Better.com CEO on Mortgage AI: Efficiency Redefines Financial Services

“Real AI is when you can take massive amounts of cost out of the system and deliver that back in savings to the consumer.” This assertion by Vishal Garg, Founder and CEO of Better.com, cuts through the current hype surrounding artificial intelligence, laying bare the true promise of the technology for established, often inefficient, industries. His recent appearance on CNBC’s Fast Money, alongside panelists Melissa Lee, Karen Finerman, Guy Adami, Dan Nathan, and Tim Seymour, offered a candid look into how Better.com is leveraging AI to disrupt the housing market and mortgage lending, particularly in the realm of refinancing and home equity.

The core of Better.com’s strategy, as articulated by Garg, is a profound commitment to cost reduction through technological innovation. He highlighted a significant market opportunity: an estimated 20 million Americans hold mortgages with rates exceeding 7%, acquired over the past three years. With Better.com offering rates around 6.2%, the potential for refinancing savings is substantial. For a $400,000 loan, this translates to roughly $3,200 in interest savings annually, a compelling proposition in an inflationary environment. This efficiency is not merely incremental; it's foundational to Better.com’s operational model.

The stark difference in operational efficiency forms the bedrock of Better.com’s competitive edge. Garg revealed a staggering disparity in loan origination costs: "The average mortgage company, it costs them about $12,000 to make a mortgage. It costs Better.com $3,000 to make a mortgage." This 75% reduction in cost per loan is a direct result of their deep integration of AI, allowing them to pass on these savings to consumers through more competitive rates. This isn’t about superficial AI enhancements; it’s about a complete re-engineering of the underlying processes.

At the heart of Better.com’s AI infrastructure is Betsy, their voice-based AI loan assistant. Trained on 12 million phone calls and equipped with comprehensive underwriting criteria across all investors, Betsy can calculate savings and present optimal options to borrowers. She operates 24/7, serving as a tireless and highly informed resource.

Garg further elaborated on the untapped potential in the home equity market, noting that American families possess "$32 trillion of tappable home equity" and carry "$18 trillion of debts," with half of that debt accumulated post-pandemic. Better.com’s home equity product, launched in 2023, is already two-thirds the size of industry leader Figure, which began in 2018, demonstrating an accelerated growth trajectory. The average family refinancing through home equity with Better.com is reportedly saving $1,100 per month, showcasing the tangible financial benefits derived from their AI-driven efficiencies.

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The true differentiator, according to Garg, lies in Better.com’s proprietary, end-to-end system called "Tinman." He characterized the traditional mortgage industry as relying on "eight different systems", separate platforms for CRM, point-of-sale, loan officers, processors, and underwriters, a fragmented, inefficient patchwork reminiscent of "Windows 95 SharePoint days." Tinman, in contrast, is the "first new end-to-end system in the mortgage industry in 25 years," built from the ground up to seamlessly integrate all aspects of the loan process. This unified architecture allows Better.com to train its AI across the entire workflow, enabling genuine automation and cost extraction, rather than merely layering AI on top of antiquated systems.

This systemic approach to AI implementation is what Garg defines as "real AI." He distinguishes Better.com's comprehensive integration from competitors who are merely creating "AI appointment schedulers" or "document retrievers," which he views as superficial applications that fail to address the fundamental cost structures. Better.com's strategy suggests that deep, transformative AI requires a willingness to rebuild core operational systems, challenging incumbents burdened by legacy infrastructure and processes. The ability to fundamentally re-architect a complex financial service like mortgages, rather than just incrementally improving existing steps, is the critical insight for founders and VCs looking to understand where AI will truly create value and competitive moats.