Mortgage

Higher mortgage overview for 2020

overview

There are a number of 21st century mortgage lenders. But few have attracted as much attention as Better Mortgage (aka Better.com or simply "Better").

Better was founded in 2014 and started operations in 2016. Even so, the company has already raised $ 3 billion in mortgages and helped thousands of borrowers.

The main attraction of the company is the simple online mortgage process. The company says its innovative technology can cut closing times in half and save borrowers an average of more than $ 3,000.

However, there are disadvantages with all of these advantages. It is better to miss some key mortgage products like USDA Land VA loans and it is not available in all states. And the interest rates will not be competitive for every borrower.

If you are looking for a digital mortgage lender and Better has the type of loan you need it is definitely worth a look. Remember to check interest rates with some other lenders to make sure you get the best deal possible.

Better mortgage rates

There are relatively few lenders that consistently offer lower interest rates or transaction costs than their competitors. But a better mortgage can be one of them.

In addition to consistently low mortgage rates, Better offers much lower fees than other lenders. This even eliminates the annoying "origination fee" (which is usually around 1% of the loan amount).

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Estimates for 30 year fixed rate mortgages from large banks

Better mortgage
Wells Fargo
Accelerate loans
chase
Average 30-year interest rate, 2019

3.89%
4.22%
4.16%
4.22%

Monthly P&I payment

$ 942
$ 980
$ 973
$ 980

Median loan costs, 2019

$ 0
$ 3,484
$ 5,075
$ 3,440

Median Origination Charges, 2019

$ 0
$ 1,199
$ 2,805
$ 1,279

Better Mortgage also has a "Better Price Guarantee" that says it will either match the final cost of the contest or give you $ 1,000 in cash. However, there is a fine print around this promise (more information below).

Average interest rate and fee data comes from public records required by the Home Mortgage Disclosure Act (HMDA).

* Monthly principal and interest payment based on a home price of $ 250,000 with a 20% decrease at an average 30-year interest rate of each lender for 2019. Your own interest rate and monthly payment will vary.

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Better.com's refinancing rates are similar to mortgage rates. They are usually the same or slightly lower than other large mortgage lenders.

However, you must apply to determine whether you actually qualify for the refinancing rate specified. Your own refinancing rate may be higher or lower than what you see on Better.com based on your loan size, credit rating and other factors.

Here you can get a custom refinancing rate from Better Mortgage.

When asked to contribute to this Better.com mortgage review, a company spokesman said:

“Our mission is to change the way Americans buy and refinance their homes by delivering lower interest rates, faster closing times, and a radically transparent, technology-driven process.

"We prioritize the customer experience through an online process with instant credit estimates, honest interest rates, and 24-hour pre-approvals, complemented by the support of a non-commissioned loan officer."

And they keep that promise for many people. If you're a tech-first shopper who's afraid to go to a bank branch to fill out paperwork, Better's business model may be perfect for you.

But there are some disadvantages. It's almost exclusively better online – you can speak to loan officers over the phone, but there are no branches for personal communication.

And because Better.com was founded recently, the company is still expanding its mortgage offerings. It is not yet licensed in all states and some key types of loan such as VA and USDA loans are missing.

In addition, Better does not offer mortgages for prefabricated houses, buildings with more than five units, cooperatives or mixed-use properties. So it's not the best for everyone.

Working with better mortgage

If you hate technology and prefer to do business the traditional way, Better.com is probably not for you. Otherwise, it is worth taking a closer look.

At Better.com, the whole idea is a comprehensive online experience. To use your phone, computer, or other device to:

Prequalification for a mortgage Apply for a mortgage. Upload documents securely. Close your home loan. Manage your account. Sign documents with an electronic signature

If you get stuck on any of these steps, you can still call a loan officer by phone. Or you can use the Better website to schedule a time for the call.

But generally Better tries to keep everything online. This method saves the company time and money – and most of these savings are passed on to borrowers.

Better.com claims you can complete your home loan in just 14 days. For comparison: the average mortgage or refinancing ends in about 30-70 days.

Better also says that its customers saved an average of $ 3,557 each in loan costs in 2018. The savings naturally vary depending on the customer. However, it is worth checking prices and costs to see if Better is competitive for you.

Better Mortgage strongly supports its Better Price Guarantee, which states:

"If you think another lender has a cheaper rate, send us your loan quote within 3 working days from the date of the loan. If we can't exceed it by at least $ 1000, we'll give you $ 1000 in cash. This is not a marketing trick or flash sale. It is simply our promise to you. "

That seems like a pretty good deal at face value. But of course there are also small print.

How does it work? For example, if Better and Wells Fargo offered you the same price but Wells had lower acquisition costs, Better would either have to cut its costs or save you a $ 1,000 check.

That sounds easy enough, but collecting your $ 1,000 is no easy task. You need to close your mortgage with the same company and exactly the same loan offer that you used to question Better's pricing. And you need to provide better proof of your financed loan within 30 days of completing it.

So if your loan amount or sales price changes, or you change loan programs, or you change the interest rate at any time during your loan process, Better's business will be void.

All in all, there are many provisions for Better's $ 1,000 offer. The real point here, however, is that Better Mortgage is extremely confident about pricing. And a company that is willing to give you a check for $ 1,000 based on this trust is worth at least a look.

Customer service and mortgage service

It is difficult to compare Better customer service directly with other lenders. This is because it is too small to be used by large agencies like J.D. Power to be rated.

However, Better has a profile with the Consumer Financial Protection Bureau (CFPB), which records complaints against mortgage lenders.

And in 2019, only 8 better customers filed nearly 30,000 official complaints.

Companies
Mortgage origins 2019
CFPB complaints
Complaints per 1,000 mortgages
2019 JD rated power
Better mortgage

29,515
8th
0.27
Not rated

Wells Fargo

1,026,800
342
0.33
837/1000

Accelerate loans

774,900
187
0.24
880/1000

chase

527,600
188
0.36
850/1000

User reviews also suggest that Better is doing pretty well for customer service.

For example, Better is an accredited company with the Better Business Bureau. It has an A + rating and four out of five stars based on 238 customer reviews.

In addition, Better earns an average of 4.3 out of five stars when rated by customers on Bankrate, Zillow and LendingTree.

That's a respectable score – though it's worth noting that larger lenders like KreditDepot, Wells Fargo and Chase have 4.9 star ratings on the same platforms.

Types of loans offered by Better Mortgage

Better.com home loan options include:

Fixed rate mortgages: A fixed rate mortgage blocks your interest rate for the entire loan term. Better offers fixed-interest loans with a term of 15, 20 or 30 yearsVariable rate mortgages: ARMs have an interest rate that is blocked for the first 5, 7 or 10 years. After that, your mortgage rate fluctuates with the market FHA loan: FHA mortgages are secured by the Federal Housing Administration and allow you to purchase with a deposit of just 3.5%. They also tend to have simpler credit requirements Jumbo loan: Jumbo mortgages are for people who need a loan larger than the current credit limit of $ 510,400

Better.com also offers Fannie Mae's HomeReady loan program, which is designed to help borrowers with lower incomes and limited cash for a deposit.

It is also worth noting that Better.com may be able to help you if you are above average in debt.

This lender says he sometimes lends to borrowers with a debt-to-income (DTI) ratio of up to 55 percent, depending on their particular circumstances. It is quite generous. With most conventional loans, the DTI is limited to 43 percent.

Types of Better Mortgage Doesn't Offer

There's no point in pretending that Better.com has a full portfolio of mortgage products – at least not yet. The lack of VA and USDA loans means that it will be a non-starter for some borrowers.

Better also does not offer loans for:

Prefabricated houses or modular housesMulti-family houses with five or more unitsKoop unitsMixed-use objectsConstruction projectsHouses in foreclosure or owned by a bank

However, Better.com offers home loan loans for investment property. And there are options for low down payments for owner-occupied transactions that allow qualified borrowers to buy with only 3 percent of the purchase price.

Where can you get a mortgage from Better?

Better Mortgage NMLS ID: 330511

At the time of writing – at the time of reading there may be more – Better Mortgage is licensed for lending in the following states (highlighted in green below):

Better.com is a purely online lender. There are no branches and the whole idea is that the systems that are available to you online are intuitive and easy to use.

Of course, you can get lots of support and assistance from loan officers over the phone. And these can be more helpful than those used by many other lenders. This is because they don't work on commission. They are closer to neutral consultants than sellers.

What is Better.com?

Better.com is home to Better Mortgage, an online lender founded in 2014. Better.com offers loans to buy or refinance a home. And unlike most lenders, Better lets you do the entire mortgage process online.

How does Better Mortgage work?

In a way, Better Mortgage works like other lenders. It rates loans based on your home price, down payment, credit score, and finance. And you have typical monthly mortgage costs.

The big difference is that Better.com handles home loans and refinancing entirely online, including remote e-signing to close documents. Therefore, the process is likely to be easier and faster. In addition, Better does not charge any lender fees, so your closing costs may be cheaper than other mortgage companies.

Does Better Mortgage Calculate PMI?

Better mortgage fees PMI mortgage insurance for conventional loans is less than 20 percent less than any other mortgage lender. With a traditional loan, your PMI will be canceled once the loan reaches a mortgage loan value of 78%. Better also offers FHA loans, which always require mortgage insurance. The FHA mortgage insurance has a term of 11 years or the term of the loan, depending on your down payment.

How Does Better Mortgage Make Money?

Better Mortgage does not charge lender fees or commissions like most banks and mortgage brokers do. Instead, Better earns all of its money by selling the mortgages it creates to “end investors”. End investors buy and sell mortgages on the secondary mortgage market and benefit from the interest that borrowers pay on their home loans.

So what should you take away from this Better.com mortgage rating? Well, this better price guarantee can be enough to get you to do everything yourself. Who doesn't want to have the chance to save or earn $ 1,000?

And an application could be a good idea anyway. You may have a better deal than anywhere else.

However, there are exceptions. You won't get far if you want a VA or USDA loan, or if you live in a state where Better is not licensed. And you won't be happy if you hate technology.

Conclusion: As with all lenders, compare the service you get from Better.com and the company's prices and fees. This is the best way to find out if a mortgage lender is right for you. Start with the link below.

Compare the main lenders' interest rates. Start here (July 18, 2020)

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