One of the most expensive things you’ll ever buy in your life is your home. Consequently, picking the right mortgage to buy is super important. A little bit of difference in interest rates or other terms can lead to thousands of dollars either saved or spent.
There are plenty of lender options on the market, you might get overwhelmed and not know where to start. There are traditional lenders and online ones, local lenders and nationwide ones, and lenders that specialize in specific types of loans.
A great way to start looking into them is to find some that fit your needs and get quotes from them. Read below for more information on what they best mortgage lenders of the year.
Why Shop Around?
The most important thing about getting a mortgage is looking around first. All lenders have to comply to certain standards. However, every one has their own flexibility in the implementation of these standards. After you get your first few offers, you might be taken back over the tons of varieties you see in rates and terms. Additionally, there are tons of loan options to consider, some might fit your financial profile and personal preference more than others.
For instance, if you don’t have a lot of extra money saved up for closing costs, a loan with a higher rate is better for you. But, if you want to lower payments each month, you might opt to pay extra upfront so you can qualify for a lower interest rate.
Be sure to compare and contrast to determine which lender can give you the best deal for your financial profile while committing to a high customer satisfaction standard.
Important Factors to Consider
When you compare one lender to another, you should keep some things in mind such as:
Type of Lender
There are 3 types of lenders: direct, mortgage, and loan-matching companies. Direct lenders will process your application and issue the loan to you directly. Mortgage brokers find loan products that match your needs and partner with lenders to approve your mortgage. Loan-matching companies pass your information to a bunch of lenders who will then connect with you to discuss your mortgage.
Direct lenders underwrite and finance their own loan, meaning they can offer you a full suite of services. Picking to go with a direct lender means you deal with just one company for all your mortgage needs: paying for your house, making your contract, and helping you each step of the way. Since everything is taken care of in-house, going with a direct lender usually results in a faster mortgage process.
Mortgage brokers tend to be more local, rather than national. You might opt for one if you want a more personalized experience, or if you have a special circumstance that needs individual consideration.
With loan-matching companies, you have no control over who gets your information or who will reach out to you. This is a good route if you don’t have time to do your own research and if you want to receive a high number of quotes. However, if you go with a loan-matching company, you will get bombarded with phone calls and emails from lenders trying to win you over.
Mortgage Options
There are lots of different types of mortgages, every one with their own interest rate, fees, terms, and flexibility. Any one of those things can have an affect on loan costs. Your interest rate can be fixed, floating, or a combination of both. Additionally, there are different repayment structures to pick from as well. It’s a lot to consider, so here are some of the popular mortgage products in the table below:
| Mortgage Product | Key Benefits | Good Option If You.. |
| Fixed-Rate Loans | – Locked interest rate – Monthly payment stays the same |
– Want security & predictability – Plan to stay in your home a long time |
| Adjustable-Rate Mortgages (ARMs) | – Initial lower monthly payments – Interest rate can change periodically (take advantage of falling rates) |
– Want flexibility – Plan on moving within the next few years |
| Jumbo Loans | – Increased purchase limits for higher-priced properties – Fixed-rate & ARM options |
– Are purchasing a home that’s more than conforming loan limits ($453,100) |
| Low Down Payment (Home Possible, HomeRun, HomeReady) Mortgages | – 3% to 5% down solution – Flexible source of down payment – Cancellable PMI once your home equity reaches a certain percentage or no PMI required |
– Are a low- to moderate-income borrower – Are a borrower in high-cost or underserved communities |
| Federal Housing Authority (FHA) Loans | – Insured by the FHA – Minimum 3.5% down payment – 500+ credit score |
– Need flexible qualification requirements – Have limited funds for down payment |
| Department of Veterans Affairs (VA) Loans | – Backed by the government – 0% down payment – No PMI required – Flexible qualification requirements |
– Are an active military member or veteran – Are a surviving spouse of a military member who died as a result of a military-related disability – Are a first-time homebuyer or looking to refinance |
| Department of Agriculture (USDA) Loans | – 0% down payment – Low interest rates |
– Are looking to buy a home in a rural area – Have a steady, modest income – Are unable to get a conventional loan |
| Physician Loans | – Low down payment – No PMI required – Higher loan balances |
– Are a physician, dentist or other eligible medical professional |
| Bridge Loans | – Buy another home before selling your existing home | – Have not yet sold your existing home before closing |
| Home Improvement Loans | – Flexible usage – Low, fixed rates |
– Are looking to increase your property value – Want to make improvements without using home’s equity |
| Interest-Only Mortgages | – Pay only the interest on the loan every month for a set term – After term, rate is variable |
– Know that you will sell the home within a short period of time – Want the initial payment to be lower |
| Reverse Mortgages | – Home’s equity is paid out to the homeowner monthly – Eliminate existing mortgage – Loan balance does not need to be repaid until the borrower dies, sells the home, or permanently moves out |
– Are at least 62 years old – Don’t plan to move – Want to access your home equity to supplement your income in retirement |
| HARP Refinancing | – Reduce your interest rate – Lower monthly payments – No appraisal required |
– Have little or no equity to refinance into more affordable mortgages – LTV ratios equal or greater than 80% |
| Home Equity Loans | – A fixed amount, secured by the equity in your home – Wide range of uses |
– Need funds to cover larger expenses |
Interest Rates
If it’s your first time buying a house, your mortgage decision will heavily depend on the interest rate. It will make sense if you think about how half a percentage point carries a large impact on your monthly payments and the amount you owe over the course of your loan. Furthermore, for example, a $250,000 mortgage over 30 years will be:
| Interest Rate | 4.5% | 5% |
| Monthly Payment | $1,267 | $1,342 |
| Total Interest | $206,120 | $233,120 |
| Total Payment | $456,120 | $483,120 |
Freddie Mac states that since early October 2018, the national mortgage interest rate average was around 4.71% for a 30-year fixed rate mortgage with 0.4 points. Usually, points are fees that you pay upfront to the lender so you can lower your long-term interest rates. One point is normally 1% of the mortgage value.
You’ll be able to use these figures as the standard average. In other words, you can compare it to other lenders’ quotes. Additionally, see which ones come with good interest rates, fees, and closing costs as well.
Customer Service
There are some lenders that will walk you through the mortgage process step-by-step. Other lenders won’t even bother returning your calls. For you to be satisfied, you need consistency and attention to detail. The lender should be entirely present from initial interview to every follow-up. Plus, you want your mortgage to be handled carefully and with respect as well.
When you interview loan officers, try to see what their attitude is towards lending and see if it matches well with yours. Do they want you to look at expensive homes outside of your specific budget? Can they tell you more about closing costs and other fees too? What kind of down payment do you need? How fast can you close when you find the house you’re looking for? These are the types of questions you need to ask when interviewing lenders.
Availability
A lender doesn’t have to have a wide availability to be able to offer good rates and customer service. However, it sucks when you see that a mortgage company you like doesn’t serve your state.
But, if the lender does work in your area and it has excellent reviews, then you should go for it. Especially, if you like face-to-face assistance. Local loan officers will want to process less loans. This way, they have more time for a personalized service instead. Additionally, they are familiar with the housing market in your region too.
Online Platform
Now, borrowers are going online to complete the entire mortgage process. In other words, it’s important for lenders to make their online presence professional, user-friendly, informative, and streamlined.
Usually, the perfect online mortgage platform has: loan rates that you can find easily, a resource center with mortgage calculators, a preapproval application, a live chat, and the option to apply via your phone.
Pre-Application To-Do’s
Before you start your mortgage process, here are some things you must do starting at least 6 months before applying to one.
Down Payment
To apply for majority mortgage loans, you need to cover the down payment and closing costs. To make the biggest down payment, you should start saving at least 6 months before you apply for one.
Credit Report
Be sure that you get a copy of your credit report and work on paying on time to get your score as high as possible. Make sure that you settle any outstanding bills, dispute any errors, and don’t take on extra credit.
Preapproval
After you get your down payment and the best possible credit report, you’ll be able to apply for preapproval. This will show sellers that you can be taken seriously and that your finances are stable.
House Hunting
Get an eligible real estate agent to help you in the home-buying process. They can be your best advocate when it comes down to looking for the perfect home for you.
Rocket Mortgage by Quicken Loans: Best Overall Lender
The good. This top pick offers everything most people are looking for in a mortgage lender. It will include: mortgage products, low interest rates, great customer support, wide availability, and a streamlined online process for rapid approval. This way, you can get preapproved in about 30 minutes.
The bad. As a nationwide, online mortgage company, Quicken Loans will not be able to give you the local touch you’d usually get from working with a local bank. Additionally, if face-to-face interactions and local insight are important to you, then consider a more regional option instead.
Here’s our review over Rocket Mortgage by Quicken Loans.
Better Mortgage: Best Online Lender
Runner Up: Guaranteed Rate
The Good. Made for the tech-savvy borrower that prefers an online experience. Better Mortgage comes with a super user-friendly and seamless application process. Additionally, it has comparable rates, great customer support, and fast approvals. Furthermore, the company doesn’t come with any origination fees at all.
The Bad. Better Mortgage will not offer government-backed loans and only serves 14 states plus the Disctrict of Columbia with no brick-and-mortar branches.
Check out our review of Better Mortgage here.
Chase Mortgage: Best Traditional Bank Lender
Runner Up: CitiMortgage
The Good. Compared to the major banks in the United States, Chase offers the best mix of mortgage product variety, lower fees, and higher customer satisfaction. Banks are a great option if you want the traditional mortgage experience of face-to-face interaction with a human loan officer. Chase has more than 5,3000 branches with high-tech online and mobile apps to manage your mortgage. Being a loyal Chase customer, you can make use of the discounts on mortgage rates and fees.
The Bad. Chase brick-and-mortar branches are usually closer to major cities. If there isn’t one near you, then the chances of personal interaction will not apply. Normally, Chase will come with higher closing fees compared to non-bank lenders.
Here’s a review of Chase Mortgage.
SoFi: Best Lender for First-Time Buyers
Runner Up: Alliant Credit Union
The Good. SoFi comes with amazing customer support, accepts low down payments, and has alternative methods of assessing credit. In other words, this is an excellent option if you’re a first-time homebuyer. Many other lenders will look at your financial past to see how eligible you are. SoFi will go over other details such as: educational background and professional history to see what your future financial behavior can be like. In other words, for people with shorter credit histories, and higher debits (younger borrowers that owe more on student loans), are eligible. Especially if you earn a steady income and have a solid record of repaying the money you owe. The extra bonuses include: no charge for origination fees, no need for mortgage insurance, and receive a 0.125% rate discount.
The Bad. If you’re a more traditional borrower, there’s a good chance that you won’t like the lack of physical branches. This online lender isn’t available in 21 states. SoFi offers a limited amount of products that don’t include government-backed loans like FHA and VA mortgages.
Check out this review of SoFi Mortgage.
SunTrust Mortgage: Best Lender for Low Down Payments
Runner Up: Carrington Mortgage Services
The Good. SunTrust Mortgage comes with a large variety of low down payment options like: FHA, VA, USDA, physician, HomeReady, and Home Possible loans. This regional bank comes in around #5 in the J.D. Power 2018 U.S. Primary Mortgage Servicer Satisfaction Study. In other words, it does much better compared to others in the market when managing relationships with their borrowers. SunTrust gives you the choice to apply online, with SmartGUIDE pre-populating and validating the application by getting information from documents and bank statements. This makes it easier and smoother for you to apply.
The Bad. SunTrust originates loans from all states except for Hawaii and Alaska. Plus, it only has 1,500 branches and is mostly concentrated in Southeastern United States with headquarters in Atlanta, Georgia.
Check out this review on SunTrust Mortgage.
Lenda: Best Customer Service
The Good. Lenda’s high level of customer satisfaction is from their complete transparency with loan costs and keeping their borrowers informed with every step of the way. When you apply for a mortgage, it’s fast and simple, thanks to their online platform where you’ll be able to upload your documents. The direct lender is all online, so it comes with low overhead charges which Lenda gives to you with their competitive rates. Additionally, they waive the origination and broker fees as well. The average time to close is around 13 days, which is much faster than most other lenders. Furthermore, you can get support from a dedicated Home Loan Advisor if you need it.
The Bad. Lenda is a growing company, which means it’s not available in all states just yet. Only people who live in Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Oregon, Pennsylvania, Texas, Virginia, and Washington are able to apply. Lenda also offers a small portfolio of products that comes with conventional fixed-rate loans for purchase and refinancing. Since they are an online lender, they have no physical branches for a face-to-face interaction.
Here’s a review on Lenda.
Busey Home Mortgage: Best Customer Service from a Traditional Bank
The Good. Busey Bank comes with an award-winning customer service with top recognition from LendingTree and Zillow based on borrower ratings and reviews. They also have top honors from the Illinois Housing Development Authority 8 years in a row. Busey comes with in-house mortgage experts and a large variety of loan product. They have special programs in specific areas that help with down payment and closing charges.
The Bad. Busey doesn’t publish their rates and fees online. In other words, you have to contact a loan officer to get concrete numbers.
Check out a review of Busey Home Mortgage.
LoanDepot: Best Lender for Refinancing
Runner Up: First Internet Bank
The Good. LoanDepot comes with an easy and smooth refinance process, so good that they have funded more than $70 billion for mortgage refinancing. Their loan officers aren’t rewarded to promote one mortgage product over another. In other words, you won’t feel pressured to take a loan that doesn’t match what you want. Plus, after your first refinance with them, the company will waive refinance fees and reimburse appraisal fees for future refinancing with the lender.
The Bad. Be sure that you’re keeping an eye on origination fees. Normally, they can range from 1% to 5%. This is definitely on the higher side when you compare it to other lenders on the platform.
Here’s a review on LoanDepot.
New American Funding: Best Lender for Not-so-Good Credit
The Good. New American Funding doesn’t use an algorithm to approve or deny applications. Rather, every one will be reviewed manually, with nontraditional factors like good savings and high income are checked out. This lender comes with a large variety of mortgage options with flexible loan terms, and high-quality customer service with bilingual capabilities. Additionally, if you don’t live near one of their 185 branches, (mostly in Southeastern U.S.), you’ll be able to complete your application online or on the phone. New American Funding will coordinate with title and real estate agents to close for you.
The Bad. Unfortunately, they charge high origination fees. You’ll be paying much more up front to get good rates in the long run. Plus, they aren’t licensed to originate loans in New York either.
Here’s a review of New American Funding.
PennyMac: Best Lender for FHA Loans
The Good. If you want an FHA mortgage, PennyMac is a great option to consider. They offer both fixed-rate and adjustable-rate FHA loans with low interest rates compared to other lenders. PennyMac has highly detailed web tools that make it easier for you to compare the different options. Additionally, Costco members receive a discount on origination fees.
The Bad. The online lender isn’t noted for their amazing customer support.
Check out a review on PennyMac Loan Services.
Veterans United Home Loans: Best Lenders for VA Loans
Runner Up: J.G. Wentworth
The Good. The biggest provider of VA loans in the U.S. Veterans United is specially qualified to work with military families and veterans to help them get the best homebuying experience possible. Additionally, they are completely transparent with their rates, so you can see them clearly on the Veterans United website. Plus, according to surveys, Veterans United has amazing customer satisfaction.
The Bad. Veterans United has a limited amount of offices in only about half the states.
Here’s a review on Veterans United Home Loans.
 |
 |
Conclusion
Overall, there are many different lenders to pick from when you want the best mortgage rates and lenders. With these options listed, hopefully you find the best one to match what you’re looking for. Furthermore, be sure that you look at the details each one has to offer before applying for one.
