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Best Mortgage Lenders of July 2022

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Finding the best mortgage company can be a challenge. The right lender depends on the borrower's unique financial credentials and what features they're looking for in a loan. The best way for each homebuyer to find the ideal lender is to get multiple quotes and compare rates and terms. While interest rates matter, borrowers should also focus on other factors such as timely loan approval and low fees. This guide provides insight into how a mortgage works and how to find the top mortgage lender no matter your situation.

Check Rates for New American Funding

On New American Funding's Secure Website.


Best for: Diverse loan types and terms

Bottom Line

Competitive rates and a diverse set of loan terms and products are a rare combo. Fast service simplifies the homebuying process even more. What's more, New American can be a good solution for people building credit and wanting a good mortgage.

Key Features

  • Fast service
  • High customer satisfaction, A+ BBB rating

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo

Fixed Rate Terms

  • Customizable (8y-30y)

Adjustable Rate Terms

  • 10/1, 7/1, 5/1
Check Rates for Better

On Better's Secure Website.


Best for: No lender fees and online application

Bottom Line

Has the right combination of features and perks, including no origination fees, low mortgage rates, and an online experience that helps homeowners cut their costs while saving time. Case in point, borrowers can secure preapproval in minutes. The lender also offers $150 off closing costs when applying through The Ascent site.

Min. Credit Score

  • 620

Min. Down Payment

  • 3%

Key Features

  • No origination fees
  • Instant loan estimates
  • 100% online application
  • $150 off closing costs for The Ascent readers
  • Better Cash offer

Loan Types

  • Conventional
  • FHA
  • Jumbo

Fixed Rate Terms

  • 30y, 20y, 15y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6
Award Icon BEST OF 2022
Check Rates for Rocket Mortgage

On Rocket Mortgage/Quicken Loans' Secure Website.


Best for: Streamlined online application

Bottom Line

Led the transition to online-only applications, and that seamless process is one reason why it has become the largest U.S. lender. Consistent No. 1 J.D. Power customer service rankings and its high-quality app make it hard to ignore.

Key Features

  • Online-only
  • High allowable debt-to-income
  • Low down payment options

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • Customizable (8y-30y)

Adjustable Rate Terms

  • 10/6, 7/6, 5/6
Award Icon BEST OF 2022
Check Rates for Guaranteed Rate Mortgage

On Guaranteed Rate Mortgage's Secure Website.


Best for: Digital experience & down-payment assistance

Bottom Line

Guaranteed Rate does a great job with ease of usability, offering comprehensive loan information during your research phase, plus the option to securely upload and digitally sign loan documents when you're ready to apply.

Key Features

  • Customer-friendly website
  • Technology to ease the process
  • Neighborhood data

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
  • Interest Only

Fixed Rate Terms

30y, 15y

Adjustable Rate Terms

5/1, 7/1 10/1

Key Features

  • Lender fee waiver for existing customers
  • Jumbo and super jumbo loans
  • HELOC and home equity line of credit offerings

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo
  • Interest Only

Fixed Rate Terms

  • 30y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6
Check Rates for loanDepot

On Loan Depot's Secure Website.


Best for: Refinancing and FHA/VA options

Bottom Line

Among the most popular refinance and FHA/VA lenders in the market. Its mello smartloan™ platform eases the refinance process by digitally hooking up to confirm your assets, employment, and income.

Min. Credit Score Info Icon Circle with letter I in it.

  • 580 - 620

Min. Down Payment

  • 3.5%

Key Features

  • Digital loan technology
  • Branch network
  • Customer discounts

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • 30y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/1, 7/1, 5/1, 3/1
Check Rates for Veterans United

On Veterans United's Secure Website.


Key Features

  • Online approval process
  • No required downpayment
  • Low rates

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo

Fixed Rate Terms

  • 30y, 15y

Adjustable Rate Terms

  • None

Best for: High loan amounts and relationship discounts

Bottom Line

Fast prequalification, membership discounts, and a modern experience explain its top pick status. A potential fit for self-employed borrowers, based on SoFi’s nontraditional underwriting process that focuses less on credit history and more on income and assets.

Min. Credit Score

  • N/A: Uses alternative data

Min. Down Payment

  • 5%

Key Features

  • Member discount
  • Fast prequalification
  • Fast financing

Loan Types

  • Conventional

Fixed Rate Terms

  • 30y, 20y, 15y, 10y

Adjustable Rate Terms

  • None

Best for: Diverse loan options

Bottom Line

Few lenders can match the lineup of loan products and terms, and the bank is a great solution for first-time homebuyers. The high-tech digital experience compliments the bank's extensive branch network. The interest rate and fee discounts for Preferred Rewards members define what relationship banking should look like.

Key Features

  • Relationship interest rate and fee discounts
  • Ability to apply entirely online
  • No PMI offering
  • Loans up to $5 million

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • 30y, 20y, 15y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6

Key Features

  • 3% down no PMI offering
  • HELOC's
  • Home equity loans
  • Considers nontraditional credit history

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo

Fixed Rate Terms

  • 30y, 25y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/1, 7/1, 5/1

Best for: Easy online application

Bottom Line

By offering rate transparency, online only help, flexible loan terms, and a rate guaranteed to beat competitors, PennyMac is a great place for people to start looking for a mortgage.

Key Features

  • 100% online application
  • Instant rate estimates
  • Flexible terms
  • No lender fee

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo

Fixed Rate Terms

  • 3y, 20y, 15y (some customized terms are available)

Adjustable Rate Terms

  • 3/1, 5/1, 7/1, 10/1

Ratings Methodology

The mortgage market is crowded and competitive, which is great for consumers. Keeping that in mind, we take our ratings and picks very seriously. While it’s impossible for us to rate and review every offer on the market, we canvas as far as we can. Our five-star rating system takes into account how competitive rates and fees are for a certain lender, the online experience and customer support, as well as how versatile a loan is including repayment terms, availability, downpayment options, and more.

What is a mortgage lender?

A mortgage lender is a bank, credit union, online lender, or other financial institution that provides a loan to purchase a home. Home loans offered by mortgage lenders are typically secured loans. That means the house acts as collateral and can be taken by the lender if you don't pay the loan. Interest rates offered by mortgage lenders are typically below the rates on most other kinds of loans. And interest may be tax deductible.

Mortgage lenders offer different types of loans. Conventional mortgages are loans without a guarantee from any government agency. Government-backed loans or conforming loans have different requirements and include:

Loan type, interest rate, and loan term can vary from one mortgage lender to another, so comparing multiple lenders is often the best move for home buyers.

What should I look for in the best mortgage lenders?

There are a few key features home buyers should consider when researching the best mortgage lenders. These include:

  • Loan types: Not all lenders offer all types of mortgage loans. If you need a larger "jumbo loan," or a government-backed loan, you'll need to find a mortgage lender that offers it.
  • Interest rates: Interest is the cost of borrowing. The lower the rate, the lower the monthly payment and total costs. The best mortgage lenders offer a more competitive interest rate.
  • Loan fees and costs: It's common to see an origination fee as well as fees for an appraisal and credit check. Most fees are paid as part of your closing costs. Some lenders charge more fees than others.
  • Qualifying requirements: Some lenders have stricter standards than others for credit score, income, employment history, and other qualifying factors.
  • Required down payment. For conventional loans, lenders may require a 20% down payment to avoid private mortgage insurance. That's insurance homeowners pay for to protect against lender losses in the event of foreclosure. However, it's possible to find lenders willing to offer loans with less money down. That's especially true if you choose a government-backed loan.
  • Approval time: Some lenders are able to complete the loan approval process much more quickly. This could be a factor if you're on a tight deadline.

A lender's reputation for customer service does matter a little. You want the application process to be easy and pleasant. But be aware that many lenders resell mortgages. There's a chance the original lender you borrow from will not remain your loan servicer for long.

What credit score are mortgage companies looking for?

Your credit score is one of the most important factors that determine if you'll be approved for a loan and what rate you'll be charged. Scores range from 300 to 850.

Most lenders set the minimum credit score for a mortgage at around 620. But some loans, including a VA loan, have no minimum credit score requirements at all. Other government-backed loans, such as FHA loans, are available with scores as low as 500 as long as you have a 10% down payment.

The table below shows the APR and monthly payment based on FICO scores, assuming a 30-year fixed-rate mortgage loan for $300,000.

FICO Score APR Monthly Payment
620-639 4.191% $1,201
640-659 3.645% $1,237
660-679 3.215% $1,265
680-699 3.001% $1,300
700-759 2.824$ $1,372
760-850 2.602% $1,465
Source: MyFICO

Because rates and terms vary so much from person to person and company to company, it is important to shop around for a mortgage. Obtaining multiple rate quotes is the best path to choosing a mortgage lender.

Lender Rating Best For
Rating image, 4.5 out of 5 stars.
Best For: Diverse loan types and terms
Rating image, 4.5 out of 5 stars.
Best For: No lender fees and online application
Award Icon BEST OF 2022
Rating image, 5.0 out of 5 stars.
Best For: Streamlined online application
Award Icon BEST OF 2022
Rating image, 4.0 out of 5 stars.
Best For: Digital experience & down-payment assistance
Rating image, 5.0 out of 5 stars.
Best For: Diverse terms and loan products
Rating image, 4.5 out of 5 stars.
Best For: Refinancing and FHA/VA options
Rating image, 4.0 out of 5 stars.
Best For: VA loans
Rating image, 4.0 out of 5 stars.
Best For: High loan amounts and relationship discounts
Rating image, 5.0 out of 5 stars.
Best For: Diverse loan options
Rating image, 4.5 out of 5 stars.
Best For: No mortgage insurance option
Rating image, 4.0 out of 5 stars.
Best For: Diverse loan offerings
Rating image, 4.5 out of 5 stars.
Best For: Easy online application

FAQs

  • To find the best rates from mortgage lenders, obtain quotes from as many lenders as possible. Look for lenders that allow you to check rates with only a soft credit check. That allows you to avoid damaging your credit score. Compare rates and fees to assess total costs of borrowing.

    If you want the best loan at the most competitive rate, the following can help:

    • Increase your credit score
    • Pay down your debt
    • Choose a shorter loan term
    • Make a larger down payment
  • Different lenders are right for different types of mortgage borrowers. The best mortgage lender for you is one that offers the most affordable overall borrowing costs. That's after taking fees and interest into account. You'll also want to make sure your lender offers the best loan term for you. And check that you can qualify for the loans they offer.

    Since every borrower has a slightly different lending profile, there isn't one mortgage lender that's best in every situation. As a result, it's important to compare rates and quotes from numerous mortgage loan providers to see which is best for you.

  • Mortgage lenders vary in terms of qualifying requirements: interest rates, fees charged, and a host of other factors. There's no one lender that's the best for every borrower. That's because your rates and costs are largely determined by your particular financial situation.

    For example, some lenders may offer better terms to borrowers with poor credit than other lenders do. Or some may be more forgiving of a low down payment or high debt balance.

    To find the best terms for your home loan, shop around and compare rates, fees, payoff times, and total costs from multiple lenders.

Mortgage expert advice

Brian Adams

Brian Adams

Associate Dean of Graduate Programs, Pamplin School of Business at the University of Portland

How can home buyers feel more confident when choosing a mortgage lender?

As with any large-ticket item purchase, the more information you have to make a decision the more confident you are with your choice. Due to the size of the mortgage industry in the U.S. there are many lending platforms and mortgage information sites on the internet. I searched for "mortgage rates" and ended up with 674 million results. For comparison purposes, searching for "NFL" brought up 496 million results. Granted, this could result in decision paralysis with this much information. I would recommend starting with your current bank/credit union, and include other lenders from [review] sites. It is likely the lender you choose will end up selling your loan through the mortgage-backed securitization process. So focus on lower rates and fees. Customer service is less under your control.

How do changing interest rates affect mortgages in different communities?

The loan decision is standardized in the mortgage market due to the participation of Fannie Mae and Freddie Mac (two government-sponsored enterprises that buy and sell about half of U.S. mortgages). FICO® Score, current income, and availability of money for a down payment are the most important factors. The efficiency of the mortgage market works against underserved communities where the ability to build a prime FICO® Score (above 720) can be more difficult. If you do not have the opportunity to build a credit history then it is more difficult to obtain an affordable mortgage. Therefore, the issue for underserved communities is the opportunity to create a solid credit history.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

Building a credit history is the key. This starts with on-time payment of bills (utilities, cable, cellphone) and then moves on to other opportunities like credit cards. Utilizing a credit card as a debit card, for only small-ticket purchases that can be paid off in full every month, also helps build credit. There are also programs through the U.S. Department of Housing and Urban Development's FHA program targeted directly at helping underserved communities become homeowners.

Clifford Rossi

Clifford Rossi

Executive-in-Residence and Professor of the Practice at the Robert H. Smith School of Business at the University of Maryland

How can homebuyers feel more confident when choosing a mortgage lender?

First, ever since the financial crisis in 2008, a number of measures were taken to strengthen and improve oversight of mortgage lending practices in the industry. The Consumer Financial Protection Bureau (CFPB) was established in part to address many of the deficient and sometimes predatory lending practices that occurred at that time. As a result, mortgage lenders, even those nonbank mortgage entities that are not regulated as closely as commercial banks and other depositories at the federal level must comply with all applicable federal state and local laws regarding mortgage lending. Generally, in shopping around for a lender you can trust, I would look at their track record in terms of complaints which are available at the CFPB Consumer Complaint Database. References from friends and family are another good way of benchmarking lenders in terms of how they handled the loan process. Regulated depositories, according to my research, tend to have far less operational problems in loan origination than nonbank financial institutions in terms of how they follow the process required to underwrite borrowers for Fannie Mae or Freddie Mac-eligible loans. So that might be another factor to consider as well.

How do changing interest rates affect mortgages in different communities?

We are approaching the end of a very long secular decline in interest rates that has spanned decades. At some point we expect the Fed to begin the process of taking measures that will start to raise interest rates including US Treasuries. Since the 10-year US Treasury yield is the benchmark for setting 30-year fixed-rate mortgage rates, we should expect that higher rates are going to dampen demand for mortgages at some point. Lower income borrowers, including minority borrowers, are going to feel the impact first of higher interest rates which will further put the dream of homeownership out of reach during a period of time when there are acute housing affordability issues already.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?
I'll offer a few tips. The first is one that every borrower needs to do first. Check your credit score and credit history through one of the readily available credit reporting companies and services and find out if there are any issues that you can address prior to applying for a mortgage. The second tip is look at your current finances. Add up all your outstanding monthly debt including credit card, student debt and the like and divide that by your monthly income. The lower that debt-to-income ratio is, the better chance you have at getting a loan. Also, determine how much money you have to put down on a home. Make sure you leave yourself with enough cash or short-term assets that you can tap for an unexpected event and for home maintenance. If you are a first-time homebuyer, do some homework or take a class on what to expect in owning a home. These activities can really help put you in good shape to find the right home and mortgage for your family.

Chester S. Spatt

Chester S. Spatt

Professor of finance at Carnegie Mellon University's Tepper School of Business

How can home buyers feel more confident when choosing a mortgage lender?

It is important for home buyers to undertake sufficient search to obtain quotes from various prospective lenders before selecting one -- especially given the range of pricing that can arise. They also should try potentially to clarify the servicing process with the lender (or even check with other borrowers of the lender about their experience, if feasible).

How do changing interest rates affect mortgages in different communities?

The decline in interest rates has contributed to high house prices and loan values, as buyers would bid more aggressively.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

I would reinforce my advice (above) -- it is very important for home buyers to undertake ample search so as to ensure that they are receiving favorable pricing on their loans as underserved communities are especially vulnerable to attempts to exercise market power. This may be at the heart of the meaning of a community being "underserved."

Michael Manahan

Michael Manahan

Lecturer at California State University Dominguez Hills, Author and Consultant

How can home buyers feel more confident when choosing a mortgage lender?

The first thing to understand about home lenders is that many of the companies that advertise mortgage loans are not really lenders. They are brokers. The money is not coming from them -- it is coming from a lender (to whom the broker takes the loan). As an example, I financed my last mortgage through Right Choice Mortgage. However, the loan was made to me from Glendale Credit Union.

The second thing to understand is that even if you go directly to a lender, the lender may still act as a broker. A lender, such as Bank of America, could give you a mortgage. But they could just as easily "sell off" the mortgage to a group of investors in the mortgage aftermarket. Why? Because this frees up the bank's capital to make more loans.

Who you choose to help you obtain a mortgage really depends on two things: 1) Your personal financial situation and, 2) What sort of relationship you want with a mortgage lender. If you have a complex personal financial situation, such as having multiple sources of income, being self-employed, having investment properties, and owning LLCs, or previous bankruptcies, you may find that some mortgage companies don't want to bother working with you (because it will take more time and effort to get your mortgaged approved). Also, many of the large automated or semi-automated mortgage companies where you apply online don't have the right "boxes" on their application for you to explain everything. You can end up in a quagmire of endless frustration working with these companies.

Even if you have a straightforward financial situation, you still must decide what sort of relationship you want with the mortgage company. Are you okay doing everything online or do you need to fill out forms by hand? Do you want to speak to the same person every time or are you okay with talking to whichever one of the hundreds of people in the call center answers the phone? Do you need someone who can walk you through the process and explain things to you, or are you an old "mortgage pro" who understands how the system works? Making the right decision will make your mortgage application process a whole lot easier.

Whoever you choose to work with to get a mortgage, before getting in too deep, find out how they do business and if their style fits in with your needs. Finally, if you do use one of those online brokers, if you can't find the phone number on the home page, don't use them.

How do changing interest rates affect mortgages in different communities?

Interest rate changes affect home buying. When interest rates drop, homes become more affordable because loan payments go down. As an example, if you purchased a home for $600,000 (the average price of a home in California) and put 20% down, you would have a $480,000 mortgage. At 3% interest your payment before taxes and insurance would be $2,024. At a 5% interest rate, your payment would be $2,577, or 27% higher. As lenders typically look for your cost of housing to be no more than 30% of your income, lower interest rates should allow more people to get mortgages, and higher interest rates will restrict mortgages.

However, changes in mortgage interest rates do not affect all communities the same. Obviously very rich people, who may still mortgage their homes for tax or financial planning purposes, have few restraints on their ability to get a mortgage. At the lower end of the scale, the least expensive house may continue to sell well when interest rates rise because there are many programs to help underserved and first-time buyers. FHA loans are specifically intended for lower-income, lower-credit, and/or first-time home buyers. This program, which is backed by the Federal Housing Administration, makes it easier to become a homeowner by relaxing the standards borrowers must meet to get a mortgage.

The communities that get hit hardest (or benefit the most) when interest rates change are those communities where the home prices are above average, but not high enough to be of interest to rich people. As an example, in California, that might include communities where the home prices are in the $1 million to $1.5 million range. I recall the recession of 2008, when the value of real estate dropped substantially, there was still demand for the least expensive houses and still demand for mega-mansions of the rich. But those million-dollar homes couldn't find many buyers.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

I offer three tips to members of underserved communities to get the best rates possible. First, do whatever you can to improve your credit score. Even in underserved communities credit scores are one of the primary indicators of credit worthiness used by our financial system.

Second, work with a bank or lender that is familiar with all the programs that are available to underserved communities. Some mortgage companies may not want to use these programs because they may be extra work. Find a mortgage company who can talk frankly to you about those programs that are available and that you can use to your benefit.

Finally, make sure the mortgage company knows that you are a member of an underserved community. Today when we do a lot of business online or on the phone, it may be difficult for the lender to know that you are member of an underserved community which under the broad-based definition recently provided by the White House is said to include "people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality." That definition covers a lot of people.

Scott Deacle

Scott Deacle

Associate Professor of Business and Economics and Department Chair at Ursinus College

How can home buyers feel more confident when choosing a mortgage lender?

The most effective way is to get quotes from multiple lenders. Time consuming as it is, the extra work pays off with leverage in your discussions with those lenders. If you know what other lenders are offering, each lender is likely to try to match or beat the rates you are getting with other lenders.

Another way is to obtain a mortgage from the bank or credit union where you have your checking or savings accounts. Such lenders sometimes offer discounts to their account holders.

You can also compare the rates lenders are offering to national benchmark rates, such as those published by Freddie Mac.

How do changing interest rates affect mortgages in different communities?

I think changing interest rates have similar impacts across communities. When interest rates fall, they generally fall for all borrowers.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

Many issues surrounding loans to members of underserved communities stem from issues with credit scores and credit reports. My one tip is to obtain the free credit report to which you are entitled by law and review it for inaccuracies before applying for a mortgage. If there are errors in your credit report, correcting them will improve your credit score, which in turn could get you a lower interest rate.

Stan Longhofer, Ph.D.

Stan Longhofer, Ph.D.

Professor and Director of the Center for Real Estate at Wichita State University

How can homebuyers feel more confident when choosing a mortgage lender?

I am a big believer of using local mortgage lenders, especially credit unions and community banks with a large mortgage business. Buyers in today’s market need to do everything they can to convince sellers that they will actually close the transaction on time. Even with loans that have been pre-approved, there are final checks the lender must make before funding the loan. If a problem arises, it really helps to have a real, live person you can meet with face-to-face to resolve it quickly.

Even more importantly, local lenders depend on good relationships with local Realtors, and if they don’t take care of you, it will directly impact their future business. When I hear about financing problems causing a real estate closing to fall apart, it almost always results from the borrower having chosen a national rather than a local lender.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

Remember that the loan with the lowest interest rate is not always the least expensive. You also have to consider the up-front fees the lender is charging. Look carefully at the Loan Estimate and make sure you understand all of the fees it lists. Your lender should be willing to take all the time you need to help explain it all to you.

If you plan on keeping the loan for a long time (more than six or seven years), the APR listed on this disclosure is a good measure of the loan’s true cost. On the other hand, if you anticipate moving in less than five years, you probably want to choose a loan with as few up-front fees as possible, even if the APR is higher.

Finally, after you choose a lender and you are getting ready to close your loan, make sure you carefully review the Closing Disclosure you receive from your lender. Compare it with the original Loan Estimate and make sure you understand any differences. Once again, your lender should be willing to talk this through with you if you have any questions (another reason it is good to have a local lender).

Vivek Sah, Ph.D.

Vivek Sah, Ph.D.

Director of the Lied Center for Real Estate at the University of Nevada, Las Vegas

How can homebuyers feel more confident when choosing a mortgage lender?

In today's competitive business environment and with much less information asymmetry between borrowers and the mortgages industry due to proliferation of data and information, homebuyers have many options but need to spend time doing their due diligence on mortgage choices. There are a plethora of options including online lending platforms, traditional banks, credit unions, and lastly mortgage brokers, which facilitate home financing. Exploring all these options for various mortgage products and comparing interest rates, but also more importantly out-of-pocket expenses such as closing costs, application fees, points, and origination charges, is highly recommended to choose the best option given their situation. Be...sure to shop around to get the lowest interest rate with the lowest out of pocket costs.

How do changing interest rates affect mortgages in different communities?

Changing interest rates only affect adjustable rate mortgages (ARM) and not fixed rate mortgages (FRM) once you have taken one. For ARMs, increasing interest rates mean your payments are expected to go up and vice versa. However, if interest rates dip significantly, FRM borrowers can always refinance their loans, especially if they are likely to stay in their current home for a longer period of time (short-term stay vs. long-term stay is an important consideration when refinancing, as there are costs associated with refinancing). Significant increases in interest rates will adversely affect communities that have a higher proportion of ARM borrowers, as that increases the likelihood of default. FRM borrowers are unaffected by such changes.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

Shop around as much as possible, and please explore all options, including banks and credit unions. Read the disclosures carefully, and minimize your out-of-pocket expenses. Also, explore special federal programs that may provide low down payment options/assistance, closing costs subsidies, and other incentives to help underserved communities buy and finance homes to boost homeownership. Talk to multiple entities before finalizing a mortgage (just like you would go to various car dealerships to get the best deal).

Michael Roberts, Ph.D.

Michael Roberts, Ph.D.

William H. Lawrence Professor of Finance at the Wharton School of the University of Pennsylvania

How can homebuyers feel more confident when choosing a mortgage lender?

I think the key is finding a reputable lender with whom you are comfortable. By reputable, I mean a lender with a positive track record. This does not necessarily mean going with a large brand-name bank. It could be your local bank or an online lender. Or, you might want to work with a mortgage broker who can act as an intermediary between you and several lenders. It's as important to have a reputable lender as it is to have a lender (or broker) you trust and with whom you are comfortable. You will likely have many questions and you want to make sure that you are working with someone who is always available to answer them, even after you sign the documents. So, do a little research on the lender and trust your gut when you engage with them.

What's one tip you would give to individuals looking to get the best mortgage rate possible?

First, shop ... a lot! When I was ready to buy a house, I must have called at least 20 banks and mortgage brokers for mortgage quotes. The variation in these quotes was huge. So, without shopping, you can wind up paying a lot more than you otherwise would. Related, get your credit score before you call for quotes. Lenders need to know your credit profile to give you a quote, and there is no need to have them pull your credit report, and possibly lower your credit score, for a quote.

Second, understand your mortgage -- and not just what the monthly payment will be. Can you prepay your mortgage without a penalty? Can you put down more on the house to avoid paying for mortgage insurance? Do you really want to include any upfront fees into the mortgage and pay interest on those fees? If your mortgage is an ARM, are you prepared to handle possibly higher monthly payments when the fixed-rate period ends, or are you sure you’re going to move before then? Mapping out a financial plan with all of the costs that come with homeownership and a mortgage before you sign that document is critical to minimizing problems later on.

Richard Green, Ph.D.

Richard Green, Ph.D.

Director at the Lusk Center for Real Estate at the University of Southern California

How can homebuyers feel more confident when choosing a mortgage lender?

It is important for homebuyers to shop for a loan. Ask all lenders what the rate on their "zero-cost" loan is. In such loans, all the upfront costs (points and fees) get rolled into the rate, so it is possible to compare lenders with each other. According to an FDIC paper from five or six years ago, fewer than half of homebuyers shop.

How do changing interest rates affect mortgages in different communities?

Clearly, the biggest impact of rates is on affordability -- lower rates make monthly payments lower. Nevertheless, in some places, rates show up quickly in higher house prices (California is exhibit A). That can ultimately mean that affordability gets worse, as mortgage payments rise back to previous levels while down-payment requirements and property taxes become higher than ever.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

  • Shop.
  • Do not be intimidated.
  • Remember that you are doing the lender a favor, because they are making a profit from the loan they are issuing you.
  • Do not pay too much in up-front fees.
  • Talking to a bunch of mortgage lenders will not hurt your credit score, so long as you don't stretch out the period in which you do it for too long.
Ken Johnson, Ph.D.

Ken Johnson, Ph.D.

Real Estate Economist and Associate Dean in Florida Atlantic University's College of Business

How can homebuyers feel more confident when choosing a mortgage lender?

Homebuyers should look for lenders that can explain the math and intuition behind loans. Answers like, “The math is complicated,” are usually provided by mortgage brokers that are good salespeople as opposed to good advisors on the choice of a critical financial product. Avoid mortgage brokers that are sales oriented in favor of those that can financially explain loan products.

How do changing interest rates affect mortgages in different communities?

Because of loan qualifying ratios and costs of living, more affluent borrowers will always be able to take greater advantage of falling rates than less affluent borrowers. Fixed costs of living across all borrowers make this mathematically so.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

Start the loan application process early and maintain clear lines of communication with your mortgage broker. Rushing the underwriting process never helps with the loan approval process.

Kelley Pace, Ph.D.

Kelley Pace, Ph.D.

Director of the Real Estate Research Institute at Louisiana State University

How can homebuyers feel more confident when choosing a mortgage lender?

The search for a mortgage lender partly depends on whether this is a purchase mortgage or a refinance. Service and problem solving ability may play a greater role in a new purchase, especially in tight markets with short finance deadlines or with unique properties. Cost may play a greater role in refinancing as a failure to obtain a new loan does not have the same consequences as with a purchase loan. For new purchasers, a good real estate agent can suggest possible lenders. Although the real estate agent may care more about maximizing the probability of a closing than the lowest possible financing costs, buyers can contrast these suggested choices with online lenders to see what premium, if any, they are paying for service. Borrowers should apply to several lenders in a short period to avoid multiple hits to their credit score and examine the different loan estimates carefully. They should also assess whether the lenders seem capable of timely performance. They should be wary of selecting mortgage lenders based on social ties or those that approach the borrower. These seem more likely to lead to predatory lending.

What's one tip you would give to members of underserved communities looking to get the best mortgage rate possible?

For those currently trying to buy or refinance, it becomes difficult to materially improve financial positions. However, buyers can attempt to acquire properties that match their financial position. In addition, borrowers can acquire all the necessary documents and be prepared to handle the required paperwork quickly. This will improve the chances of a closing.

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