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Ready to start adulting? Buying a home is a major milestone on your journey. But first, you need to know which of the top-rated mortgage lenders is best for you. You’re in good company — a third of the loans that the best home loan lenders make are to first-time homebuyers. You’re sure to find that the best mortgage companies have first-time homebuyer programs to make the process easier and more accessible.
And even if this isn’t your first time at the rodeo, it’s good to keep yourself updated about the top mortgage lenders and what they’re doing differently since the last time you purchased a home. The Simple Dollar compared what the top-rated mortgage companies have to offer and examined how they measure up in categories such as customer service, loan process, and buyer assistance, to review the best mortgage lenders for 2020.
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In this article
Current mortgage rates
According to Bankrate’s latest survey of the nation’s largest mortgage lenders, these are the current refinance average rates for a 30-year, 15-year fixed and 5/1 adjustable-rate mortgage (ARM) refinance rates among others.
Highly rated by customers, Rocket Loans streamlines the home lending process into a simple online experience. Rocket Mortgage is the best home lender thanks to an easy application process, high customer satisfaction, options for many types of buyers, and competitive mortgage rates, so launch yourself over to the website and get started.
Rocket Loans is the home lending division of Quicken Loans and the largest mortgage provider in the country. The home loan process happens entirely online, but you’ll have access to help through online chat or by phone. Prequalifying is easy — answer Rocket Mortgage’s questions and provide information such as your name, income, employment information and Social Security number to get an answer in just a few minutes.
Buyers with fair or poor credit may have mortgage options through Rocket Mortgage. The lender looks at more than your credit score, such as down payment amount and income. Plus, it provides FHA loans for low-income buyers.
Keep SunTrust in mind as your plan B if one of the other mortgage lenders on your wish list don’t come through with the mortgage terms you were hoping for. Give SunTrust a shot when you need some guidance through the online or mobile application process.
SunTrust, now known as Truist after a merger with BB&T, offers a wide range of mortgage loan products in all states except Alaska, Arizona, Hawaii and Oregon. The prequalification and application process can be completed online or through the mobile app by following the clear and simple steps. You’ll need to set up an account and start an application to get customized interest rates, but once you’re happy with what SunTrust/Truist has to offer, a mortgage advisor will work with you along the way.
Borrowers of nearly every type may qualify for a loan through SunTrust. If you have less-than-perfect credit, you still have a good shot at a home loan — besides the traditional home mortgage, SunTrust provides FHA, VA and USDA loans, which look at more than your FICO score. And if you have less than 20% to put down, check out its affordable loan programs through Fannie Mae and Freddie Mac.
Chase’s affordable lending program for buyers that need a chance to make their homeownership dream come true is highly recommended. f you don’t fit the bill of what banks expect a mortgage borrower to look like, Chase has a program for you.
Chase is one of the largest traditional banks in the country, offering the standard fare of mortgages through its local branches. But its DreaMaker Mortgage Program expands home loans to customers who would love to buy a home, but may be denied or overlooked by other lenders.
The DreaMaker program provides up to $3,000 in grants and assistance, as well as special concessions to make a mortgage more accessible. The grant includes $2,500 toward your home purchase through a Chase Homebuyer Grant and a $500 reward for completing homebuyer education courses. Besides the grant, you may qualify for a low 3% down payment and a reduced price on private mortgage insurance that you’re required to pay when you put down less than 20%.
Cash in on the perks available to you through the Bank of America Preferred Rewards program to get a discount on your closing costs. If you’re a BofA Preferred Rewards member, you’ll save money on your origination fees.
There’s more to a home loan than the interest rate. There are a variety of fees you’ll need to pay at closing, as well, that can cost you as much as 2% to 5% of the home price you’re financing. If you already bank with BofA, you can save some money through the Bank of America Preferred Rewards program. You’ll have access to discounts of $200 to $600 on closing fees or a small interest rate reduction.
Besides the discounts, Bank of America is transforming from a traditional bank known for its wide network of physical branches to a financial institution with a strong online presence. You can prequalify for a home mortgage using the bank’s mobile app or website.
SoFi is new to mortgage lending and it’s looking to disrupt how you borrow money. A fully-digital mortgage loan process isn’t a new thing, but SoFi has created a membership program with perks for borrowers. One of the perks is a $500 discount on your loan origination fee at closing. The discount can come in handy when you finally get your home’s keys. Take the savings on the $1,495 loan processing fee and buy yourself a sofa for your new home.
SoFi doesn’t provide any of the government-backed loans that make it easy for buyers with lower credit to qualify, but it tries to make borrowing more affordable by accepting 10% down payments on home loans.
The best mortgage lender for borrowers with solid financials but a few blips on their credit score. If you have some credit issues but feel you have a convincing story as to why you’re a good candidate for a home loan, New American Funding may be more open than other lenders to hear you out.
New American Funding is a California-based, family-owned business that services loans everywhere except Hawaii and New York. The lender does things differently than any other of the best mortgage lenders in our roundup — its underwriting process is fully manual. Wondering what that means? Your mortgage application will be reviewed by a human and not loan software and algorithms, which could work to your advantage.
You’ll be more than just a series of numbers — underwriters may consider other factors that aren’t weighed as heavily during a computerized underwriting process. Paired with the lender’s offerings of low-credit-friendly mortgages for credit scores as low as 620 from the FHA, USDA, and VA, your chances of getting approved to fund your dream home are higher.
Offers some of the best interest rates for borrowers with good credit and strong financials. If you work for certain medical, car dealerships, educational institutions and more, you could save on the $1,290 closing fee.
Guaranteed Rate aims to be the premier mortgage lender from all the options available. They provide a fully online process and home mortgages for nearly every type of buyers. You can complete the entire mortgage application process online and from the comfort of your own home. You don’t even have to worry about making photocopies or mailing the company documents — Guaranteed Rate allows you to upload your documents through the online portal.
Check with your company’s HR department about whether they’ve partnered with Guaranteed Rate to provide employees preferred discounts. Professionals in the medical and teaching fields, as well as employees of larger companies may have access to special discounts, such as no closing fees.
What is a mortgage?
A mortgage is a type of loan used to pay for real estate. Mortgages are one of the most common loans because most people don’t have a few hundred thousand dollars to pay cash for a house.
The process of qualifying and getting a mortgage used to take some time but online lenders today make it possible to answer a few questions through their online mortgage portals and get pre-approved for a mortgage in a matter of minutes. The interest rate will depend on a few factors, such as your credit score, employment history, and income.
When you feel it’s time to start house hunting, it’s a good idea to prequalify for a mortgage so you know how much house you can afford and what it’s going to cost you. Before you get started, it’s important to make sure your credit score is as high as possible, you have some money set aside for a down payment and you’ve paid down your debts. Here’s how mortgages work:
You decide you’d like a mortgage and do some research about the type of loan you’d like
You choose the length of the home loan and if you’d like a fixed or adjustable-rate mortgage
You apply for the type of mortgage by providing details about your credit history and financials for the last couple of years
A lending institution looks at your overall financial picture to decide if you’re a creditworthy borrower
If the lender believes you’re a good candidate, it will provide you with a loan amount and interest rate
If you agree, you’ll work with the lender to close on the loan for a house of your choice and make a downpayment to move in, which is typically 20% of the loan amount
The lender will fund the home purchase and you’ll pay it back through monthly payments for the agreed-to length of time
The coronavirus pandemic has led to an economic slowdown that has pushed the federal government to create a stimulus package to protect the economy. The federal stimulus means that borrowing is cheaper than ever, pushing mortgage interest rates down to a new low. Now is one of the best times in history to borrow money for a home purchase — the low interest rates will result in lower monthly mortgage payments. In addition, the lower interest rates have the potential to save you tens of thousands of dollars in interest charges over the life of your mortgage.
Types of mortgages
Conventional: A conventional loan is a mortgage from a private lender, as opposed to one you get from a government program. Conventional loans have a fixed interest rate so you know what your monthly payment will be for the life of the loan. Conventional loans are limited to $510,400 or $765,600 in high cost areas.
Jumbo: If you need to borrow more than the conventional loan amount allows, you’ll need a jumbo loan. They may come with stricter requirements on your credit and financials.
ARM: Short for adjustable rate mortgages, they’re a type of mortgage in which the interest rate can change over the life of the mortgage. The initial interest rate is typically fixed for a period of time, such as three, five, or seven years. Once the period of time is up, the interest rate resets on a monthly or annual basis.
FHA/VA/USDA: These are government-backed mortgages for first-time, low-income, farmers, rural or military buyers.
Choosing the best mortgage lender takes a lot of research and pre-planning. It’s important for you to know what type of mortgage you’d like and have an idea of how much you’re comfortable paying in monthly payments. Once you have a general idea, follow these steps to choose the best mortgage lender:
Get your financials in order. Lenders will look at your credit score, the amount of debt you have, your income and your savings. Pay down your loans, stay up to date on your payments and review your credit score for any errors and report them.
Read about a few different types of mortgage lenders to find ones that resonate with you.
Do your research about the lenders you’re interested in by checking out reviews online.
Reach out to the lenders you’re interested in with a list of questions about interest rates, application process, and what type of help the lender would provide through the application process.
Apply to get prequalified to know how much you’re approved for and the cost of your loan.
Evaluate what each lender offers you and choose the terms that best work for your situation.
Mortgage lender FAQs
There are many mortgage programs that don’t require you to put 20% down, although it may be in your best interest to do so. Otherwise, you’ll have to pay private mortgage insurance. In addition, not paying 20% down means your monthly mortgage payments will be higher.
Comparison shopping multiple mortgage lenders is a smart idea. You’ll be able to see what each mortgage lender offers you and who has the best rates and terms for your needs. Make sure you know whether the lender does a hard or soft pull on your credit to provide you with customized interest rates. Each credit inquiry could affect your credit score.
A mortgage is a long-term commitment. You’ll be responsible for payments for up to 30 years. Make sure you’re working with the best mortgage lender. There are a variety of mortgage companies out there ready to help you with your unique home loan needs. Lenders typically specialize in certain types of customers or products. It’s a good idea to compare lenders and review their interest rates, fees and terms before you decide.
We welcome your feedback on this article and would love to hear about your experience with the mortgages we recommend. Contact us at firstname.lastname@example.org with comments or questions.
We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.
Our editorial team:
Identifies five factors to compare across each brand
Determines the rating criteria for each factor
Calculate an average of those five factor scores to get one SimpleScore
We break down each of these five factors and their rating criteria for our review of the best mortgage companies.
Why do some brands have different SimpleScores on different pages?
Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores because they offer more than one financial solution — like home loans, auto loans, personal loans and more.
For instance, in our Bank of America Mortgage Review, we give the company a 3.8 out 5 based on our five rating factors for mortgages. In our Bank of America Auto Loans Review, we give the company a 4.4 out of 5 based on our rating factors for auto loans. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of a brand’s services and how it compares to competitors’ services.
Mortgage lending companies that provide more perks receive a higher score from us.
Hard/Soft credit checks
We know that credit checks affect your score –– that’s why we favor companies that offer soft credit checks or hard credit checks when you want to see your pre-approval rates.
We use the J.D. Power 2019 Mortgage Origination Satisfaction Study℠ to find out how customers rate their experience with each company. (If a company is not included in J.D. Power’s study, we skip this rating factor and average the remaining factor scores.)
Mortgage lenders that offer more products for their home loans are given higher scores.
Fees can add up fast. Companies that don’t require as many fees for your home loan receive a higher score with us.
Cynthia Paez Bowman is a finance, real estate and international business journalist. Her work has been featured in Business Jet Traveler, MSN, CheatSheet.com, Bankrate.com and Freshome.com.
She owns and operates a small digital marketing and public relations firm that works with select startups and women-owned businesses to provide growth and visibility. Cynthia splits her time between Los Angeles, California, and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development
Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.