Online lenders are popular in the home loan market because they offer an easy application process and quick turnaround times. Benzinga has compiled a list of some of the best online mortgage lenders available. Let’s take a look at the best online mortgage lenders if you prefer to things virtually and avoid a standard mortgage broker, closing, protracted approval process and achieve the dream of homeownership today.
Quick Look at the Best Online Mortgage Lenders:
Best Online Mortgage Lenders
There’s sure to be an online lender suited for your needs, no matter what mortgage type or term you’re interested in. Each online lender has its own strengths, so take a look below and pick out a few that may work for you. Remember, among your homeownership goals should be affordable private mortgage insurance, unique loan programs, and easy-to-understand loan estimate, competitive interest rates and quality customer service.
1. Rocket Mortgage®: Best for Comprehensive Offerings
Rocket Mortgage® by Quicken Loans® is a great option for consumers who want something quick, easy and customizable. Its intuitive application generates your employment information from a few personal details.
This not only saves you time but allows you to get pre-approved in as little as 8 minutes. Like Quicken Loans®, Rocket Mortgage® offers a wide range of mortgage loan options as well as stellar customer service.
2. Angel Oak Home Loans: Best for Bank Statement Loans
Angel Oak Home Loans is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. Angel Oak is licensed in 45 states and offers competitive rates and quick closing times.
- Available for purchase, cash-out or rate-term refinance
- Primary, second home, or investment properties
- Single family, townhomes, or condos
- Loan amounts up to $3.5 million
- No tax return options for self-employed borrowers and real estate investors
- 1099 income options available
- Government loan products available (FHA, USDA, VA)
- Competitive rates on conventional purchase and refinance
- Flexible down payment options
- Non-warrantable condos allowed
3. New American Funding: Best for a Variety of Options
New American Funding offers conventional, proprietary and government-backed mortgages. Its variety of mortgage options make it worth checking out, especially if you have unique financial needs. It also offers options for refinancing and tapping into your home equity. Its loan products aren’t available to New York or Hawaii residents.
New American Funding is a good choice for self-employed borrowers. It allows you to use bank statements to verify your income instead of trying to qualify with tax returns, W-2s or pay stubs, which you might not have with a fluctuating or lump-sum income.
New American Funding is also an excellent lender for first-time home buyers. You can opt for an FHA, USDA or VA loan. New American Funding also has educational resources to help you understand the mortgage process.
It may also be a good fit for senior homeowners looking for a reverse mortgage. A reverse mortgage allows you to take advantage of the equity you’ve built up in your home. It’s not for everyone, but it’s worth considering if you’ve built up significant equity in your home but have concerns about your income in retirement.
New American Funding recommends you have a credit score of at least 640 and are ready to provide a downpayment of 20%.
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. The home buying process should be as simplified as possible, and you want to look at a lot more than closing costs.
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
- 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
andveteran 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.
Rates and Terms
The interest rates and loan terms offered by mortgage lenders are also an important consideration and can also come with variable or fixed interest rates. Long-term fixed-rate mortgages may add stability and predictability to your monthly mortgage payments. Adjustable-rate mortgages (ARMs) can offer more risks — your interest rate will fluctuate during your loan term.
The most common loan term is 30 years, although some lenders offer terms as low as 10 years. Your mortgage’s interest rate and monthly payments will vary depending on your loan term. Be sure to discuss your options with various lenders to determine what is right for you before taking out your mortgage.
Monthly mortgage payments aren’t the only cost to consider as you choose your online lender. There are several fees that lenders may or may not charge you. Most lenders charge a loan origination fee equal to the percentage of your total loan amount. You may also pay document preparation fees and credit report fees.
Most lenders also require a home inspection to confirm that the home you are taking out a mortgage on is in livable condition. These fees can vary depending on the lender, so understand all the fees associated with your home purchase before you land on a mortgage lender.
5 Tips for Finding 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 that can loan you the amount you need at a good interest rate and reasonable terms. The 1st step in the process is answering this question: How much house can you afford? Once you’ve determined what you can afford, you’ll know what size loan you’ll need.
2. Ask Around
Don’t be afraid to reach out to friends and colleagues to ask about their experiences with lenders you’re considering. This can be especially helpful if the people you get advice from are in a similar financial situation as you.
3. Compare Your Top Lenders
Consider making a comparison chart to write down what each lender offers. Then, compare this to your must-haves. For example, you may know you only want to put 10% down, so list the lenders that offer mortgage types that fit your needs. It’s also helpful to note interest rates and origination fee amounts. When you place the lenders side by side on these issues, it’s easier to compare and make the right decision for your home buying experience.
4. Reach Out to Lenders
Ask questions before you select which lender you’ll use for your mortgage. Know what each lender’s customer service is like. You're going to be in a relationship with this lender for several years or decades to come, so it's important that you're comfortable with the company you choose.
5. Consult Your Real Estate Agent
A real estate agent will likely be able to offer you some insight on mortgage lenders. Ask which lenders he or she has had the most experience with and who he or she would recommend for the type of loan you’re looking for.
Your Next Steps
Take stock of the information above and contact the lenders that offer the loan types you’re interested in — and don’t forget to read up on how to save for a house.
Be sure to do your research and get all your questions answered before moving forward, no matter which lender or loan type you decide to go with. Buying a home is one of the biggest financial decisions you’ll make and the right lender can make all the difference.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.