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.

After you’ve checked your credit score, figured out how much house can you afford and researched the best mortgage lenders, it’s time to start the real paperwork. Your mortgage application process will vary depending on preapproval status and other factors, but more or less everyone who applies for a mortgage goes through these five steps:

1. Collect important documents

You’ll need W-2s or federal tax returns for the past two years, plus pay stubs for the past month and any details about long-term debts like a car note or student loan, recent bank statements, and a government-issued ID. Your lender will also need to verify information relating to your monthly income, credit report and cash savings.

2. Fill out the application

Residential loan applications are uniform across lenders, so if you’ve seen one you’ve seen them all. First, you’ll sign the top to acknowledge that you understand and agree to the terms of the application. There will be a box to check if you are including a spouse’s information to qualify, and another box to check that indicates the loan type and loan amount for your mortgage application. You’ll then fill out personal information, such as your name, date of birth, Social Security and phone numbers, marital status and number of dependents.

You’ll also have to provide information about your residence history and employment history for the last two years and fill in details about your gross income and regular monthly expenses, checking and savings account balances, as well as other assets or liabilities. Keep in mind that you also must disclose if you’ve filed for bankruptcy in the last seven years or if there are any outstanding judgments against you.

One of the last sections you have to fill out will include the address of the property that you want to finance. If at any point you’re confused about how to fill out a section your loan application, your loan officer should be able to explain or clarify what information you need to provide. Finally, you (and a co-borrower, if applicable) will be required to sign the application again at the bottom to acknowledge that all of the information you’ve provided is true.

3. Review Loan Estimates from several lenders

All lenders are required to use the same Loan Estimate form with three days of receiving your application, which makes it easy to compare loan amounts, interest rates, monthly projected payments and origination fees.

• 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 same rate you were offered.
• Monthly projected payments: This section of the Loan Estimate breaks down the amount you’ll pay each month for principal, interest, mortgage insurance and the estimated escrow along with 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.

4. Make a commitment

After you’ve compared rates and fees and found a lender you can trust, it’s time to make a decision. It’s alright to take your time on this step, so don’t let a pushy loan officer make you feel cornered into your final decision. When you’re comfortable, you can simply contact the mortgage lender that you like best and tell them you’re ready to buy a house.

5. Wait for approval

Remember that official mortgage application that you filled out and had to sign twice? Now that you’ve committed to a lender, all of that information will be scrutinized. A processor will pull all of your tax records to confirm your income. Then an underwriter will evaluate how risky it is to give you a loan. This process can take anywhere for from a few days to a few weeks.

Keep in mind that it’s more difficult to get a mortgage now than it was pre-Great Recession. Common reasons that mortgage applicants are unexpectedly denied a loan include leaving out crucial information on their application, inability to verify some portion of their income, a recent application for a personal loan or line of credit, job change or overdraft on a checking account.

If you are denied for a mortgage loan, you have the right to find out why. You can ask your loan officer what went wrong, and they might give you advice—you might be able to still get the loan if you make a bigger down payment, get a cosigner or put up extra collateral for the loan. If all else fails, you can still try to apply for the mortgage loan with another lender. If you’re approved, then closing will be the next step toward homeownership.

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.