Securing mortgage financing in today’s white-hot real estate market can be a headache. Securing seed financing for a digital mortgage startup, however, isn’t such an ordeal.
In the third major fundraise by a home financing startup in under a week, Tomo — a brand new startup that will issue fully underwritten pre-approvals in a matter of hours — raised $70 million Wednesday.
Fueling the Post-Pandemic Housing Market
After a brief slump appeared to signal the end of the pandemic boom, home sales in May hit their highest levels since 2005. Tomo, which is so early-stage that it has no operations yet, was launched to edge out the big banks on mortgages for the ample homebuyers still out there:
- Founded by Zillow alums Greg Schwartz and Carey Armstrong, Tomo pledges low rates, guaranteed on-time closing, and “customer-obsessed” service. Its promised speedy pre-approvals are especially valuable in hot markets, where homes are raking in multiple offers.
- Instead of catering to existing homeowners, a strict focus on buyers is what Tomo says distinguishes them. And real estate companies will be thrilled to know the startup is pledging to use data to help homebuyers close in as little as 21 days, less than half the industry average.
Financing Home Finance: Lower, founded in 2014, just raised $100 million of its own last week. The startup will help you obtain or refinance a mortgage and get insurance. And Accept.inc just pulled in $90 million. Accept’s selling point is a loan that allows customers to submit all-cash offers.
Watch Out: Sales are up, but mortgage demand dropped 7% this week to its lowest rate in over a year. This suggests high prices (up 15%) are scaring off some first-time buyers.
Digital Mansions: Republic Realm, a “virtual real estate firm,” is now backed by billionaire Mike Novogratz’s VC outfit Galaxy Digital. The company buys and develops plots of virtual land in blockchain-based online “worlds.” Good luck competing with that, RE/Max.