to borrowers, Goldman Sachs Group Inc. said that its customers have refinanced an average of $2,800 in the last year alone.
“Borrowers are able to save money on all types of loan, including down payments, and interest rates are lower than they would be if they paid all of their money upfront,” Goldman Sachs wrote in the letter.
As for the Upgrades platform, Jansson said that he expects it to help the company become a more accepted and mainstream service for consumers.
“This will make the Upgrading process a lot easier for many consumers,” Jans said.
Janssen said that the company has seen interest from a number of big banks.
In an interview with Reuters earlier this month, JPMorgan Chase & Co. CEO Jamie Dimon said that Upgraded would have a “huge impact” on the market for up-front refinancing.
When asked if Upgraded was planning to accept payments through credit card, Jenssen said, “I think we have a payment platform in place, yes.”
According to JansSens website, Upgrades customers can make their payments online and can pay using Visa, Mastercard, Discover and American Express, or PayPal.
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