Best Online Mortgage Lenders for 2020

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For most people, a house is the biggest purchase they’ll make in their lives. And unless you’ve fallen into a lot of money or been very prudent with your savings – in which case, kudos to you – buying a house is probably going to mean taking out a mortgage.

Over the last few years, various digital mortgage lenders that allow you to complete the whole process online have popped up, and many traditional lenders have followed by launching their own digital mortgages.

Finding the best mortgage lender used to be a long and challenging process that involved going into branches and talking to representatives. These days it’s far easier.

So in this article, I will highlight the top 10 online mortgage lenders that aim to simplify the mortgage process.

Best Online Mortgage Lenders

Here are the top 10 online mortgage lenders for 2020:

  1. 🏆 Rocket Mortgage by Quicken
  2. Lending Tree
  3. Credible
  4. Better Mortgage Corporation
  5. NBKC Online Bank
  6. SoFi
  7. Reali Loans
  8. Guaranteed Rate
  9. SunTrust
  10. Bank of America

1. Rocket Mortgage by Quicken

Quicken is the highest-volume lender in the USA and the innovator behind Rocket Mortgage, a project launched in 2015 which offers mortgages designed for online and mobile. This helped to set the tone for online lending and led to many competitors following suit.

You apply online by syncing your bank information and receive instant approval, although the whole application is likely to take half an hour. After you’re approved, you’ll go through the underwriting stage virtually. Then, you’ll e-sign the paperwork and monitor the progress online.

You can then continue to use the app to close your loan and manage your mortgage, including making payments. Other features include the opportunity to talk to licensed mortgage experts virtually as you go through the loan application, which is available 24/7. Their advice will guide you towards your custom recommendations.

The loan types available include purchase, refinance, jumbo, FHA, VA, and USDA, at both fixed and adjustable rates. There are no home equity loans or lines of credit available, as these are generally for bank lenders only. The specialty of Rocket Mortgage is refinancing loans – they’re currently the largest refinance lender in the US.

  • Minimum down payment: 3%
  • Minimum credit score: 620

Pros

  • Good mobile experience
  • Find out if you qualify very quickly
  • Everything is completed online

Cons

  • No in-person customer service
  • No home equity loans or lines of credit

Learn More:

2. LendingTree

LendingTree is a website that allows users to compare different lenders in one place. They don’t provide loans themselves, but by answering questions through their site, they can help to match you with a suitable provider. This makes them a great starting point in your journey towards purchasing a house.

The website is very user-friendly; within five minutes, you can find out which mortgages you’ll be approved for, and most major providers are on the site. However, since they’re not a direct lender, LendingTree can’t walk you through the whole application process.

  • Minimum down payment: not applicable
  • Minimum credit score: not applicable

Pros

  • Good customer service
  • Compare different types of loans

Cons

  • Can’t use them to make an application

Learn More:

3. Credible

Like LendingTree, Credible is a site to help you make comparisons between lenders rather than a direct lender who can give you a mortgage. They’re a very new platform, but you can certainly trust them with your information: they have an A+ rating from the Better Business Bureau and have an average rating of 9.5 out of 10 from customers.

Credible aims to present information to customers in a form that is as intuitive and understandable as possible. They know purchasing a house can be intimidating, especially if you’re doing it for the first time, so they avoid jargon and provide resources for you to learn more about the process.

  • Minimum down payment: not applicable
  • Minimum credit score: not applicable

Pros

  • Free
  • Easy to use

Cons

  • Not a direct lender

4. Better.com Mortgage Corporation

The main selling point of Better Mortgage, and their claim to being superior, is the lack of fees and the speed of getting your mortgage set up. As an exclusively digital lender, they do this by simplifying the process and using technology.

There are no commissions or fees involved in Better mortgages at all, including no origination fees – this is made possible because loan officers are there to help customers rather than to receive a commission for sales, as is traditionally the case. The mortgage process happens totally online, which also helps to keep costs down.

You can also find out whether you get approved and an estimate of your offer almost instantly. If you manage to find a better offer elsewhere, Better will match a competitor’s rate by $1,000. So as long as you do your research, you don’t need to worry about getting cheated out of your money.

They offer purchase, refinance, jumbo, and FHA loans at fixed or adjustable rates. However, there are no VA, USDA, home equity loans, or lines of credits, making the offering of Better lower than some other lenders. However, they’re flexible with the loans they do offer – first-time homebuyers can get a loan with just a 3% down payment, while jumbo loans with no mortgage insurance are available with a 10% down payment.

  • Minimum down payment: 3%
  • Minimum credit score: 620

Pros

  • Good customer service
  • No fees
  • Quick rates estimate
  • Price guarantee

Cons

  • Limited choice of loan types
  • Not available in all states

Is Better Mortgage a direct lender?

Yes. Better Mortgage is a direct lender, meaning they provide borrowers the funding as well as taking them through the application and approval process.

Learn More:

5. NBKC Bank

NBKC Bank (National Bank of Kansas City) is an online bank that has been around since 1999 but is yet to gain much recognition. Nevertheless, they offer plenty of appealing features. One of their main draws is the use of technology and automation – they’ve been way ahead of competitors in this respect.

Although they’re an online bank, NBKC is based in Kansas, so they offer in-branch customer service to anyone living in that area. Even if you live elsewhere, NBKC goes out of its way to provide the best experience possible, and their reviews are a testament to that. The Bank has an A+ rating by the Better Business Bureau and a 4.9 out of 5 rating from its customers across multiple reviewing platforms.

NBKC offer FHA, VA, refinancing, jumbo, and home equity products at adjustable and fixed rates. In the case of FHA and VA loans, a history of making prompt rent and utility payments can be used if your credit report isn’t sufficient – good news for new buyers.

One of the main disadvantages is that NBKC charges origination fees, unlike many other mortgage lenders. However, you could argue this is a fair price to pay for excellent customer service.

  • Minimum down payment: 3%
  • Minimum credit score: 620

Pros

  • Online lending experience
  • Customer satisfaction

Cons

  • In-person customer service only available in Kansas
  • Origination fees for most borrowers

Learn More:

6. SoFi

Short for social finance, SoFi aims to help younger people who have good potential but relatively limited credit history to access the money they deserve. For instance, they help those with nontraditional income sources, like the self-employed, who often struggle to be approved for mortgages.

For the same reason, the specialism of SoFi is jumbo loans of up to $3 million for borrowers who need low down payments despite high income, with no private mortgage insurance required. However, they offer a smaller bundle of products than other providers – other than jumbo loans, only purchase and refinance loans are available.

Although SoFi is a digital lender, their mortgage loan officers help customers through the mortgage process. There are also educational resources available online, so you can educate yourself more about how everything works.

Getting started with SoFi is relatively easy. Once you enter in your personal details and the purchase price, down payment and loan amount you’re looking for, you’ll receive a rate quote and be able to select a suitable loan. You can then be pre-approved and continue your application, all of which happens entirely online.

  • Minimum down payment: 10%
  • Minimum credit score: none

Pros

  • Good for those with low savings or non-traditional income
  • Option to apply with a co-applicant

Cons

  • Limited offering of loan types

Learn More:

7. Reali Loans

Previously known as Lenda, Reali is an online-only real estate brokerage service that boasts a quick, simple application process. There are no fees, including origination fees.

You can complete a pre-approval questionnaire, and shortly after a representative will call you. Each customer is assigned a digital Home Loan Advisor to guide them through the mortgage process, who will remain their point of contact for the entire process. Once you provide your information and go through a credit check, you can review, sign, and upload all documents electronically.

Reali offers purchase, refinance, jumbo (up to $3 million), FHA, and VA loans at a fixed rate only. For an FHA loan, you’ll need a credit score of only 500, but this goes up to 620 for other loans.

Unfortunately, Reali isn’t available everywhere. It currently only serves in the following states: Arizona; California; Colorado; Florida; Georgia; Illinois; Michigan; Oregon; Pennsylvania; Texas; Virginia; and Washington.

  • Minimum down payment: 5%
  • Minimum credit score: 620

Pros

  • No fees
  • Single point of contact

Cons

  • Not available in all states

8. Guaranteed Rate

Guaranteed Rate has been around since 2000 and claims to have invented the world’s first digital mortgage, which was launched in 2016. They’re now the seventh-largest retail mortgage lender in the US It only takes 10-15 minutes to fill out the application, and you’ll receive preapproval straight away.

You’ll find loans suitable both for purchasing and refinancing a house. They offer fixed-rate mortgages of both 15 years and 30 years, adjustable-rate mortgages, jumbo loans, FHA loans, VA loans, and interest-only mortgages.

96% of customers stated they’d recommend Guaranteed Rate to others, demonstrating customer service. Unlike most other digital lenders, you can speak to an expert in person – there are 350 branches across the country, which is great news for those who prefer to speak face-to-face. They’re also particularly good for borrowers who have a good credit history but fare less well in terms of their savings for a down payment.

On the Guaranteed Rate website, you can search for a postcode to find out data about the neighborhood for a property about everything from local schools to house prices.

However, one of the main disadvantages is that there are application and lender fees, although Guaranteed do say they’re completely transparent from the beginning about the charges along the way.

  • Minimum down payment: 3%
  • Minimum credit score: 620

Pros

  • Excellent customer service
  • Flexible requirements
  • Quick applications

Cons

  • Application and lender fees

9. SunTrust

Unlike many of the other lenders on this list, SunTrust isn’t exclusively an online loan provider. After a merger with BB&T Corp, it’s one of the largest commercial banks in the US.

Thanks to their physical presence around the country, you can choose whether you’d prefer to speak to somebody in person or over the phone. They’ve also scored well in customer satisfaction surveys, so you can rest assured the help will be useful. However, unfortunately, most branches are limited to the Southeast.

Although SunTrust is a physical bank, you can still complete the application process online. You won’t be able to access a rate specific to your personal information until you officially start your application, but of course it’s possible to stop your application before you send it off.

There are a range of products on offer. These include 15- and 30-year fixed loans, adjustable-rate mortgages, jumbo loans, FHA loans, VA loans, and USDA loans. They specialize in loans for lower-income households, offering an Agency Affordable Financing program with lower down payments.

If you’re a medical professional, you’ll also be able to choose a special loan program that recognizes your greater earning potential and gives more flexible terms, with up to 100% financing and no monthly insurance payments.

  • Minimum down payment: 3%
  • Minimum credit score: 620

Pros

  • Flexible options for low-income households and medical professionals
  • Speak to representatives in branches

Cons

  • Need to start an application for your rate

Learn More:

10. Bank of America

As the second biggest banking corporation in the US, Bank of America is hardly a newcomer to the mortgage market. However, they have moved their mortgage process increasingly online over the last few years.

They offer most of the different loan options out there. Purchase, refinance, jumbo, FHA, and VA loans are available at fixed and adjustable rates. They also offer home equity loans, which is a big differentiating factor from other providers.

A major disadvantage of Bank of America is the high fees that come with a more traditional bank. Application fees alone are normally more than a thousand dollars, and there are origination fees too. To make matters worse, customer satisfaction isn’t very high judging by the consumer complaints, which doesn’t make a convincing case when banks with no fees are scoring well for this metric.

On the bright side, some existing clients qualify for a reduction in the origination fee through the Preferred Rewards scheme. You can also complete the application online, through the website or app, and if you have any questions along the way, you can call a representative. Alternatively, you can go into a branch to complete the application.

  • Minimum down payment: 3%
  • Minimum credit score: 620

Pros

  • Home equity loans available
  • Reduced fees for some eligible customers
  • Option to complete the application in a branch

Cons

  • High application fees
  • Customer complaints

How Do Online Mortgages Work?

A mortgage is an agreement made between a borrower and lender: the lender provides money that the borrower uses towards a property, and in return, the borrower pays the money back plus interest. The type of mortgage that’s right for you depends on your personal circumstances and the type of property you want to buy.

However, the nature of online mortgages means the agreement can take place all online.

Purchase vs. Refinance Mortgages

Two of the most basic mortgage types are purchase loans and refinance loans. A refinance mortgage is for people who already have a mortgage but find it no longer suits them and want to change their terms. On the contrary, purchase loans are for purchasing a new home.

Jumbo Loans

Jumbo loans let you take out a larger loan than you’d normally be able to – typically houses with a value of a few million dollars – but they often come with terms of stricter credit guidelines or greater down payments.

FHA, VA & USDA Loans

You may also have come across FHA VA, and USDA loans, all of which are back by the government. The FHA (Federal Housing Administration) is probably the most popular. It’s quite flexible, with lenient credit requirements and low down payments, making it ideal for first-time buyers. A VA (Veterans Affairs) loan is for veterans or people currently serving in the military only. As a thank you for serving, VA loans also consist of low down payments and flexible credit restrictions. Finally, USDA (United States Department of Agriculture) loans are only for people purchasing a property in a rural area.

Home Equity Loans

A home equity loan is a second mortgage taken out on a property you already have a mortgage for, using the property as collateral. This means you can borrow against the home’s value and receive a lump sum. Similarly, a home equity line of credit (HELOC) is a more flexible option that lets you take money from the value of your home when you need it. The purpose of these loans is to access cash by using your property as collateral rather than to take out a mortgage for a new property, so they’re both inherently risky.

Reverse Mortgages

These aren’t to be confused with a reverse mortgage, which is available for older homeowners who are 62 years or older and lets them receive some value of their property back in the form of liquidity. This is a special case and not applicable to many people.

Fixed vs. Adjustable Rates

As well as different types of mortgages, you can choose between a fixed rate and adjustable rate for your mortgage. Fixed rate mortgages come with the guarantee that your rate won’t change, making it easier to predict and plan for your monthly repayments. This often means you pay less interest too.

On the other hand, adjustable rate mortgages feature rates that change over time – this means you face more of a gamble, but the starting rate is often lower than that of a fixed-rate mortgage. Mortgages with adjustable rates often have names like a 5/1 ARM, which means it has a fixed rate for five years then resets once a year.

This terminology can be overwhelming, especially when you’re learning it for the first time. However, you’ll quickly realize most of the mortgage types are designed for specific purposes, such as USDA loans for rural areas and reverse mortgages for people older than 62. For most people, the most relevant factors to consider are whether to opt for a fixed or adjustable-rate mortgage and how big a down payment they need.

How Do I Choose A Mortgage Lender?

Comparison sites like LendingTree and Credible are a great place to start your search for mortgage lenders and find out what’s available. As well as showing you a variety of offers, you’ll be able to figure out a baseline of what rates you can expect given your credit history and the size of your down payment.

Choosing a mortgage lender isn’t a decision to be taken lightly – in many ways, it’s just as important as the decision of which house you want to buy. We highly recommend you to explore different options to make sure you’re getting a good deal, either by using a comparison site or by obtaining preapproval from various lenders.

Price Isn’t The Only Thing That Matters

For most people, price is the most important factor when it comes to choosing between mortgage offers. However, don’t forget to consider other factors too. Hidden fees, flexibility over down payments and credit score, and the type of mortgage are also important, as well as “softer” aspects like customer service.

This comparison may take a while, yet it’s a necessary evil. The world of online mortgage lenders may provide you with the opportunity to complete your application in a matter of minutes, but that doesn’t mean you shouldn’t take your time! Make sure you understand the types of mortgages and how they fit your situation to make the wisest choice possible.

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