Online lenders are popular in the home loan market because they offer an easy application process and quick turnaround times. Benzinga has compiled a list of some of the best online mortgage lenders available today. Let’s take a look.
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Quick Look: Best Online Mortgage Lenders
- Quicken Loans: Best Overall
- loanDepot: Best for FHA Loan Qualifications
- Rocket Mortgage: Best for Comprehensive Offerings
- Guaranteed Rate: Best for Low Payments
- Better.com: Best for No-fee Mortgages
- SunTrust Bank: Best for Traditional Bank Experience
What to Look for in an Online Mortgage Lender
There are a handful of things you’ll want to consider before you choose the best online mortgage lender for you — here are a few ways you can make sure your lender checks all the boxes.
Types of Mortgages Offered
There are many types of mortgages to consider, and choosing the one that is right for you depends on your circumstances. You may be eligible for government-backed loans or you may find that you prefer the customized loan options that are available with select lenders. The most common mortgage types are:
- Adjustable-rate mortgages (ARMs) offer fluctuating interest rates throughout your mortgage term. There are also hybrid ARMs, which offer a fixed interest rate for a certain number of years, followed by fluctuating rates. Adjustable-rate mortgages may also be referred to as variable-rate mortgages.
- Conventional mortgages are loans offered by lenders that are not backed by the federal government. You can get these mortgages from a private lender such as a bank, credit union or mortgage company.
- Federal Housing Administration (FHA) loans are government-backed loans that are popular among first-time homebuyers or buyers with lower credit scores.
- United States Department of Agriculture (USDA) loans: USDA loans might be an option available to you if you’re looking for a home in a rural community. These specialized, low-payment loans are offered to encourage rural homeownership.
- The Department of Veterans Affairs (VA) Loans: Active duty, reserve and veterans are eligible for VA loans. These loans can offer 0% down and are backed by the government.
- Fixed-rate mortgages are typically offered in 15-, 20- or 30-year terms. The interest rate on a fixed-rate loan is set at the start of the loan term. Fixed-rate mortgages can offer you predictable monthly payments throughout your mortgage term.
- Interest-only mortgages offer you the opportunity to pay lower monthly payments at the start of your loan term. During this period, you will only pay interest on your loan instead of paying the principal and the interest.
- Jumbo mortgages are unique options accompanied by underwriting requirements and tax implications because they exceed the financing limits set by the Federal Housing Finance Agency (FHFA). These may be an option if you want to finance a luxury property or a home in a highly competitive market.
- Reverse mortgages are an option for senior citizens. You relinquish the equity in your home in exchange for payments during the rest of the time you live in your home.
Rates and Terms
The interest rates and loan terms offered by mortgage lenders are also an important consideration and can also come with variable or fixed interest rates. Long-term fixed-rate mortgages may add stability and predictability to your monthly mortgage payments. Adjustable-rate mortgages (ARMs) can offer more risks — your interest rate will fluctuate during the duration of your loan term.
The most common loan term is 30 years, although some lenders offer terms as low as 10 years. Your mortgage’s interest rate and monthly payments will vary depending on your loan term. Be sure to discuss your options with various lenders to determine what is right for you before taking out your mortgage.
Monthly mortgage payments aren’t the only cost to consider as you choose your online lender. There are several fees that lenders may or may not charge you. Most lenders charge a loan origination fee equal to the percentage of your total loan amount. Other fees lenders may charge include document preparation fees and credit report fees. Most lenders also require a home inspection to confirm that the home you are taking out a mortgage on is in livable condition. These fees can vary depending on the lender, so be sure to understand all the fees associated with your home purchase before you land on a mortgage lender.
5 Tips for Finding the Best Online Mortgage Lender
These 5 tips will help you narrow down your options and find the best lender for you.
1. Be Realistic About Your Finances
Focus on lenders that can loan you the amount you need at a good interest rate and reasonable terms. The first step in the process is answering this question: How much house can you afford? Once you’ve determined what you can afford, you’ll know what size loan you’ll need.
2. Ask Around
Don’t be afraid to reach out to friends and colleagues to ask about their experiences with lenders you’re considering. This can be especially helpful if the people you get advice from are in a similar financial situation as you.
3. Compare Your Top Lenders
Consider making a comparison chart to write down what each lender offers. Then, compare this to your must-haves. For example, you may know you only want to put 10% down, so list the lenders that offer mortgage types that fit your needs. It’s also helpful to note interest rates and origination fee amounts. When you place the lenders side by side on these issues, it’s easier to compare and make the right decision for your home buying experience.
4. Reach Out to Lenders
Ask questions before you select which lender you’ll use for your mortgage. Know what each lender’s customer service is like. You’re going to be in a relationship with this lender for several years or decades to come, so it’s important that you’re comfortable with the company you choose.
5. Consult Your Real Estate Agent
A real estate agent will likely be able to offer you some insight on mortgage lenders. Ask which lenders he or she has had the most experience with and who he or she would recommend for the type of loan you’re looking for.
The 6 Best Online Mortgage Lenders
There’s sure to be an online lender suited for your needs, no matter what mortgage type or term you’re interested in. Each online lender has its own strengths, so take a look below and pick out a few that may work for you.
1. Quicken Loans: Best Overall
Quicken Loans is well-liked for its customer service and its wide variety of mortgage options. Its Home Loan Experts are on hand to answer questions — you’ll know there will be someone there to help walk you through your mortgage options.
Quicken Loans is the largest mortgage lender in the country and offers a robust range of mortgage types. YOURgage, a custom fixed-interest loan term that can range anywhere from 8 to 29 years and can help you meet your financial goals.
2. loanDepot: Best for FHA Loan Qualifications
loanDepot is a direct mortgage lender available to buyers in all 50 states and is a popular choice among buyers with little credit history. Many lenders require FICO credit scores of 620 or above, but loanDepot’s minimum requirement for an FHA-backed loan is 580.
loanDepot may be able to help you if you have a lower credit score. The company also offers a lifetime guarantee for returning customers. You won’t be charged additional lender fees if you later refinance your mortgage with loanDepot.
3. Rocket Mortgage: Best for Comprehensive Offerings
Rocket Mortgage by Quicken Loans is a great option for consumers who want something quick, easy and customizable. Its intuitive application generates your employment information from a few personal details.
This not only saves you time but allows you to get pre-approved in as little as 8 minutes. Like Quicken Loans, Rocket Mortgage offers a wide range of mortgage loan options as well as stellar customer service.
4. Guaranteed Rate: Best for Low Payments
Guaranteed Rate offers many services designed to make the home buying process as easy as possible. These services include an Intuitive Finder designed to help you find the right loan type for you and a mobile app for on-the-go convenience. Guaranteed Rate also offers a loan type that will allow you to make lower payments for the first few years of your mortgage — an interest-only loan. This involves lower payments and that you won’t pay down the principal of your loan or build home equity. Interest-only loans can be an attractive option if you want to save money for a few years or buy a home that you otherwise wouldn’t be able to afford.
5. Better: Best for No-Fee Mortgages
Better streamlines the mortgage lending process and offers full transparency, too. Quotes take as little as a few moments, and you can receive verified pre-approval in 24 hours.
Better is a great option if you’re looking for a quick process and want to cut out the fees. Unlike most lenders, Better does not charge any commission or origination fees.
6. SunTrust Bank: Best for Traditional Bank Experience
Maybe you’re more comfortable with a traditional bank experience. If so, SunTrust may be a good option for you — its online application process is a great way to get prequalified. SunTrust offers stellar customer service, competitive rates and loan options. SunTrust can offer you the best of both worlds if you want to work with a reputable bank to get your mortgage.
Your Next Steps
Take stock of the information above and contact the lenders that offer the loan types you’re interested in — and don’t forget to read up on how to save for a house.
Be sure to do your research and get all your questions answered before moving forward, no matter which lender or loan type you decide to go with. Buying a home is one of the biggest financial decisions you’ll make and the right lender can make all the difference.
Frequently Asked Questions
1) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
2) Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first-time buyers. Check out the lenders that specialize in making the home buying experience a breeze