Any affiliate links to products on this page are from partners who pay us a commission (see our advertiser disclosure and partner list for more information), but our opinions are our own. Find out how we rate mortgages and write an unbiased product review.
Finding the right mortgage lender can make or break your home buying or refinancing success. With so many lenders competing for your business, it can be difficult to know which lender is worth your time and money.
To help you make the best decision for your financial situation, Personal Finance Insider conducts thorough research on each mortgage lender we review.
What we look for when evaluating mortgage lenders
Each lender we review receives a rating between 1 and 5 stars, with the ratings split into four different categories and weighted equally.
In each category, lenders can earn a rank from 1 to 5. These numbers are then averaged to determine the overall star rating.
The categories we look at are:
Loan type (25%) Ability to repay (25%) Customer satisfaction (25%) Reliability (25%)
Combined, these categories provide a broad picture of what experience a customer will have when dealing with a mortgage lender, including the mortgage options they have available to choose from, how easy it is to qualify, how much they will ultimately pay, and how easy and trustworthy it is to do business with the lender.
Types of Loans
The more types of mortgages a lender offers, the higher its rating.
First, find out if the lender offers the most common types of mortgages (conventional, jumbo mortgages, government-insured mortgages like FHA loans), then look at other types like home equity loans, construction loans, physician loans, non-QM loans, and the lender's own specialty products.
The best lenders offer all the basic mortgage types, including the three government-insured mortgages (FHA, VA, USDA), as well as several less common mortgage options.
example
Lenders that offer conventional and jumbo mortgages and at least one government-insured mortgage earn a 3 out of 5. Lenders that offer conventional mortgages, jumbo mortgages, FHA mortgages, VA mortgages, remodeling mortgages and HELOCs earn a 4 out of 5.
Affordable
A lender is considered affordable if it has options available to borrowers with low incomes and low credit scores and has cheaper mortgage features.
Affordable lenders offer several government-insured mortgage options because these loans often have more flexible qualification requirements and lower mortgage interest rates, as well as lower down payments and less stringent credit score requirements.
Also find out if the lender has any flexible credit guidelines, which might include allowing borrowers to apply with lower or nontraditional credit scores (such as proof of rent or utility payment history) or accepting people with recent negative events on their credit reports.
Lenders will also receive more favorable reviews if they offer products tailored to first-time or low-income borrowers, which could include special mortgage products with affordability features such as low down payments or down payment assistance without private mortgage insurance.
Finally, consider any other features that may make it more affordable for the lender, such as not charging lender fees or offering free moving assistance.
example
Lenders that do not offer government-insured mortgages, have minimum credit scores above 620, and require down payments of more than 5% would receive a score of 1 out of 5. Lenders that allow credit scores as low as 580 for FHA, VA, and USDA loans, accept nontraditional credit, allow 3% down payments on conventional loans, and offer down payment assistance to low-income borrowers would receive a score of 5 out of 5.
Customer Satisfaction
To determine how satisfied customers are with a particular lender, we look at two main sources of information: J.D. Power's annual Primary Mortgage Origination Satisfaction Survey and online customer reviews.
For customer reviews, we use a lender's Zillow profile rating and TrustPilot rating, both of which are based on reviews left by customers on the respective sites, but we only consider these ratings if they are based on 200 or more reviews.
example
If a lender is rated at or near the industry average in the JD Power survey, the lender will receive a 3 out of 5. If a lender is ranked highly in the JD Power survey and has a 5-star rating on their Zillow lender profile, the lender will receive a 5 out of 5.
reliability
To gauge the lender's level of trustworthiness, check their rating with the Better Business Bureau and why they received that rating. Also, look into any recent controversies or scandals the lender has been involved in and any government actions taken against the company.
example
A lender that has a C- rating from the BBB and has recently had a scandal directly related to its mortgage business (for example, being found to have engaged in deceptive advertising practices in relation to mortgage offers) would receive a 2 out of 5. A lender that has few customer complaints, an A rating from the BBB, and has had no recent public scandals would receive a 4 out of 5.
Our ratings can help you know which lenders are worth getting pre-approved from, but the best lender for you will depend on your needs and financial situation. When searching for a mortgage lender, consider the characteristics that are important to you to narrow down your choices. Then, get pre-approved from multiple lenders to see which lender can offer you the most favorable terms.
Molly Grace
Mortgage Reporter
Top Offers from our Partners
Source link