The most ideal way to be able to find the right mortgage loan partner is to shop among the best mortgage lenders out there. By doing so, you are assured you get the best deals possible — the one that’s exactly what you need and can afford.
Mortgage debt is the largest form of debt among consumers in the United States according to a report from Statista. As of 2019, the outstanding mortgage debt in the country was estimated at $16.01 trillion, and the number is expected to rise this year and the years to come.
Real talk – people want to eventually own their own home, and one of the best ways to attain that goal in as soon as possible is through a mortgage.
To be blunt, there is totally nothing wrong with that! In fact, it’s a good way to stay inspired and to keep working hard – knowing that you need to have enough money to pay for a mortgage loan, and eventually, pay it off so you can finally say, you own that home.
Now, when it comes to how to get a mortgage loan, there are actually a lot of options out there.
There are so many lending companies, banking institutions that offer really good rates when it comes to a mortgage loan. Of course, there are several factors to take into consideration, but as long as you qualify, then getting a loan should not be a problem.
When it comes to choosing a “partner” though, for your dream home, it is important that you do not settle immediately to one lender.
As much as possible, you go shop around for the best mortgage lenders so you get to compare deals and come up with an informed decision.
Now, to help you come up with a list of lending companies to check out (because admittedly, it could be hard and overwhelming, at the same time, knowing there are so many choose from out there), we are going to give you our list of best mortgage lenders to date.
But before that, we are going to share with you some important information first about the mortgage – particularly the following:
- What is a mortgage?
- What are the major types of mortgages?
- How to find the best mortgage lenders?
WHAT IS A MORTGAGE?
Before we even talk about the best mortgage lenders, we thought it’s important for borrowers to fully understand first what mortgage is all about.
A mortgage is a type of loan that a borrower can get from a financial institution or lending company. The money is specifically intended for purchasing a home.
Similar to other forms of loans, mortgage comes with an interest. When a borrower gets into a mortgage with a lending company, it’s tantamount to a promise that you are going to repay the amount of money you borrowed plus the accrued interest.
Unlike personal loans, a mortgage does have collateral. In fact, the house you buy using a mortgage automatically becomes the collateral. This means that if in case you fail to pay off the mortgage, the lending company has all the right to foreclose the property.
It is important to note that the loan does not become a mortgage up until it is attached as a lien to the property. Thus, the importance of paying the loan on time and according to the terms you agreed to.
WHAT ARE THE MAJOR TYPES OF MORTGAGES?
One thing’s for sure, not all mortgage products are equal to one another. While some have more stringent guidelines, others are not.
While there are lenders that might require a 20% down payment, others may require as little as 3% of the property’s purchase price.
Now, before you even seal a deal with a mortgage lender, it is also important that you are aware of the different types of mortgages available.
So, to give you an idea, below are some of the major types of mortgages available in the market today:
This refers to a loan that is not backed by the federal government but by Fannie Mae or Freddie Mac, two government-sponsored enterprises that buy and sell most conventional mortgages in the country.
To qualify for this type of mortgage, the borrower has to have a good credit history; stable employment, as well as income histories; and must have the ability to make at least a 3% down payment.
However, to be able to avoid the need for private mortgage insurance (PMI), generally, borrowers need to make a 20% down payment for the property.
Conforming Mortgage Loans
This type of mortgage loan is bound by the maximum loan limits that were set by the federal government. The limits depend on the geographical area.
Nonconforming Mortgage Loans
This type of mortgage loan cannot be sold or bought by Fannie Mae and Freddie Mac because of the loan amount or underwriting guidelines set. The most common type of non-conforming loans though is what they call “jumbo” loans, which is referred to as it is because of the loan amount usually exceeding conforming loan limits.
Government-Insured FHA Loans
This type of mortgage is ideal for low-to-moderate-income buyers purchasing a house for the first time who can’t qualify for a conventional loan. This type of loan is insured by the Federal Housing Administration.
Government-Insured VA Loans
This one’s specific to qualified military service members, veterans, and their spouses. For this type of loan, the U.S. Department of Veterans Affairs guarantees homebuyer loans.
Furthermore, borrowers are allowed to finance 100% of the mortgage with no down payment required.
Government-Insured USDA Loans
For this type of mortgage loan, the U.S. Department of Agriculture guarantees loans to help make homeownership possible for low-income buyers in the country’s rural areas.
This is ideal for homebuyers who cannot qualify for conventional loans, and have low income, and does not have enough money to pay for a down payment.
HOW TO FIND THE BEST MORTGAGE LENDERS?
Now that you already know what a mortgage is and what the major types of mortgage loans are, this time around, we’ll share a few important tips on how to find the best mortgage lenders in town.
Tip 1: Build a strong credit. Before you even start sending mortgage loan applications, make sure you check your finances and fix whatever needs to be fixed. Strong credit is the key to the best rates and terms possible.
Tip 2: Slim down your budget. Do not aim for a high-priced property if you do not have the right income for it. Narrow your budget to ensure you are able to pay off the loan without any problem.
Tip 3: Know your options. There are several types of mortgages. Make sure you are well-aware of them and that you know which one fits you.
Tip 4: Compare among lenders. As mentioned, do not settle with one lender immediately. Make sure to take time to shop around and compare.
Meanwhile, sharing with you a very informative video by Homebuyer’s School wherein they share tips on how to choose the best mortgage lender:
BEST MORTGAGE LENDERS IN THE COUNTRY
As the last tip say, compare lenders.
At this point, we are sharing with you some of the best mortgage lenders in the country today. Of course, there are so many options available. There are a lot of them. However, trimming down your options and focusing on the best ones is the key to get into the right deal possible.
So, here are the companies that we thought you should check out (we arrange the list alphabetically):
- Bank of America
- Citi Mortgage
- Guaranteed Rate
- New American Funding
- Quicken Loans
- Rocket Mortgage
|BANK||MINIMUM DOWN PAYMENT||BEST POSSIBLE RATE|
|Bank of America||5%||3.750%|
|New American Funding||3%||3.500%|
|Quicken Loans||3%||3.99% (4.247% APR)|
|Suntrust||3%||3.75% (3.8898% APR)|
BANK OF AMERICA
Apart from offering a wide range of retail banking, the bank also offers various types of mortgages, which include adjustable as well as fixed rate mortgages, jumbo loans, VA, FHA, and the ““Affordable Loan Solution” mortgage”. The latter refers to a program that was launched in 2016 to specifically help low-income buyers to get to buy their first home.
When it comes to credibility, Bank of America has it being one of the biggest financial institutions in the country. Needless to say, they’ve been around the banking industry for a long time now.
As with the reach and availability, the bank has several branches across all 50 states, which makes it very accessible to borrowers. In addition, they have mortgage lenders who are available to walk you through the whole loan process.
Although Bank of American is a giant, you may still find a number of bad reviews on the internet. So, to make sure, it would be better if you do your own research and also consider talking to a lender at the bank to know more about their products and services, especially about a mortgage.
Chase is another well-known bank in the country. When it comes to mortgages though, the bank has a major presence in this industry.
Apart from the fact that it has in-person mortgage experts in 30 states across the U.S. who are available to guide you through the loan process, Chase comes out on top of the lowest rate on fixed-rate mortgages as compared to other big lenders.
The bank practically offers any type of mortgage like adjustable-rate, FHA, VA, HARP, jumbo, and of course, fixed-rate.
Like Bank of America, Chase does have a special program called “DreaMaker Mortgage,” which is a mortgage grant that provides $3,000 assistance for either down payment or closing costs. More so, it does not have income limits, and that it provides down payment options for as low as 3%, which could be from gifted funds.
Citi Mortgage is related to Citibank, which is one of the country’s largest banks. With that, it’s no wonder why they are able to provide mortgage options to almost anyone who qualifies.
Citi Mortgage is ideal for borrowers who opt for either an FHA or VA loan. But generally, the institution offers a diverse set of loan products as well as terms and relationship discounts, which actually make it a top pick especially among first-time homebuyers.
One thing that Citi Mortgage must be proud of, apart from their outstanding products and services, is the fact that they do have high customer satisfaction ratings.
Guaranteed Rate is ideal for borrowers who have at least 620 credit score, solid credit history, and stable income but do not have enough money for a down payment.
This lending company offers various mortgages including FHA, VA, USDA, as well as various adjustable-rate mortgages and jumbo mortgages for purchase or refinance. They also offer cash out.
Although it has 170 physical offices across 50 states, Guaranteed Rate allows an online application, which makes the process easier.
NEW AMERICAN FUNDING
As compared to other larger mortgage lenders, New American Funding is family-owned. However, over the years, it has grown to be one of the top 30 lenders in the United States.
New American Funding offers various types of mortgages including home equity, reverse mortgages, jumbo, fixed, adjustable, HELOCs, FHA, VA, USDA, as well as refinance and purchase.
Unlike most lending companies, New American Funding uses manual underwriting to evaluate a borrower’s creditworthiness. By doing so, they get to evaluate the borrower’s finances in a more comprehensive manner.
Although that is the case, the company offers the online application, as well as rate quotes, document upload, and loan tracking. A pre-qualification process may also be done online, but make sure to follow up on the prequalification letter.
What’s nice about the company is that they offer competitive rates and that they also have first-time home-buyer programs, which obviously is something first-time homeowners can take advantage of.
New American Funding also works with both state and local agencies to be able to help buyers with regards to payment assistance.
One thing that probably sets Quicken Loans apart from other lenders in our list is that it provides an easily accessible online application that automatically verifies a borrower’s income as well as employment. They also have mortgage advisors if you need one.
When it comes to loan terms, the lending company offers a wide selection of terms that range from five up to 30 years.
For borrowers who require an FHA-backed loan or products by Fannie Mae and Freddie Mac, you can easily walk away with a mortgage for a very low down payment of three percent.
Unfortunately, the company does not offer HELOCs (Home Equity Lines of Credit) or home equity loans. So, if you are looking at that, you better check other mortgage lenders instead.
Meanwhile, Quicken Loans only looks at a borrower’s credit score and debt-to-income ratio to qualify. Needless to say, the process is fairly straightforward. Often, the company provides an answer regarding the approval or non-approval of your loan application in just a matter of minutes.
If you are looking for either conventional or government-backed mortgages, then Rocket Mortgages is one of the best options around. The company offers various loan types including purchase, refinance loans, jumbo loans, adjustable-rate loans, as well as fixed loans, VA loans, FHA loans, and USDA loans.
Just like Quicken Loans, Rocket Mortgage does not offer home equity loans or HELOCs as well.
Unlike other mortgage lenders, Quicken Loans is a self-service, online, mobile-friendly mortgage company. The company lets you know about the amount you qualify for in just a few minutes.
Although they promote online mortgage loan applications, they do have available lenders in case you have questions.
SoFi is a leading online mortgage lender, which adds up to its credibility. It specializes in jumbo loans for borrowers who have a good income but does not have enough savings for a down payment.
SoFi offers a lot of perks — they do not charge an origination fee, no prepayment penalty fees, and to top it all, you can loan up to $3 million on either primary or secondary homes with a 10% down payment.
However, all these perks are only available for borrowers with excellent credit history and solid employment. Borrowers need to have a high range of income and must purchase or refinance a home in a state where SoFi is licensed to originate loans.
As with the whole application process, it could take as long as 30 days. But it’s going to be worth it anyway as long as you know you hit all the qualifications set by the company.
SoFi also offers a pre-approval process that won’t affect your credit.
SunTrust has a wide range of online mortgages with competitive interest rates.
You can opt for a 30-year or 15-year fixed loans, and 5-, 7-, and 10-year ARMs (adjustable rate mortgages), as well as jumbo loans.
For borrowers who do not have a standard 20% down payment or good credit history, do not worry as this lending company also provides other mortgage options like FHA, VA, and USDA Loans.
Furthermore, SunTrust also offers affordable loan programs, which they call as “Agency Affordable Financing,” which is made possible through Fannie Mae and Freddie Mac.
This particular program is ideal for homebuyers who can only pay a 3% to 5% down payment.
FINAL THOUGHTS ON BEST MORTGAGE LENDERS
You see, there are so many mortgage lenders out there. Needless to say, there are a lot of best mortgage lenders competing with one another, offering the best possible deals among borrowers.
While it may get a little overwhelming choosing one among a sea of options, it is, for sure, worth it and satisfying in the end.
So, have you decided which mortgage lender to deal with yet?