What to Look for in an Online Mortgage Lender
Look at a handful of factors you’ll want to consider before you choose the best online mortgage lender for you.
Types of Mortgages Offered
Choosing the mortgage that’s 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 available with select lenders. The most common mortgage types are:
- Adjustable-rate mortgages (ARMs) offer fluctuating interest rates throughout your mortgage term. Hybrid ARMs offer a fixed interest rate for a certain number of years, followed by fluctuating rates. Adjustable-rate mortgages are also called 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 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 are for active duty, reserve and veteran military members. 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.
Also Read: The Best Jumbo Mortgage Lenders.
Rates and conditions
The interest rates and loan terms offered by mortgage lenders are also an important consideration and may also have variable or fixed interest rates. Fixed-rate long-term mortgages can add stability and predictability to monthly mortgage payments. Adjustable rate mortgages (ARMs) may offer greater risk - the interest rate will fluctuate over the life of the loan.
The most common loan term is 30 years, although some lenders offer terms of up to 10 years. The interest rate and monthly mortgage payments will vary based on the term of the loan. Be sure to discuss your options with various lenders to determine which one is right for you before taking out your mortgage.
Other expenses
The monthly mortgage payments are not the only cost to consider when choosing your online lender. There are various fees that creditors may or may not charge you. Most lenders charge a loan issuing fee equal to a percentage of the total loan amount. You can also pay document preparation fees and credit reporting fees. Most lenders also require a home inspection to confirm that the home you are applying for is in a livable condition. These fees can vary by lender, so understand all the fees associated with buying your home before landing on a mortgage lender.
5 tips to find 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 who can lend you the amount you need at a good interest rate and on reasonable terms. The first step in the process is to answer this question: how much home can you afford? Once you have determined what you can afford, you will know what amount you will need.
2. Ask
Don't be afraid to contact friends and colleagues to ask about their experiences with the lenders you are considering. This can be especially helpful if the people you are receiving advice from are in a similar financial situation to yours.
3. Compare your best lenders
Consider creating a comparison chart to record what each lender offers. So compare this to your must-haves. For example, you may know that you only want to make a 10% down payment, so list the lenders that offer mortgage types that suit your needs. It is also helpful to note interest rates and origination fee amounts. When you put lenders side by side on these topics, it's easier to shop around and make the right choice for your home buying experience.
4. Contact the lenders
Ask questions before selecting which lender to use for your mortgage. Know what each lender's customer service is like. You will be in a relationship with this lender for several years or decades, so it is important that you feel comfortable with the company you choose.
5. Consult your real estate agent
A real estate agent may be able to provide you with information on mortgage lenders. Ask which lenders they have had the most experience with and who they would recommend for the type of loan you are looking for.
The best online mortgage lenders
There will surely be an online lender that suits your needs, regardless of the type or duration of the mortgage you are interested in. Each online lender has their own strengths, so take a look below and pick a few that might work for you.
1. Quicken Loans®: the best ever
Quicken Loans® is highly regarded for its customer service and its wide variety of mortgage options. Their home loan experts are available to answer questions; you will know someone will be there to help you discuss your mortgage options.
Quicken Loans® is the largest mortgage lender in the nation, offering a wide range of mortgage types. YOURgage, a custom fixed-rate loan that can range from 8 to 29 years and can help you achieve your financial goals.
2. Morty: Best Process
Morty is a tech-first mortgage originator, working with multiple third-party lenders. When you are ready to make what could easily be the biggest investment of your life, the process can be complex and confusing. It hopes to connect customers with mortgages when they may not feel comfortable working with traditional lenders.
You can apply online in a matter of moments, submit as many financial documents as possible and await pre-approval. You can take that document to your realtor and begin submitting offers on available homes. With the assurance that a pre-approval letter from Morty provides, you can expedite any home search.
Morty works with conforming conventional loans, following Fannie Mae guidelines. You may need to submit further documentation, but everything is handled online to simplify the experience. Every loan is customized to meet the customer’s needs, and you work with a dedicated closing specialist to avoid any issues leading up to your settlement date.
In short, the process is seamless and welcomes those who do not understand or enjoy the traditional mortgage origination process.
3. New American Funding: Best for Refinancing
A family-owned business, New American Funding is a Fannie Mae, Freddie Mac and Ginnie Mae direct lender, seller and servicer. New American Funding offers the following mortgage types and loan options:
- 30-year fixed-rate mortgage
- Conventional loan
- VA loan
- Buydown loan
- Reverse mortgage
- 15-year fixed-rate mortgage
- FHA loan
- Adjustable-rate mortgage
- I CAN mortgage
- New American Funding makes everything faster, easier and simpler. The company makes it easy once you’re making payments, too. Its online bill pay through Customer Care Net lets you set up your monthly payments automatically at no charge.
New American funding makes refinances easy, too. Simply contact the lending department at 800-450-2010, and click on “Refinance” on the website to get information about your refinance options.
Make New American Funding your mortgage partner today.
4. Rocket Mortgage® - Best for comprehensive offers
Rocket Mortgage® is a great option for consumers who want something quick, easy and customizable. Its intuitive application generates employment information from some personal data.
This not only saves you time, but allows you to get pre-approved in just 8 minutes. Like Quicken Loans®, Rocket Mortgage® offers a wide range of home loan options as well as stellar customer service.
5. Credible: Best for Low Rates
Credible is an online marketplace that provides you with personalized loan offers from multiple vetted lenders in real time. It works like this:
- Fill out one simple form. An easy-to-fill-out form, your information is also completely protected.
- You get personalized rates. Credible offers real rates (not ranges) from several lenders in just 2 minutes.
- Choose your lender. You can tap into Credible’s client success team to help you out.
- Find your best match whether you want to refinance student loans, get a private student loan, a personal loan, a mortgage, refinance your mortgage or even get a credit card.
6. eMortgage: Best for Comparison Shopping
eMortgage is a comparison shopping platform that offers up to 5 competing mortgage quotes in a few minutes.
Once you receive the top lenders in your network you’ll be able to connect with the lender of your choice. There is no obligation for you to take any quote, and the online request form is free.
Only available in the following states: AK, CO, CT, DE, HI, ID, KS, NE, NH, NJ, NY, NC, OK, RI, SD, VT, WV, WY
Your next steps
Take stock of the information above and contact the lenders who offer the types of loans that interest you and don't forget to read about saving for a home.
Make sure you do your research and get all your questions answered before moving forward, no matter which lender or type of loan you decide to choose. Buying a home is one of the most important financial decisions you will make and the right lender can make all the difference.