Reali Mortgage Review: Low Costs and Cash Back

Reali Mortgage is different from other mortgage lenders, because it's also a real estate brokerage. In that role, it provides some appealing home-buying and selling services that can make the process smoother and less stressful in general. Its brokerage services are only available in California, but Reali offers mortgages with or without the real estate services. You don't have to use its real estate services to get a home loan there, but you might find some benefit in bundling services.

Read our full Reali Mortgage review to decide if it's the best mortgage lender for you.

This mortgage lender is a good fit for: Borrowers looking for a low-cost conventional mortgage. It's also a great choice for conventional borrowers looking to bundle home loan and real estate services to save money.

Top perks

Low rates and fees

Reali's mortgage interest rates are very competitive. There is no application fee or origination fee.

You can buy mortgage discount points to lower the interest rate for the life of your loan. (Mortgage discount points are interest that you pay upfront in exchange for a lower interest rate.) Or, if you take a slightly higher rate, Reali gives you a lender credit to help with other closing costs.

There are fees for some of the special real estate services (see below).

Special programs to help you land a home in a competitive market

In California, Reali offers a couple of interesting home-buying programs to help you win out as a buyer and transition from your old home more smoothly.

The trade-in program, called Reali Buy Before You Sell, is an alternative to a bridge loan (a loan that helps you buy a new home before your old home sells). With this program, Reali buys your new home for you. Once you move in, Reali cleans, preps, and stages your old home, then sells it. After it sells, you use the proceeds to buy your new home from Reali at the price Reali paid.

There is a fee for this service. At 5%, it's comparable to what you might pay another agent to sell your old home and represent you in the purchase of your new home. Also, you pay rent to Reali on the new home until your purchase transaction is complete.

With this option, there are three separate loan transactions:

• Reali purchases your new home
• You sell your old home
• You buy your new home from Reali

Each of these transactions has closing costs. Reali charges very low fees and offers some cash rebates, so those benefits should defray the total cost. It's not clear from the website whether the fee for the service covers any of the closing costs.

The cash-offer program works similarly. In order to help you win in bidding for a home, Reali makes an all-cash offer (with no financing contingency) on the home you want. If the seller selects Reali's offer, Reali buys the home. Once the transaction is complete, you buy the home from Reali at the price Reali paid.

There is no additional fee for the cash-offer program once you are pre-approved. And again, multiple transactions are required, each with potential closing costs.

Cash back option

You may get additional cash back if you use Reali's real estate brokerage services. If you work with Reali's real estate agent, Reali gives you cash back equal to 1% of the purchase price. Usually, 2%-3% goes to the buyer's agent, but Reali accepts a lower commission in order to share it with the customer.

Fully digital

You can apply and track your mortgage application online. Reali offers a fully remote loan closing where the law allows it.

Transparent mortgage interest rates

Reali publishes its rates online. Even better, you can play around with the numbers on Reali's website to see how your credit score, down payment, and other variables affect your rate. Reali displays a range of results that illustrate the different levels of upfront costs. You'll easily see how you can save money on closing costs by taking a higher rate, or save on interest charges long term by paying for points.

What could be improved

Not nationwide

Reali is currently licensed to make mortgage loans in 15 states: Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Michigan, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, and Washington.

Reali's real estate brokerage services are only available in California.

Limited loan options

The options are slim here. Reali currently only offers conventional fixed-rate mortgage loans (purchase and refinance). These can be conforming loans or jumbo loans.

Reali plans to introduce FHA and VA loans in 2022, which will make Reali's bundled home-buying services available to a much bigger group of potential applicants.

If you need any kind of mortgage that is not run of the mill, consider looking elsewhere for now. Borrowers in need of non-standard mortgage types might include self-employed borrowers, foreign nationals, borrowers with lower credit scores, medical professionals looking for doctor loans, and so on.

Human factor

Reali is not for everyone. It uses data and artificial intelligence more than warm bodies. Reali doesn't have a huge team of agents. Even in California, where they offer brokerage services, much of the state is out of their agents' service areas. Where they do have agents, a small number of people cover huge swaths of geography. If you are more comfortable with a neighborhood expert and some hand-holding, you might not enjoy working with Reali.

To get a home loan from Reali, you need to reside in a state where Reali lends.

You also need a down payment of at least 5% of the purchase price. You might need additional funds to pay closing costs, but that depends on your loan amount and whether you opt for a lender credit (and a higher interest rate).

Reali's best rates are reserved for the most creditworthy applicants. Reali's minimum credit score to qualify is 620. But borrowers with a higher credit score can qualify for a lower rate. When we checked, Reali's lowest mortgage rate was available to borrowers with a credit score of at least 720.

Reali also looks at your debt-to-income ratio. This is the percentage of your before-tax income that you spend on required debt payments each month (including your proposed new housing payment). All lenders love for this number to be under 36%. So if you're in that zone, you're in great shape. Many people have a higher DTI, and that's okay. Reali can approve applicants with a DTI as high as 55%.

The underwriter looks at all of the factors in your application. If you have a higher down payment, you can probably get away with a higher DTI. If you have a low DTI, you might be okay with a lower credit score. If you're not sure where you stand, a loan officer can help you.

Reali Mortgage keeps its mortgage refinance rates very low, usually hovering right at or below the national average. Even better, Reali's refinance rates are a little lower than its purchase loan rates. And to get the same rate on a refinance loan, you pay less in points than for a comparable purchase loan.

Reali's mortgage rates trend lower than the national average. When we checked, the rate for a 30-year fixed-rate mortgage was about 0.2% lower than the national average. And the cost for that rate was lower. Nationally, borrowers are paying about 0.7 of a point to get the average mortgage rate. At Reali, the cost is less than half a point to get an even better rate.

Alternatively, you can let Reali buy up the rate -- instead of your paying Reali, Reali pays you, in exchange for a higher interest rate on your loan. This is an option some borrowers like, especially when rates are already very low. You could potentially cover all of your closing costs with a lender credit.

Reali is a great choice if you can benefit from bundling a loan with real estate services. If you're buying in a competitive market and you want to leverage Reali's cash offer service, or if you want help getting your new home secured before your old one sells, Reali can smooth the process. Also, Reali's discounted real estate agent fees can put a significant amount of money back into your pocket.

Reali is also a great option if you're shopping for a low-cost, fixed-rate conventional mortgage.