The Best Mortgage Lenders


The single biggest financial decision most people ever make is buying a home.

Makes sense. The decision is filled with a lot of important questions:

… and many others.

Perhaps one of the biggest decisions though is finding a good mortgage lender. This isn’t a step that should be taken lightly. Finding the right mortgage lender gets you a home loan that’s affordable and the home that you want.

Find a bad one and you might find yourself saddled with a mountain of debt at a high interest rate.

Let’s try to avoid that. That’s why we gathered this list of the 5 best mortgage lenders out there.

The 5 Best Mortgage Lenders

These are a few of the mortgage lenders we like. Just like with anything else finance related, though, you’re going to want to do even more research to make sure it fits you. 

Here are a few good place to start:

Quicken Loans

  • Minimum down payment: 3%
  • Minimum credit score: 620

Quicken Loans is a reputable home mortgage lender (A+ rating on the Better Business Bureau) that offers an intuitive home loan program online. Through their digital platform, Rocket Mortgage, potential home buyers can easily see if they qualify for a home loan and what kind of loans they qualify for.

On top of conventional home loans, you can also get FHA, USDA, VA, and ARM loans through Quicken too.

Chase

  • Minimum down payment: As low as 5%
  • Minimum credit score: 620

Chase is a major national bank that offers a wide variety of lucrative home loan programs depending on your personal financial situation. On top of conventional home mortgages, Chase also offers FHA, VA, ARM, and a first-time home buyer program. Their in-person team can also help you find a good home buying assistance program if you are low income.

It’s worth mentioning though that Chase is a major bank—so you might be wary of being nickel and dimed by small fees (that can really add up).

SoFi

Minimum down payment: 10% for loans up to $3 million

Minimum credit score: 620

Social Financial (SoFi) began as a student loan refinancing organization in 2011, but has since grown to become a leader in home mortgages. They offer a wide variety of loan types including:

  • 30-year fixed
  • 15-year fixed
  • 7/1 ARM
  • 5/1 ARM interest-only

When looking at loan applicants, SoFi is distinct due to how they look at elements beyond credit history as well such as your college degree in order to determine your earning potential.

LoanDepot

  • Minimum down payment: 10% – 20%
  • Minimum credit score: 600

LoanDepot is another great online lender that provides a seamless underwriting experience. Where they really excel is at giving borrowers great refinancing options with good interest rates. If you choose to refinance, they’ll waive any lender fees and appraisal fees you might have on any other future refinancing with them.

The organization also has a ton of brick-and-mortar locations across the United States, which is great if you’re looking to meet with someone face-to-face.

Guaranteed Rate

  • Minimum down payment: 3%
  • Minimum credit score: 620

Guaranteed Rate offers a fantastic online lending experience with a wide variety of loan types including:

  • 30-year fixed
  • 15-year fixed
  • Adjustable rate
  • Jumbo
  • FHA
  • VA
  • Interest-only

Their interest-only home mortgages are a good option for someone looking to make smaller payments each month—but you won’t build equity or pay down the principle on your home. Still, Guaranteed Rate is a solid option if you’re looking to go that route.

Understanding Your Options: Different Kinds of Mortgage Loans

Among the many decisions you’ll have to make when purchasing a new home is what kind of mortgage you should get. 

And there are a lot of different kinds too. Here are a few of the most common types you can expect to be offered—and what they mean to you:

Conventional mortgage

A conventional mortgage is one of the most common types (ergo “conventional”). It refers to any loan that isn’t backed or insured by the government. Instead, it’s insured via payments and fees by the borrowers.

There are many different types of conventional mortgages you can attain too. The most popular ones are fixed rate mortgages. These are mortgages with set interest rates and term limits. That means you’ll make regular payments over a fixed period of time.

And there are many different kinds of fixed rate loans. For example:

  • 10 year
  • 15 year
  • 20 year
  • 30 year
  • 40 year

15 and 30 year mortgages are the most common types.

Overall, this is a popular choice because homeowners know exactly how much they need to pay each month—as well as how long the loan will last. That means easier budgeting and less confusion.

They also have the least amount of risk for you. The interest rate is set in stone, you don’t have to worry about it going up on you.

Government loans

The US government offers a number of lucrative loan options for first-time homebuyers. They’re insured by different agencies in order to encourage more Americans to become homeowners.

The most common loans are:

  • Federal Housing Administration (FHA) loans. These loans are great for those with low credit scores. If you have a credit score of 580 or higher, you can expect to make a down payment as low as 3.5%.
  • Veterans Affairs (VA) loans. These loans are available to current or former members of the U.S. military and their families. Down payments are not often required and you’ll also have protections if you default on the loan.
  • United States Department of Agriculture (USDA) loans. These loans are aimed to attract homebuyers to live in rural areas of the country. Benefits include no down payment, 100% financing, and low credit score requirements.
  • Good Neighbor Next Door (GNND) loans. These loans are to assist “law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters, and emergency medical technicians” to purchase a home. This loan gives those applicable a 50% discount on a house’s listing price.

For more on this, be sure to check out our article for first-time homebuyers.

Interest-only mortgage

These loans allow homebuyers to only pay the interest on your monthly mortgage rather than the full amount.

Typically, there’s a fixed timeline for when you can do this (five to ten years) but can be helpful to people who are in a good financial position, have their assets in order, and don’t anticipate living in the property for a long time.

For everyone else, we highly suggest you don’t pursue this type of loan. Sure, your monthly payments will be less, but the term of your loan will be much longer since you won’t be paying down the principle. Look towards some of the other options on this list instead.

Adjustable rate mortgage (ARM)

ARMs have changing interest rates over time. You’ll typically see ARMs represented by two numbers such as 5/5 or 5/1. The first number refers to the length of time in years a fixed-rate will be applied to the loan. The second number refers to the length of time a variable rate is applied.

For example, a 5/1 loan will have a fixed rate for five years. After that, it will have variable rate determined by the performance of an index for one year.

So depending on how the economy is doing, you might have a good interest rate or a high one. It all depends on the performance of the index.

ARMs have a few major advantages:

  • They’re available at lower credit scores
  • You can get one with a lower down payment
  • Your interest rate can improve with the economy is doing well

But they have one major disadvantage: the interest rate can spike when the economy isn’t doing well. This is exactly what happened during the 2008 financial crisis. Be really careful with taking on an ARM and make sure you’re prepared for a worst case scenario. If not, you could lose everything.

How to Qualify For The Best Mortgage Rates

If you want to get the best mortgage rates possible, build up a good credit rating.

Here are a few fast tips on improving your credit score:

  • Get out of debt. Debt of any kind has a massive impact on your credit score. That’s why you need to take the steps to make sure you get out of it as soon as possible. Of course, this is easier said than done — especially if you have a large amount of debt due to something like student loans. Check out our article on how to get out of debt for a solid system to do just that.
  • Keep your accounts open and keep a recurring charge on them. 15% of your score is reflected by the length of your credit history. That means getting rid of old cards is getting rid of that history. Instead of doing that, keep your credit cards open even after you’ve paid off their debt. Just be sure to keep a recurring charge on them in order to keep that history alive.
  • Create new types of credit but only if you are out of debt. You can do this by requesting an increase to your line of credit in your credit cards, or by opening up new ones (we suggest the former). Remember: Only do this method once you’re out of debt. It’s risky to open up new credit cards — especially if you’re prone to falling into debt in the first place.

For more on this, be sure to check out our article on how to improve your credit score for more.

The Best Mortgage Lenders is a post from: I Will Teach You To Be Rich.



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