Best Mortgage Lenders and Refinancing Companies

A home mortgage is a long-term decision, so it’s important to choose a trusted company that offers a financially feasible option. When choosing our top picks for mortgage companies, we looked at online experience, types of loans offered, customer reviews, availability of service, minimum credit scores required, refinancing options, prompt and attentive customer service and maximum debt-to-income ratios accepted. We also took into account whether the companies offered VA loans, FHA loans and USDA loans. Our top pick for mortgage broker excels at matching consumers to mortgage lenders with the aforementioned qualities.

620 minimum credit score 3% minimum down payment 45% maximum debt-to-income ratio

AmeriSave offers fixed, adjustable, FHA, HARP, VA, USDA and jumbo loans. They also offer cash-out refinances. For conventional loans, a minimum credit score of 620 is required. For government-backed loans, including FHA, VA and USDA, the minimum credit score required is 600. AmeriSaves serves customers in 49 states and the District of Columbia. The company conducts most of its business with consumers (80 percent) through its call center. The remaining 20 percent is conducted online. Mortgage refinancing is a specialty of AmeriSave’s—a full 80 percent of its business is refinancing mortgages.

Homeowners can apply online for pre-approval. AmeriSave will conduct a hard credit pull, and applicants will need to update the necessary documents and sign them electronically. Each applicant is paired with a loan officer who will communicate updates to the consumer.

You can find many mortgage calculators and other educational tools on AmeriSave’s website to help you with your home and mortgage search. AmeriSave also offers many financial bonuses to customers. Borrowers can receive bonuses ranging from a couple hundred to several thousand dollars if they purchase a home through AmeriSave’s network of affiliated real estate brokers. AmeriSave also offers a rate matching guarantee. If you find a better rate after securing a loan with AmeriSave, the company will either match the competitive rate or give you $1,000.

620 minimum credit score 5% minimum down payment 36% maximum debt-to-income ratio

HomeDirect Mortgage is an online-only lender. They offer conventional, refinance and VA loans. These can be purchase, refinance, cashout refinance or HELOC loans. Consumers are able to pre-apply for a loan via HomeDirect Mortgage’s online application system. All that potential lenders have to do is upload the necessary documents and e-sign the applications. Once the application is reviewed, a loan officer reaches out to the applicant to discuss next steps and answer questions.

The company requires a credit score of 620 and 5 percent down for those applying for conventional loans. Customer service is good, and consumers report consistently receiving status updates during the application process. HomeDirect Mortgage’s website also offers comprehensive answers to questions consumers might have about their loans. This information is designed to help consumers, not just to sell a product or service. They even explain the pros of renting a house or apartment vs. buying a house.

500 minimum credit score 5% minimum down payment 43% maximum debt-to-income ratio

In the same way a real estate broker connects you with owners, a mortgage broker connects you with mortgage lenders. Lending Tree is our top pick for mortgage broker. Because they are brokers and not lenders, Lending Tree does not supply loans directly. Lending Tree’s vast affiliate network makes it easy to find the right home mortgage for you. And with such a vast network, homebuyers can find loans that vary greatly in interest rates and term length. Types include conventional, VA and FHA loans.

Lending Tree’s user-friendly interface, speedy loan approval process and privacy features stand out as top features. Reviewers also note that it is easy to receive several mortgage loan offers in a matter of minutes. Lending Tree has a long history of operation and a minimum amount of controversy. They are a solid choice if you are investigating your home mortgage options.

1. Check your credit score
To avoid any surprises during the pre-approval process, know what your credit score is before you start looking for a mortgage lender. Payment history and credit utilization ratio together make up 65 percent of your FICO score. For that reason, it’s wise to stay current on all your payments and pay down your credit card balances as much as possible. Your credit history and credit score can affect your loan options, and a higher credit score will usually get you a lower interest rate.

2. Determine your budget
Your total upfront cost will include your down payment and your first monthly mortgage payment. A down payment is an amount of money you pay upfront to secure a mortgage. How much you need to save for a down payment will depend on the type of mortgage loan you get and the price of the home you buy.

You will also need to determine how much you can spend on your monthly mortgage. Remember that your total monthly mortgage payment will include principal and interest, property taxes, mortgage insurance and, in some cases, a homeowners association (HOA) fee.

3. Get pre-approved for your mortgage
Getting a pre-approval letter from a mortgage lender can make the difference between having your offer accepted or rejected. Pre-approval means your lender has reviewed your financial statements and has decided that you can afford the house you want to buy. Many home sellers will require a pre-approval letter before they’ll accept an offer. Getting pre-approved can take as little as three days or as long as several months. Pre-approval does not guarantee you will receive financing from a mortgage lender, but it is a good step.

4. Know your mortgage financing options
When it’s time to compare your loan options you’ll need to consider the term of the loan, the type of interest rate you want and the type of loan you need.

• Loan term: The term of the loan is how long you have to pay off the loan. Most homebuyers get a 15-year or a 30-year mortgage, but some mortgage lenders may offer other terms. A longer loan term will generally mean lower monthly payments. However, a shorter loan term will mean you’ll pay less in interest over the life of the loan.
• Interest rate: Mortgage interest rates can be either fixed or adjustable. Adjustable-rate mortgages (ARMs) may start out low and change during the course of a loan, causing your monthly mortgage payments to fluctuate. Fixed-rate mortgages lock in the same interest rate during the life of the loan. The most common type of home loan is the fixed-rate mortgage since it provides a lower monthly payment for the same loan amount.
• Mortgage points: Mortgage points, or discount points, are fees that you pay to your lender directly at closing to lower your interest rate. One mortgage point is equal to one percent of your loan amount, so one discount point on a $200,000 mortgage is $2,000. Figure out how long it will take you to break even by dividing the cost of your points by how much you’ll save every month. The number you end up with is the amount of months it will take you to break even. If you plan on staying in your home for that period of time or longer, then it’s worth paying the upfront discount points to save over the life of your loan.
• Loan type: Mortgage loans come in three main types: conventional, FHA and special program loans. Conventional mortgages are loans that are not insured or guaranteed by the federal government and can have either a fixed or adjustable rate. FHA loans are insured by the Federal Housing Administration and come with lower down payment and credit score requirements than most conventional loans. Special program loans like VA loans and USDA loans are also government-insured loans available to eligible homebuyers.

5. Compare several mortgage lenders
Mortgage lenders are required by law to provide a Loan Estimate within three days of receiving your application. To get the best possible rate on your mortgage, you should compare Loan Estimates from at least three potential mortgage lenders. All lenders are required to use the same Loan Estimate form, which makes comparing them easier. Review the following information that will be provided with each mortgage Loan Estimate you receive.

• Loan amount: This is the total amount of money you’ll borrow for your mortgage loan. This amount could go up if your lender rolls some of your closing costs into your loan.
• Interest rate: Make sure you’re getting the lowest interest rate possible, and hold on to your original Loan Estimate when it’s time to close to make sure you’re getting the rate you were originally offered.
• Monthly projected payments: This section of the Loan Estimate breaks down the amount you’ll pay each month for principal, interest, mortgage insurance, the estimated escrow and how they’ll change over time.
• Origination fees: Mortgage lenders charge loan “origination fees” for things like mortgage application and underwriting fees. Origination fees are usually a small percentage (between 0.5 and 2 percent) of the total loan amount, but some mortgage lenders offer fixed fees of $1,000 or less. You can try to negotiate these fees or shop around to find a mortgage lender that charges less.

How does a mortgage loan work?

A mortgage is a loan from a bank, credit union or lender for the purchase of a home. In addition to paying back the mortgage over the course of several years, you also agree to provide the house as collateral in the event that you are unable to make your monthly payments toward the mortgage.

The amount you borrow initially is called the principal. Each month, your payment reduces the amount owed. Lending companies also charge interest in addition to the initial principal. On a fixed-term loan, the lower your mortgage balance, the less interest you will owe. Taxes and insurances also usually add additional costs.

What is a good mortgage interest rate?

In 2018, the average interest rate for a 30-year fixed rate mortgage was 4.38 percent. A good mortgage rate will be one that you feel results in payments you can afford over the long term.

Historically, rates have hovered around 8 percent. Mortgage interest rates vary from year to year and tend to be higher when the economy is doing well. Interest rates have increased since the recession, with most homeowners paying at least 4.5 percent. You’ll get around the same interest rate with a conventional loan as you will with an FHA loan.

How do I get the best mortgage rate?

To get the best interest rate on your mortgage, you need to have excellent credit. Take the time now to pay off your credit cards, and don’t take out any new loans while you’re getting ready to apply for a home loan.

You can also get a better mortgage rate by getting an adjustable-rate mortgage (ARM) rather than a fixed-mortgage. Keep in mind, though, that your monthly payments will increase after the fixed-rate period ends if you opt for an ARM.

A higher down payment usually equates to a lower interest rate. Try to save up for a 20 percent down payment, so you can also avoid having to pay private mortgage insurance (PMI). If you can’t put down 20 percent, shoot for at least 5 percent, since that is usually where you’ll start seeing a decrease in interest rates.

How do you get rid of PMI?

If you want to avoid paying private mortgage insurance (PMI), you have to place a down payment of 20 percent or more at closing.

If you put down less than 20 percent of your new home’s purchase price, you’ll have to pay PMI, which protects the lender in case you stop making payments on your loan. If you paid 20 percent initially, or once your conventional loan balance has dropped to 78 percent of the value of your home, you can submit a written request to your lender asking for your PMI to drop off.

If your home’s value has increased to the point that you owe less than 78 percent of the value, you might be able to request for your PMI to be removed. You’ll need to pay for an appraisal to validate that the value of your home has increased. Many lenders won’t consider removing PMI until you have made payments for at least two years, so check with your bank or mortgage lender before getting an appraisal.

If you have an FHA loan, you have to keep paying PMI unless you refinance your mortgage to a conventional loan.

How do you get pre-approved for a mortgage?

To get pre-approved for a mortgage, you have to submit your W2, tax returns and pay stubs to your lender so they can verify your monthly income. Your lender will also want documentation of any other assets you have. They will use all this information to determine whether or not you can reasonably afford the loan you’re going to apply for. Keep in mind that the lender will do a hard pull on your credit, which means your credit score could take a small dip, so only get pre-approved when you’re serious about putting in an offer on a home.