2022's Top Online Mortgage Lenders
Shelter-in-place orders haven't been enough to derail the American ideal of house ownership, but they have made things more difficult for many people. As a result, more and more homeowners are using the internet to remotely close on their mortgages.
The 2019 Borrower Insights report by Ellie Mae found that 50% of borrowers chose lenders that provided digital capabilities. Furthermore, internet applications were favoured by 66% of borrowers since they result in faster closing.
According to the Federal Reserve Bank of New York, digital mortgage lenders speed up the processing of loans by roughly 20% when compared to traditional lenders. Online lenders also reduced processing times from 2010 to 2016 by an average of 10 days. Applying online for a mortgage refinance can reduce the length of the transaction by an average of 14.6 days.
The application procedure for consumers is sped up and made simpler by online mortgage lending instruments, which also lessens the bottlenecks that hamper traditional lending. The Federal Reserve Bank of New York claims that digitally-based mortgage lenders have widened lenders' ability to contact more borrowers and reduced capacity restrictions while avoiding human mistake.
2020's Top Online Lenders
We've analyzed the top online mortgage lenders who prioritize the client experience and provide continuing support from application to closing in light of recent events and growing public desire for a fully online mortgage application.
Better Mortgage Rocket
Bank of America New American Funding
Jump Mortgage
One of the biggest mortgage lenders in the United States based on volume is Rocket Mortgage. Additionally, for ten years running, the business has consistently obtained the highest customer satisfaction ratings in J.D. Power's Primary Mortgage Servicers Study.
For tech-savvy borrowers who prefer an online, mobile-friendly application experience with live service, Rocket Mortgage is a good option. Although the organization advertises that you may apply and receive approval for a mortgage in less than 10 minutes, consumers are free to take their time and complete their mortgage or refinance applications.
Simple online application for Rocket Mortgage. You'll be asked if you want to refinance or buy a house. If you decide to refinance, the platform will ask you for the address of the property and will then use public data to populate the rest of the form for you.
You should be prepared to input personal details about your assets and employment during the application procedure. However, Rocket Mortgage also expedites this process by obtaining information straight from your bank, saving you time from having to manually enter data from your account statements. If your bank has access to them, the corporation may also obtain information such as pay stubs.
If you work for yourself, you'll need to confirm and show your revenue in order to demonstrate your ability to make ends meet. Additionally, Rocket Mortgage can demand that you have better credit and a smaller DTI than other applicants.
After gathering your information, Rocket Mortgage provides personalized quotations that are tailored to your requirements and financial objectives.
The YOURgage program enables qualified borrowers to tailor their loan terms from 8 to 29 years if they prefer a flexible loan term and a fixed interest rate. Borrowers must meet certain requirements in order to qualify, including a minimum FICO score of 620, a minimum 3% down payment, a debt-to-income ratio below 50%, and enough cash set aside to pay closing fees. For borrowers looking for a 30-year term, the majority of lenders won't go higher than 45% DTI.
Seven days a week, you can contact mortgage professionals by phone or online chat if you have any questions.
Better.com
Digital mortgage lender Better Mortgage provides a selection of purchase and refinance loans. Even though Better.com is entirely online, it gives you a loan officer you may get in touch with at any time during the process to personalize your experience. Most of the week, additional help is offered via phone, email, and chat.
This lender is perfect for customers that desire an online-only experience because it doesn't have any physical locations. The business claims that its automated method can provide rate quotes in a matter of seconds and a pre-approval letter in a matter of three minutes. Better.com also manages its own portfolio of loans and doesn't charge any origination, application, or commission costs, which can save borrowers hundreds of dollars.
Better.com distinguishes itself from its rivals by providing its Better Real Estate discount program, which is only accessible in a few states. You may qualify for up to $2,000 in lender credits if you hire a real estate agent from Better Real Estate and obtain a mortgage through the business.
With Better.com, closings may take up to 21 days, and rate locks are available upon request.
However, it should be mentioned that Better.com does not provide home equity loans, VA loans, USDA loans, or home equity lines of credit (HELOCs).
Bank Paramount
Despite being a regional bank with customers in 11 states in the Midwest, South, and West, Paramount Bank now offers internet services to all 50 states. The business is a HUD-approved lender that offers a variety of mortgage and refinancing products, including conventional mortgages, jumbo loans, and loans for home renovations called 203K loans.
Except for the steps required to submit an online loan application, Paramount's website provides very little information on the loan process.
A Paramount loan officer will call you to discuss your possibilities once you fill out a simple form that requests some basic information about your credit, employment, and current assets.
The loan officer will go over the actions necessary to achieve your goals based on the information you supply online, whether that necessitates temporarily postponing your home purchase plans and enrolling in a credit rehabilitation program, or completing the house purchase or refinance process.
If you opt to proceed with the loan application, you will simply be required to submit more information and undergo a hard credit pull. After your application is accepted, the closing can be finished electronically with e-signatures, necessitating no face-to-face interaction.
The unique coronavirus outbreak has caused other competitors to tighten their loan eligibility conditions, but Paramount hasn't altered their standard qualification requirements. A credit score of at least 620 is required for an FHA or VA loan, while a credit score of at least 680 is required for conforming loans. For first-time homebuyers, Paramount also provides a 3% down payment scheme.
In particular, Paramount, a veteran-owned business, is dedicated to supporting veteran families and doesn't charge lender fees for its VA Home loan program.
You would need to get in touch with the business directly to learn more about their loan offerings, and the only way to do that is by making an account.
American New Funding
Since its founding in 2003, New American Funding has rapidly expanded to rank among the biggest family-owned mortgage lenders in the US. The non-bank lender provides traditional and governmental loans, as well as the option to refinance or reverse your current mortgage at fixed or adjustable rates.
For conventional loans, New American Funding requires a FICO score of 620, and for government loans, a score of at least 580. These standards are those specified by Fannie Mae and Freddie Mac (FHA, USDA, and VA loans). In order to determine your trustworthiness if your credit score is poor, New American Funding states that they will use your payment history as an alternative credit rating method.
Direct online mortgage loan applications are available. As they evaluate your profile, the organization uses manual underwriting, which offers attention to detail and superior lending possibilities.
As of 2021, the California-based lender is accessible in all but New York and Hawaii. Borrowers assert that if you are comparing quotes, you won't receive an estimate up front. Instead, in order to learn their prices, you must apply directly.
How We Selected The Best Online Lenders
We examined the goods and services that set these suppliers apart in order to identify the top online lenders. To better understand the qualities that customers seek in a mortgage lender, we consulted with industry professionals, including economists, mortgage brokers, realtors, and financial consultants with decades of experience. On the basis of the following criteria, we chose our top businesses.
Different Loans
We valued lenders who provided a wide range of loans, from conventional to government-sponsored loans, to meet the needs of each borrower. Additionally, we took into account any unique lending programs, required minimum FICO scores, discounts, waivers, and debt-to-income ratios.
Digital Features
While completing a mortgage application from beginning to end might be challenging, technology has greatly streamlined the procedure. With the correct digital tools, you can prequalify, estimate how much you can borrow, and compare lenders and home values to save time and money.
Our top recommendations include lenders that provide the perfect harmony of digital tools, consumer service, and education. For a well-rounded experience, we valued businesses who offer easily accessible online tools including mobile apps, mortgage learning centers, and calculators.
customer satisfaction
We gave businesses with good standards for customer service priority when it comes to online mortgages. As much assistance as a physical loan application should be provided during an entirely digital lending process. Additionally, studies reveal that applicants enjoy human interaction, and that a good mix of personnel and technology support can expedite the loan process and make borrowers feel more secure. We considered J.D. Power's 2019 Mortgage Customer Satisfaction survey results to assess consumer satisfaction.
Consumers do have a say in what happens to their digital experience, according to a statement from John Cabell, director of financial services for J.D. Power's global business team. "Customers are telling us that they want funding deadlines to get shorter. Younger clients, in particular, consider a lender's reputation through reviews and the ease of the web platform.
Financial standing
We considered the quantity of grievances lodged against each institution with the Consumer Financial Protection Bureau while assessing them (CFPB). The Consumer Financial Protection Bureau (CFPB) is a federal body that issues guidelines to businesses to protect consumers against unfair, abusive, or misleading activities. The Nationwide Mortgage Licensing System and Registry's list of each lender's regulatory actions was also taken into account (NMLS).
Obtaining a Mortgage
Here are some of the most crucial actions you must take if this is your first time applying for a mortgage:
Obtain Preapproval
Start by requesting a prequalification or preapproval letter from your lender if you're serious about buying a house. Lenders may estimate how much you can borrow when you prequalify for a house loan based on self-reported financial information, such as your salary, monthly bills, and credit score. This straightforward step can help you establish which mortgage type best suits your long-term objectives and provide you with a rough idea of how much house you can afford.
You can ask for a letter of pre-approval whenever you're prepared. A pre-approval letter demands documentation of income, assets, and debt in contrast to a pre-qualification, which is self-reported, and also calls for a formal credit check. It's important to remember that pre-qualification does not ensure pre-approval.
Your credit score will often be reduced by less than five points as a result of a pre-approval letter, and it can take your lender a few days to thoroughly examine it. Once your new property has been appraised, you will receive a final loan approval.
In high-demand areas, getting pre-approved might offer you an edge over cash purchasers and even provide you leverage when negotiating a home's price because the seller will view you as a more serious buyer. In fact, experts claim that the majority of agents and sellers won't even take into account a bid from a buyer who hasn't been pre-approved.
Because of the coronavirus pandemic and its impact on the economy, the majority of house sellers demand a pre-approval letter as proof of your consistent income. Some are even asking for an additional letter from your work to confirm that the Covid-19 situation won't have an impact on your income.
Prepare your documents
Depending on your circumstances, different paperwork may be required for a house loan. For instance, if you work for yourself, you'll need to submit more paperwork than someone who works for a firm. Due to Covid-19, some lenders are requiring more information than normal from new borrowers in order to verify your ability to make payments and maintain a job.
pay slips (30 days or more)
Homeowners insurance policy copy
government tax returns (last two years)
W2s (previous two years)
credit report
I.D. with a photo, bank records, and other assets
bankruptcy filings (if applicable, last seven years)
paperwork for child support or alimony (if applicable)
mortgage disclosures (for refinancing)
gift cards
Home evaluation
Examine Your Credit
Experts advise you to verify your credit reports for inaccuracies or out-of-date accounts before beginning your quest toward homeownership.
Your ability to obtain credit and the interest rate your lender can charge you will both depend on your credit history. You can have problems being approved for a new loan if there are any mistakes in your report.
Check your credit report thoroughly for any accounts you don't identify, inaccurate current balances, inaccurate information on negative accounts, addresses of areas you haven't lived, or names of employers you don't recognize. According to the Consumer Financial Protection Bureau, even minor mistakes could have a big influence on the health of your credit score.
The three main credit reporting agencies, Equifax, Experian, and TransUnion, accept disputes for these inaccuracies online. By phone or postal mail, you can also file a complaint about false information or fraudulent activities on your report.
By visiting AnnualCreditReport.com, you may obtain a free copy of your credit report from each of the three major credit bureaus once every 12 months.
Assess Lenders
Experts advise that you should always take the time to research lenders to get the best financing option for your needs, whether you're buying your first house or refinancing your mortgage to acquire some additional cash for remodeling your space. The Federal Trade Commission claims that simply being aware of your expected rate and monthly payment is insufficient. You could ultimately save thousands of dollars by shopping, comparing, and negotiating fees, points, down payments, and available quotations.
Home loans and quotes may differ based on your lender, whether it's a commercial bank, a typical mortgage company, a credit union, or an independent mortgage broker. The FTC advises that you be aware of your financial limitations and ask lenders for a full quote that includes all fees, rates, and terms associated with the loan, including any additional or hidden costs.
Plan a Home Inspection
A house appraisal is a crucial step in determining your property's fair market worth, whether you're buying, refinancing, or selling a home. In order to provide you with a formal appraisal of the value of your home, a home value specialist or appraiser will visually evaluate it and assess how it stacks up against similar properties in the area.
The appraiser will consider the home's characteristics, such as square footage and recent improvements, as well as current market trends when establishing the worth of the property. You can determine any improvements made to the home and the property's general condition with the use of an appraisal report.
Lenders are going above and beyond to protect their clients and staff and reduce the risk of infection as a result of the coronavirus epidemic. To meet CDC requirements, some lenders are figuring out alternative methods for concluding appraisals and mortgage closings, which may or may not cause a delay in the closing process. Some lenders are providing short-term appraisal waivers.
In the event that a physical site check is required, appraisers must adhere to CDC regulations to protect everyone. Keeping a distance of at least 6 feet and not shaking hands are two examples. If an agent cannot enter your home, you should speak with your lender to see if they have any other choices available to you during this public health emergency.
