Check out Rocket Mortage as the best online mortgage lender.
It’s now easier than ever to explore mortgage loan options from the comfort of your home. While there are many online mortgage companies offering a variety of loan products that allow you to apply for a mortgage online, the best online mortgage lenders for your needs might vary depending on where you’re buying a home and your financial situation.
Here's where to look when you want to apply for your mortgage online.
Quick Look: Best Online Mortgage Lenders
- Best Pre-Approval Process: Rocket Mortgage
- Best for Conventional Loans: New American Funding
- Best for Nonconforming Mortgage Loans: Angel Oak Mortgage Solutions
- Best for Refinancing: Better.com
4 Best Online Mortgage Lenders
The best online mortgage lenders offer streamlined application processes, a variety of loan choices, the chance for a mortgage preapproval online, and additional features that make securing housing easier. Consider the following loan providers as you shop for a mortgage.
1. Best Pre-Approval Process: Rocket Mortgage
Rocket Mortgage is one of the largest online lenders in the United States, offering a wealth of loan types and terms. Rocket Mortgage is notable for its streamlined application process, which can be completed entirely online. Most users will also receive an instant decision when they apply for preapproval, speeding up the mortgage process.
Rocket Mortgage is also notable for its online homeowner education resources. If you’re still in the beginning stages of comparing your loan options, Rocket Mortgage’s extensive learning center can be an excellent place to begin familiarizing yourself with mortgage options.
- Efficient online process with document and asset retrieval capabilities
- Ability to edit your preapproval letter
- Lower mortgage interest rates compared to other lenders
- Option to work with loan officers by phone if desired
- Customized interest rates require a credit check, which could negatively impact your score
- Unable to take out home equity lines of credit
2. Best for Conventional Loans: New American Funding
New American is an online mortgage lender offering a variety of conventional and government-backed mortgage loan options. The company is notable for its cash buyers program, which may allow you to unlock the benefits that come with making a purchase offer in cash.
Customers who qualify for the cash Buyer Accepted program may save up to 11% on their home purchase, as some sellers prioritize cash sales. Using this program, New American issues a mortgage loan to you and pays the seller in cash. This can be beneficial for borrowers looking to reduce the price they pay for their homes.
- Variety of options for purchasing and refinancing mortgages
- Home equity line of credit can be used for a second home or owner-occupied home
- Great option for underserved communities to obtain financing
Mortgage origination fees are a bit high
3. Best for Nonconforming Mortgage Loans: Angel Oak Mortgage Solutions
Angel Oak Mortgage Solutions is a unique online lender that specialized in nonconforming mortgage loans, particularly for those in unique financial situations. For example, if you work as a contractor or you own your own business, you may not have W-2s to prove your income — a common requirement from lenders considering applications. Angel Oak offers a bank statement loan option that allows you to skip the W-2 requirement and qualify for a loan based on asset documentation.
Angel Oak also offers other nonconventional loan choices, including those for foreign nationals and 1099 contractors. While Angel Oak only offers 30-year, fixed-rate mortgage loans, the provider can be a unique option if qualifications at other lenders are preventing you from financing a home.
- Condo loans and cash-out options are available
- Rate-term refinance options available
- Loans available up to $3.5 million
- Bank statement loans are available
- Minimum credit score requirements start at 660
- Requires assistance from a mortgage broker as they are not a direct lender
4. Best for Refinancing: Better.com
Another online lender, Better.com is notable for its easy application process and refinance considerations. Better.com allows users to view current rates online before applying, which can help you compare loan prices without damaging your credit with a hard pull. The company also offers loans without lender fees or commissions — though you still need to pay closing costs.
Better.com is notable for its free refinancing program that allows you to refinance a mortgage loan. If you get a mortgage loan through Better.com and rates on your type of loan drop within three years, Better.com will cover the cost of a refinance for qualifying buyers.
This can be beneficial for anyone who wants to buy a home but has been hesitating because of the current refinance rates.
- Qualifying buys can make cash offers
- Customized mortgage rates are available
- Average interest rates are lower compared to other lenders
- Does not offer USDA loans
- Does not offer home equity loans
- VA loans are only available in select states
Types of Mortgages
Did you know that there are multiple types of mortgage loans? The type of loan you choose may dictate where you can buy a home, the down payment you’ll need to qualify, credit requirements and more. The following are some of the most common types of home loans.
Conventional mortgage loans are the most common type of loan and can be used to purchase any type of property. These loans offer flexibility and options, but they require meeting stricter qualification criteria.
FHA loans are designed to help buyers with lower credit scores or past financial mistakes buy a home. FHA loans can only be used to buy homes in livable condition.
A loans are special property loans for people who have served in the armed forces as well as active duty service members. Some select family members of service members may also qualify.
A USDA loan can help you buy a home in a rural or suburban area. Like an FHA loan, you can only buy a home that’s safe to live in when you use a USDA loan.
If you’re buying a home in a high-value area, you might need to use a jumbo loan to buy your property. Jumbo loans are larger than the conforming loan limits set in place by Fannie Mae and Freddie Mac.
What to Look for in an Online Mortgage Lender
Not satisfied with Benzinga’s list of the best online lenders? Look for these features when you continue your search for additional mortgage lenders.
Not every type of mortgage loan is offered by every company. Begin by deciding what type of loan would be best for your home purchase and seek out lenders offering what you need.
Compare interest rates between lenders offering your type of loan. While interest rates are constantly changing based on a variety of economic factors, most lenders allow you to lock in your mortgage rate for a few weeks to a month after being preapproved. Take this time to compare loan pricing between competitors.
If this is your first time buying a home, it can be comforting to choose a lender with a responsive customer service team. Before applying for a mortgage preapproval, you may want to test each company’s customer service by connecting with a representative and asking a few questions about the home-buying process.
How to Prepare for a Mortgage
Before applying for a mortgage loan, there are a few steps you can take to improve your chances of getting the financing you need, including:
Pay Down Debt
Your debt-to-income (DTI) ratio describes the amount of debt you have outstanding compared to your household income. Lenders look at DTI ratios to determine how much financing they will extend to a borrower. Paying down outstanding debt will improve your chances of getting a home loan.
Check Your Credit
Mortgage providers always look at your credit history when applying for a home loan. Pull your credit report with each of the three major bureaus and look for items you don’t recognize. If there is a mistake that is lowering your score, contact the bureau issuing the report to adjust it.
Avoid Opening New Credit Lines
After you apply for your loan, avoid applying for other types of credit like a personal loan or a new credit card. This may lower your credit score during the underwriting process — a red flag for lenders.
Don't forget that when shopping for a home, a mortgage pre-approval will go a long way with sellers. That's because when you prequalify for a home loan, the risk of a failed contract is greatly reduced.
Fees Associated With Mortgages
While most borrowers are familiar with the concept of a down payment, there are additional closing costs you’ll need to cover when applying for a loan. Closing costs will vary depending on the specific lender you’re working with, but may include:
The origination fee covers the cost of preparing your loan paperwork on your behalf. It is usually expressed as a percentage of the total loan amount and is often deducted from the loan proceeds.
Appraisals are necessary before getting a loan because banks cannot extend more financing than a home is worth. The appraisal fee is paid to the home appraiser who estimates the value of the property you’re buying.
Credit Check and Underwriting Fees
As a part of the application process, your lender will need to pull your credit report and verify your assets. There may be a variety of fees associated with the underwriting process, including fees for checking your credit.
Choosing the Best Online Mortgage Lender
With the convenience and accessibility of online lenders, you are presented with numerous options. However, it is important to carefully consider factors such as interest rates, loan terms, customer service, and overall reputation before making a decision. By conducting thorough research and comparing different online mortgage lenders, you can find the best option that meets your specific needs.
Frequently Asked Questions
How can I get a mortgage online?
You can get a mortgage online by applying with a bank or lender with an online preapproval process. Rocket Mortgage, Better.com and New American are all examples of lenders that allow you to apply for a loan online.
How much should I save for a down payment for a house?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment.
Is there a soft credit pull for a mortgage?
Most mortgage lenders require a hard credit pull for mortgage approval. This means that your credit may be impacted when you apply for a mortgage loan.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.