The Best Mortgage Lenders
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If you’ve found your dream home and are now ready to take the leap into the world of mortgages, then you’ll want to find the best mortgage lender for your unique situation.
This will probably be one of the biggest and most significant loans you’ll take out in your lifetime. According to a report by the U.S Census Bureau, a massive 63% of homeowners have a mortgage.
But unlike in the past, folks aren’t all going to banks to get a mortgage. Over the past couple of years, banks have actually seen a drop in applications with an uptick in the use of mortgage brokers.
What caused the change?
Well, mortgage lenders (often used interchangeably with mortgage “brokers”) – have many benefits over banks among offering more specialized advice and guidance, which can be so valuable during this important process.
A mortgage lender is essentially the middleman between you and your prospective lender. The broker will liaise with multiple banks to secure the best mortgage to suit your needs. Mortgage lenders generally have a strong network of lenders, which makes for a more efficient and easier process.
In this article, we will take you through the five best mortgage lenders for 2020. We have included banks in the list, for the sake of honesty, and giving you the best information and options out there.
It’s important to understand all the details about your mortgage, and we only need look at what happened over the past decade as proof of that. So, we’ve also included some mortgage, and mortgage investing basics to complete the article.
With that said, let’s dive into our reviews of the top mortgage lenders and brokerages this year.
Best Mortgage Lenders – Reviewed and Compared
Taking a well-deserved first spot in our best mortgage brokers list is, Rocket Mortgage; an online, user-friendly mortgage application process created by Quicken Loans. The process is visual, simple and best of all, it makes the whole process feel do-able. You can avail of their licensed mortgage advisor whenever you need it, and take your time.
Rocket Mortgage was born in 2015, in the midst of heavy, headache inducing mortgage applications, and took the mortgage lending world by storm upon its arrival. Today, it remains a leader in the mortgage industry.
- The site is user-friendly, powerful in its simplicity and will save your documents if you want to come back to things later; saving you time and a little less stress.
- You’ll have a mortgage advisor on hand to answer any questions you may have
- Verifies employment and income level for over 60% of working Americans
- The site caters to those on a tight schedule who are looking to take the first step, but want to do it as efficiently as possible
- You’ll discover how much you’ll qualify to receive in a matter of minutes
- You can’t get a home equity loan or HELOCs
- If you would prefer to speak to a human this isn’t for you
- It focuses on credit scores, debt and your income without looking at alternative credit info.
As soon as you get to the Rocket Mortgage page you almost feel a sense of relief, a sense of ‘I can do this.’ Everything is clearly laid out, well-structured, and most of all, thoughtful.
Where consumers may be at coming into this experience stressed, worried, or apprehensive, Rocket Mortage eases some of that tension. This is a powerful and commendable achievement for a prospective home owner.
The application goes through some brief tick-the-box options including the house type you would like to buy, with four options to choose from, and when you would like to buy, again with some straightforward options to choose from.
There’s no essay writing, no arduous tasks, no complicated questions.
Rocket Mortgage offers a number of standard loans. All rates are changed daily based on the market, and you can choose between a fixed or adjustable rate.
To get a sense of the brand, its humor, and overall view on mortgages, take a look at the firms new addition to its ongoing More Than a House campaign, created in collaboration with commercial production company, Native Content.
Better.com is the runner up in our bets mortgage lender list. Better.com is an online mortgage broker that provides quality technological offerings and 24/7 on demand human assistance. Better.com was created by founder Vishal Garg in 2014, to offer customers a simple mortgage loan process.
- A good online experience with an advisor on hand to help if you need it
- You don’t need to worry about the Loan Officers up-selling you, because they don’t receive any lender rates or commissions, and are there solely for support purposes
- You can get an “underwriter reviewed” pre-approval letter in just 24 hours or less.
- You won’t be able to get home equity loans or HELOCs
- Doesn’t offer VA or USDA loans
- Unavailable in 50 states.
Better.com is one of the first digital lenders of its kind, offering customers a streamlined mortgage process that eliminates fees, those extra unneeded steps, and time-wasting, awkward AF appointments.
Better.com offers purchase and refinance loans, and several products. First-timers can receive loans with a 3% down-payment, and a 10%-down loan that includes no mortgage insurance.
The lender offers a great range of easy-to-read resources, mortgage tools and calculators to help you better understand your options, and break everything down, like their Home Affordability Calculator, which helps you figure out how much you can afford.
Take a look at what the lender got up to in 2019 by watching their Bringing it Home: 2019 in Review video, which goes through some of their improvements and achievements in 2019, including the addition of 3 new offerings to help create an easier, and smarter partnerships that “brought it all home.”
Better.com doesn’t charge lender fees or pay commission, is all about affordable lending, and promise to offer you a better price than competitors by as much as $1,000 – Now that’s a good offer!
For a better understanding of the industry, take a look at Better.com’s Consumer Trend Report 2019 that discusses how FinTech transformed a once archaic $15 trillion industry, into a new digitally-native, customer focused industry.
In a cool third place in this list of mortgage lenders is NBKC, a bank that aims to be “scrappier” and “more innovative” in a bid to increase their success rate. NBKC has come in third because of their low interest rates, fast loan processing, and responsive customer service.
- Everything can be done online
- You won’t be charged lender fees for VA’s
- Isn’t very favorable to those with a low credit score
- Most will be charged a mortgage origination fee
- Lack of in-person service available
The company focuses on automation and efficiency, while keeping that vital element of human touch through high-quality, responsive, loan officers.
NBKC offers standard FHA and FA fixed rates, and adjustable mortgages, jumbo-loans, refinancing, and home equity loans.
You will need a good credit score of 620 or more to receive a NBKC mortgage, which isn’t the most ideal. Those with a score of less will be better off going with our top pick, Rocket Mortgage. Those looking for an FHA or VA loan can show rent and utility payments to help reach the requirements if you don’t have enough account types in your credit report.
Veterans are of particular focus for NBKC and VA loans make up 36% of the banks mortgages, even though they account for just 11% of mortgages overall.
Take a dive into NBKCs learning section and get to know more about topics including saving and navigating mortgage loans. This section is quirky, with a cool feel to it, and speaks a language we can all relate to, if not more-so younger borrowers.
Check out their article on what to expect when working with a mortgage loan officer and 5 ways to make your offer more alluring, to help arm you with some extra knowledge for this super important process.
In 2019, less than a year after its Fountain City Fintech launch, NBKC introduced a new program called Entrepreneur in Residence. This program was created to tackle common banking industry issues by helping to build new companies along the way, a cause that helps show the company’s commitment to community, and helping the little guy win.
SoFi is great for jumbo loan borrowers with good incomes who may be missing the right amount of savings for down payments.
- Fully-digital experience with a straightforward process
- Takes into account and considers non-traditional income, including from those who are self-employed
- Jumbo loan borrowers won’t need private mortgage insurance
- You won’t be able to avail of any government-backed loans, such as FHA or VA.
- No option to receive a home equity loan or HELOC.
SoFi, short for Social Finance, offers a complete digital experience for customers applying for a mortgage refinance.
This lender takes their customer experience to the next level by offering impressive customer benefits including career coaching, personalized financial advice and member events, such as networking experiences, to help you build your future, community and career.
The firms Pay Off event celebrates customers who have achieved paying off their loans and are looking forward to progressing to the next stage of their lives.
SoFi offers a range of other offerings too, including student loan refinancing, private student loans, and personal loans. The firms mortgage loans offers competitive rates, affordable down payments of just 10% for loans up to $3 million, an exclusive members discount of $500, and on hand help from loan officers.
You will need to pay for private mortgage insurance, or PMI, on conventional loan for down payments that are 20% or under. You won’t however, need PMI for jumbo loans.
If you qualify for a loan then SoFi can give you upfront pre-approval. This shows sellers that you are a serious buyer with the financial means to take you through a home purchase, and will set you up nicely when writing your offers.
After this, you’ll be assigned a loans officer to work with who will assist with your application, answer any questions you may have and help guide the process to make it as hassle-free as possible.
LoanDepot rounds our our list of the best mortgage brokers article because they too have a smooth and simple process for borrowers seeking to finance their mortgage.
- Offers a digital experience and assesses your documents quickly online
- Over 150 affiliated loan stores for those looking to speak to someone in-person
- Very active for FHA and VA loans
- Up to 3 points of prepaid interest rates and fees
- No home equity loans or lines of credit available.
LoanDepot offers both adjustable and fixed loans for buys, refinances, jumbo loans and government backed loans, except for the USDA Rural Development loans.
The firm offers a lifetime guarantee, which means that once you refinance with them, any and all fees will be waived, and appraisal fees will be reimbursed.
LoanDepots advisors aren’t paid commission, so they won’t try to steer you in any direction that isn’t for your benefit.
The lender is state licensed, and has funded over an incredible $100 billion in loans since 2010. They are also the 5th largest lender of VA-guaranteed home loans.
LoanDepot also prioritize renovation loans, offering FHA loans up to 203k in addition to home improvement loans. Both loans offer the flexibility to buy and improve a home with just one loan. You can also use these loans to refinance your existing mortgage and do some remodeling, too.
LoanDepot is a great option for borrowers who want some guidance throughout the process, and especially if you’re looking for a top-class refinancing option.
The Basics of Mortgages & Mortgage Investing
Taking out a mortgage is probably one of the biggest decisions you will make in your lifetime. So, it’s really important that you have the basics right to start, and you can learn the rest as you go.
Here are the answers to some of your most asked questions about mortgages and mortgage investing.
What Mortgage Can I Afford?
To calculate how much house you can afford different brokers and banks take different things into consideration. Generally, the lenders site will have a calculator that can give you an estimation.
There tends to be some standard primary things taken into consideration across the board too, such as your household income, money debts, credit score and any savings you have that you can use as a down payment.
That said, this will also vary from person to person depending on your preferences, for example you might want to put some of your money aside for long-term savings or to put towards other payments, which means that you’ll probably need to sit down and work that out first.
Overall though, it’s always a good idea to have at least 3 months of your housing payments saved up to give you a net to fall on.
Will Mortgage Rates Go Up?
The mortgage rates today are particularly low and the good news is; this is expected to continue into 2020.
The 2020 housing market is dependent on a mixture of things, including a countries economic status, the federal reserve and the housing market.
However, experts have predicted that the current strength of the job market and low mortgage rates in the U.S should sustain the housing market in 2020. The problem however, will be finding enough homes for people to buy.
Will Mortgage Rates Go Down After BREXIT?
Although the UK is set to leave the EU on January 31st 2020, there is still a lot of uncertainty surrounding the details, to say the least. The major thing that will affect mortgage rates is whether they leave with or without a deal.
That said, both alternatives could result in increased interest rates depending on the state of the economy. For example, if the economy begins to worsen after BREXIT, the government might lower interest rates as an incentive for growth.
Alternatively, if inflation begins, the government might turn to increasing interest rates.
Keep up to date with the status of BREXIT to get a sense of whether interest rates will fall or rise, as well as how BREXIT will affect you if you have a holiday planned, or what might happen any property or assets you have in the EU, after BREXIT.
Can Mortgage Offers Be Extended?
In most cases, lenders will allow you to extend your mortgage offer if needed. Banks have been dealing with people for a long time and understand that things don’t always go to plan.
If you think you might need to extend your mortgage you should speak to a mortgage lender as soon as you can. The quicker you speak to someone the quicker you will hopefully get it resolved, as they will usually need to be notified several weeks before your offer expires.
The extension will completely depend on your lender, but be prepared to show them more documents such as bank statements and payslips for the past six months to prove that your situation remains the same as when you were offered the mortgage.
What if I Can’t Get an Extension?
Be aware that mortgage lenders are under no obligation to extend your offer and if they don’t you will need to re-apply.
The application process will require a property evaluation and may cost you some hefty solicitors fees.
In addition to this, you will be put through the same process as your first application.
Can Mortgage Interest Be Offset Against Tax?
Homeowners can reduce their taxable income by the amount of interest paid on a qualified residence loan through the Mortgage Deduction.
The law surrounding the Mortgage Deduction has recently been updated by the Tax Cuts and Jobs Act (aka “Trump Tax Reform”), and will begin to take effect with files returned in 2019. So, whether you will be claiming it for the first time, or if you have claimed it before, you should read the new details of the law that could affect the amount you can write off this year.
In the U.K, new rules will take full effect by April 2020, which will result in landlords progressively losing tax relief on any buy-to-let mortgage fees.
A policy of allowing landlords to declare their rental income has been gradually phased out since 2017 which will result in increased tax bills for landlords.
Therefore, the once popular option of borrowing money through a buy-to-let mortgage will no longer be a good option. The Money Advice Service has written more about buy-to-let property services; how they work, and the risks and returns of investing in one.
Who Buys Mortgage-Backed Securities?
Non-agency backed, more private label securities dramatically fell in popularity a few years ago after they were blamed for causing the financial crisis, wiping out trillions of dollars in wealth. The 2015 movie, The Big Short offers a glimpse into the financial motivations behind selling mortgage-backed securities.
But they are still available and can usually be availed of in fixed-income mutual funds and real estate investment trusts.
Who Should Own Mortgage Backed Securities and Who Should Not?
Mortgage-backed securities (MBS) are considered safe by many experts, and can be a valuable part of any investor’s portfolio.
Mortgage-backed securities can be thought of as bonds that allow their owners to share in interest and principal received from homeowners’ mortgage payments. They were made famous during the subprime financial crisis of 2008, when MBS packaged with billions of dollars in subprime loans led to the 2008 global financial crisis, ultimately putting most of the world in an economic recession and destroying trillions of dollars in wealth.
Agency-backed securities are the most common, and include Ginnie Maes, which are guaranteed by the Federal Housing Admission, or securities from government authorized companies like Freddie Mac.
Investors can buy these securities from bond brokers, but most commonly, investors buy mutual funds, or REITS that own mortgages, as opposed to physical real estate.
While they are considered safer than before, non-agency backed securities still hold a high risk because they can be hit heavily if the homeowners stop paying their mortgage.
Agency-backed securities hold real risk too, through pre-payment and interest rates. Prepayment risks happen when homeowners refinance and it’s when your interest earnings stop.
Interest rate risk is when a security loses value because newer ones bring higher yields.
Mortgage Lender vs. Bank
A key difference between a mortgage lender and a bank is; a bank mortgage officer can only offer you the products that their institution has, while a mortgage broker acts as a kind of middle-man between lots of lenders and is usually paid a referral fee by the lender.
Here are some advantages of choosing a bank versus a broker.
- You may have already built a relationship with a certain bank and its staff which can make the process feel a little less overwhelming.
- Can offer a better view of the finances involved and products available, but may not be a specialist in mortgages.
- Usually can offer a more efficient approval process considering the bank will already have access to a lot of your financial details for example, your account balance and credit history, especially if you have taken out a loan with them before.
- Banks are generally safer options when financial instability hits.
- Can save time; there is only one application to fill out and you won’t have to search for quotes from individual lenders.
- Because they’re dealing with multiple lenders, you are more likely to get better rates
- Mortgage lenders have specialists in mortgages who can provide detailed and valuable information
- If you have trouble getting approved by a bank, a mortgage lender may be able to help you.
How to Get Started
Whether you opt for a mortgage lender or a bank, down payment rules for conventional mortgages are the same for both.
You will need to put a 5% down payment on a property valued less than $500,000. Properties priced from $500,000 to $999,999 will cost you 5% for the initial $500,000 and 10% for everything exceeding this.
Those looking to buy a property worth $1 million or over will need to put down 20%. If you want to pay less than 20%, you will need mortgage loan insurance.
Overall, make sure you do you homework and ask questions to help you understand what exactly you are committing to.