The mortgage and real estate industry is no stranger to disruptors, especially over the past few years as scores of companies have tried to change the way we buy, sell, and obtain a home loan.
One of the latest examples is “Tomo,” a venture-backed fintech with some big-name founders and investors, including former Zillow employees Greg Schwartz, Carey Armstrong, and Spencer Rascoff.
What’s unique about this mortgage lender is they only originate home purchase loans. No refis. That means they’re completely committed to home buyers.
Like other lenders, they’re attempting to level the playing field between cash buyers and those who need a mortgage, an especially relevant concern in today’s ultra-competitive housing market.
Tomo Mortgage Fast Facts
- Direct-to-consumer, purchase loan-only mortgage lender
- Founded in 2020, headquartered in Stamford, CT
- Started by former Zillow executives Greg Schwartz and Carey Armstrong
- Do not charge lender fees and offer both a low rate and closing guarantee
- Will also pair you with a real estate agent for an additional mortgage rate discount
Tomo Exists Because Buying a Home Can Be Terrible
Tomo was created because purchasing a property can be a real pain in the neck, and instead of relying on old technologies, they’re going the digital route.
This means you can get started right from their website in minutes, whether by desktop computer or smartphone.
They’re also streamlining the process, simplifying how you can complete tasks, and throwing in a bunch of guarantees along the way.
It all starts with a mortgage pre-approval, which they break down into two options: verified and an underwritten pre-approval.
The verified pre-approval assesses your credit score, income, and debt, and turns around the paperwork in no more than three hours after they receive your information, without a hard pull.
The more robust underwritten pre-approval does all that with a hard credit check and a complete assessment by an underwriter, backed by their Closing Guarantee.
The second option takes about 24 hours to complete, once you’ve uploaded all your necessary documents.
Tomo commits to closing on time, and are confident they can do so by moving critical steps earlier in the process.
But if there is a delay on their end, they guarantee your closing date will not change.
It’s unclear what happens if they aren’t able to meet their obligations, but they appear to not let that be an issue.
The Tomo Price Match
While all that sounds good, there’s even more to like about Tomo when it comes to their pricing.
For one, they do not charge lender fees, similar to companies like Better Mortgage, Filo Mortgage, and PenFed Mortgage.
On top of that, they offer the Tomo Price Match if you happen to find a better mortgage rate elsewhere.
Just provide a valid, comparable Loan Estimate (LE) dated within one business day of submission to Tomo and they’ll lower their rate if need be to match it.
But they’re confident they can offer some of the lowest rates around because they’ve simplified the home loan process and made it more cost-efficient.
Speaking of mortgage rates, they’ve got them on full display on their website, so they’re not hiding anything.
Simply navigate to “Find your rate” and you’ll see a list of rates and corresponding costs (discount points) or rebates (lender credits).
You can also fine-tune the rates by entering in your borrower and property information for a more accurate gauge of pricing.
Tomo Brokerage Partner Agent
Speaking of pricing, to sweeten the deal even more, they’ll throw in a .125% (eighth) discount in mortgage rate if you use a Tomo Brokerage Partner Agent.
This is essentially their real estate referral network that pairs you with a local real estate agent, which makes a lot of sense because both Schwartz and Armstrong worked on Zillow’s Premier Agent product previously.
In truth, Tomo might be even more similar to Redfin Mortgage, which doesn’t charge fees and has an obvious real estate agent affiliation.
It also plays into the trend of controlling more of the home buying process instead of just the lending piece, or merely the agent portion.
Assuming you don’t already have a real estate agent, you could save some money by going with one of their recommendations.
This is known as “Tomo Perks,” and on a $300,000 loan amount could save you more than $7,000 over the life of the loan.
To get paired up, you simply provide your info to Tomo and they’ll send video profiles for three local real estate experts they love. Then it’s up to you who to pick, if any of them.
For the record, it is possible to take advantage of both the Tomo Price Match and Tomo Perks.
Where Is Tomo Mortgage Available? And What Loan Types Are Offered?
- Currently serve just five states: CO, CT, FL, TX, WA
- Offer home purchase loans only
- Fixed-rate mortgages: 15- and 30-year loan terms available
- Minimum loan amount of $150,000 and min. credit score of 660 required
- Jumbo loans available with loan amounts up to $3 million
- Single family homes, townhomes, condos, and 2-4 unit properties acceptable
- Do not offer FHA/VA loans
At the moment, the company is licensed in just five states, including Colorado, Connecticut, Florida, Texas, and Washington.
And currently only operates in three markets, Dallas-Fort Worth, Houston, and Seattle. My assumption is they’ll expand fairly quickly with their big venture cap backing.
They also only offer home purchase loans, as stated above, though it’s possible they may expand into mortgage refinances in the future.
In terms of loan choice, you can get a conventional mortgage starting with loan amounts of $150,000, or a jumbo loan up to $3 million.
You can’t yet get your hands on an FHA or VA loan, though that could change in the future.
A minimum 660 credit score is required, and they only offer 15- and 30-year fixed mortgages. No ARMs just yet.
While it seems like a limited product menu, something like 90% of home buyers go with the 30-year fixed, and most home loans are conforming.
In summary, Tomo is yet another mortgage/real estate startup looking to shake up the status quo.
While it’s a crowded place, their low rate guarantee and on-time closing guarantee, combined with their fresh modern look, might be enough to help them stand out.