I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.
Picking a mortgage lender is a crucial part of the home buying experience, and finding the best one can make all the difference.
Buy or refinance your home with Better Mortgage for a seamless online mortgage experience backed by superior customer support. They are my #1 recommended mortgage lender.
Figure offers a simpler, faster way to find the loan that's right for you. If you are trying to refinance your mortgage, they are an excellent lender that I recommend using.
The best mortgage lenders offer competitive mortgage rates, an easy-to-navigate application process, and won't surprise you with high-fees. Finding all of that in one company isn't easy, but it's possible.
Below, we cover seven companies (plus a bonus one) that fit the bill.
The Best Mortgage Lenders in 2023
- Better Mortgage - Best Overall
- Figure - Best for Refinancing
- New American Funding - Best for Lower Credit Scores
- AmeriSave - Best Loan Options
- Bethpage Federal Credit Union - Best Credit Union
- loanDepot - Fastest Pre-approvals
- Lendingtree - Best Marketplace
Comparison of Mortgage Lenders
Buy or refinance your home with Better Mortgage for a seamless online mortgage experience backed by superior customer support.
Figure offers a simpler, faster way to find the loan that's right for you.
New American Funding is a direct mortgage lender offering an array of mortgage loan options including purchase, refinance, and first time home buyer loans.
AmeriSave Mortgage Corporation is a direct mortgage lender operating in 49 states and DC (It does not originate mortgages for properties in NY).
Whether you're looking for fixed, adjustable or refinance, Bethpage has the right mortgage for you.
An emerging-growth nonbank consumer lender and market leader offering home mortgage, refinance and home equity loan products in all 50 states.
Compare home loan offers from some of America's top lenders. Get a mortgage loan in as little as 30 days.
1. Better Mortgage - Best Overall
Better mortgage offers streamlined loan applications with low rates for tech-savvy users. Though there's still access to human help, Better Mortgage caters to those who want a completely online experience, and because of that, it's fast.
They offer underwriter-approved pre-approval in under twenty-four hours and guarantee purchase loans will close on time. Otherwise, they'll pay you $2k!
By working with a Better real-estate agent as well, you'll have access to other perks like appraisal guarantees.
2. Figure - Best for Refinancing
Figure offers purchase and refinancing mortgages with no maintenance or prepayment fees and promises funding in as little as five days. Their services are completely online, though there is access to live help if needed.
Figure excels at streamlining the typical refinancing process and promises you'll be able to close within weeks rather than months. The average time to close a loan is about twenty days, and they offer discounted APRs when you sign up for auto-pay or credit union membership.
3. New American Funding - Best for Lower Credit Scores
New American Funding aims to help finance buyers who are traditionally underserved. If you have a low credit score, non-traditional employment, or some other reason that keeps traditional financial institutions from lending to you, New American Funding is a great option.
They use manual rather than automated underwriting, which gives them more flexibility when lending. They also offer to help home buyers find payment assistance and have first-time homebuyer programs.
4. AmeriSave - Best Loan Options
AmeriSave offers a wide range of mortgage products, including purchase loans, refinancing loans, ARMS, fixed-rate mortgages, FHA, VA, and USDA loans. They also offer cash-out refi's, which can be helpful when you need to consolidate debt.
Their application process is mobile-friendly and easy to complete. And, they're available in 49 states, with New York being the sole exception.
5. Bethpage Federal Credit Union - Best Credit Union
Working with a credit union often means a better rate because credit unions are not-for-profit and don't pay federal taxes. You will have to join Bethpage Credit Union to use their mortgage services, but that's not hard.
It's a matter of opening a $5 savings account.
Once you do that, you have access to a wide range of mortgage products, including home equity lines of credit, VA, FHA, and jumbo loans. Though Bethpage only has physical branches in the Long Island area, you can obtain a mortgage from them over the phone from most states.
6. loanDepot - Fastest Pre-Approval
LoanDepot offers a streamlined "SmartLoan" system that verifies financial information, employment history and runs a credit check in a matter of minutes, which makes pre-approval lightning fast.
Though they offer a relatively high origination fee, they also promise a "lifetime guarantee" that states any future refinancing will be without any lender fees. There are terms on the promise, of course, but a promise of no future fees is still a nice perk.
7. Lendingtree - Best Marketplace
Lendingtree isn't a financial institution; it's a marketplace. So, with one free application, you can gain access to offers you qualify for from several lenders. That allows you to compare loans easily and find the best rates.
Because lenders know they're competing for your business, they may offer lower rates than they would have elsewhere, and with LendingTree, you can quickly find financial institutions that will loan to you even if you have lower credit.
How Do Mortgages Work?
Mortgages are a contract between a borrower and a lender that outlines repayment terms for a loan.
Typically, you would take out a mortgage from a financial institution to purchase a home or property. The lender usually requires a down payment and then monthly payments to cover a portion of the loan's principal plus interest.
Types of Mortgage Loans
There are several types of mortgage loans, including purchase loans, refinancing loans, reverse mortgages, jumbo loans, FHA loans, VA loans, and USDA loans.
- Purchase Loans: These are straightforward home loans that you would take out to purchase a property. They usually have 15 or 30-year terms and can have a fixed or adjustable rate.
- Refinancing Loans: These are loans you would take out to pay off an existing loan. So, if you refinance your home, you would take out a refinancing loan to pay off the original purchase loan. Usually, you would do this to gain more favorable loan terms.
- Reverse Mortgages: Reverse mortgages allow anyone over 62 years old to tap into the home equity they've acquired and borrow against its value. Sometimes they're beneficial, but you also have to watch out for reverse mortgage scams.
- Jumbo Loans: These are mortgages that exceed conforming loan limits set by the Federal Housing Finance Agency (FHFA). As of January 1, 2022, the FHFA conforming loan limit is $647,200. Anything over that would be a jumbo loan.
- FHA Loans: With these loans, the Federal Housing Administration (FHA) ensures the loan so that the lender can provide lower down payments, easier qualifications, and low closing costs. They often apply for first-time home buyers and reverse mortgages.
- VA Loans: These are mortgages offered by the U.S. Department of Veterans Affairs. They're only available to active and veteran service personnel or their surviving spouses and are backed by the U.S. government but issued through private lenders.
- USDA Loans: USDA loans are for rural homebuyers who can't always get a traditional mortgage. They require no down payment and are guaranteed by the U.S. Department of Agriculture.
Types of Mortgage Rates
Mortgage rates are usually either fixed or adjustable.
Fixed-rate mortgages are common for home buyers. With them, the annual percentage rate (APR) is fixed for the loan duration, meaning it will not change. If the loan terms state a 4% APR, that will remain until the duration of the loan, be it 15, 20, or 30 years, is reached.
A set monthly payment is appealing to most homebuyers, but it's important to note that the longer the loan duration, the more you'll end up paying in interest.
Up until the Great Recession in 2008, adjustable-rate mortgages (ARM) were common for home buyers, but today, you're much more likely to see them in commercial real estate.
That's because adjustable-rate mortgages only make sense if you plan to sell the property quickly. With an ARM, the APR can change over the duration of the loan.
Usually, the rates are tied to an index, and they adjust according to a repayment schedule spelled out in the loan terms. They also typically include a balloon payment.
So, let's say you see a 5/1 ARM. That means that each year, the APR will adjust by .05%, with a balloon payment due in year five. The APR in an adjustable-rate mortgage usually starts very low, making them incredibly appealing, but the increases can quickly add up.
So, unless you plan on selling the property fast, an ARM on a residential property doesn't make much sense.
How to Get a Mortgage Loan
Getting a mortgage loan is a standard step in the home buying process, and your real estate agent or lender will likely be able to walk you through it. Still, the process can feel overwhelming, so let's break it down:
- Start by determining how much you can afford for a monthly payment. Consider your income and expenses and decide what's reasonable.
Many choose to use the unofficial 28/36 rule, which states that your monthly payment should be no more than 28% of your monthly income, and your combined debts shouldn't exceed more than 36% of your total income.
- Know your credit score and what it means. Anything over 670 is considered good, and anything under 580 is poor. The better your credit, the better terms you can expect, but even those with below-average credit can typically find a mortgage lender.
- Research home prices in your desired home area and consider other costs. The home price will greatly determine your monthly payment, but it's important to understand other potential costs as well.
Property taxes, private mortgage insurance, closing costs, and HOA fees can all add up. The more you understand the total price, the better equipped you'll be to pick a lending agreement you can meet.
- Organize the paperwork that financial institutions will want to see. This includes two years of taxes, one year of bank records, documentation of any financial holdings, and personal identification. You may also need two years of salary or employment history.
- Gain pre-approval before you put an offer down. Most mortgage companies will offer a pre-approval letter if it looks like you'll meet their terms.
Pre-approval isn't a mortgage agreement, and it doesn't mean you have to use the mortgage company that offers you one. It does look good to home sellers, though, and in a competitive market, having it is crucial.
Finding the best mortgage lender can be tricky. You'll want one with low fees, competitive APR, and a streamlined application process. All of the companies on this list offer that and then some.
So, get your paperwork together and reach out to one before you go home shopping. Doing so will take at least a little bit of stress out of the home buying process.
Mortgage Lender FAQ's
Before we go, let's see if we can answer a few frequently asked questions.
Closing costs typically range from 3%-5% of the home's purchase price. However, they can be as low as one percent, depending on the lender.
Private Mortgage Insurance is a type of insurance conventional lenders will require when you put down less than 20% on a home. This insurance protects the lender, not you, so if you're putting down 20% or more, you should try to negotiate the need for it.
You should seek pre-approval for a mortgage before looking for a home, especially in a competitive market. Pre-approval doesn't mean you have to go with that mortgage lender, though.
You can always choose a different lender when you actually make the home purchase.
To get pre-approved for a mortgage, you'll seek out a mortgage lender and then provide the following: proof of assets, proof of income, good credit, employment verification.
When applying for a mortgage, you'll need tax records from the past two years, banking records from the last year, documentation of any financial holdings, your personal identification, and your salary history.
Buy or refinance your home with Better Mortgage for a seamless online mortgage experience backed by superior customer support.
I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.More Posts