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الثلاثاء، 21 يناير 2020

The 7 Best Mortgage Lenders for 2020

A variety of factors help determine your monthly mortgage payment including the amount of your loan, your property tax bills, how much you pay for homeowner’s insurance, and whether you pay private mortgage insurance or PMI. Still, one of the most important factors that contribute to your monthly mortgage payment is the lender you end up with — and the interest rate you ultimately pay.

The best mortgage lenders for 2020 offer low rates and reasonable closing costs that can help you save money in the short-term and long-term. Most of the top lenders also make it easy to shop around and compare mortgage rates online and from the comfort of your home.

If you’re in the market for a new home or want to refinance the mortgage for a property you already own, you’ll want to find out which mortgage lenders offer the best loans and terms. Keep reading to find out which lenders beat out the others to get on our list of the best mortgage lenders for 2020. 

Here’s Why You Should Shop Around for a Mortgage

Every mortgage loan is different, and every mortgage lender offers their own selection of lender perks, benefits and rates. Some lenders are also able to offer lower closing costs or interest rates in some cases, and the criteria they use to approve consumers for a mortgage can vary widely as well.

For that reason, it’s crucial to shop around and compare mortgages from at least 2-4 lenders before you move forward. It’s possible one lender could offer a much better deal than another, but you may never find that out unless you check.

If you simply apply with the first mortgage lender you come across, you could easily be leaving thousands — or even tens of thousands — of dollars on the table when you add up higher interest payments, higher closing costs, and the opportunity costs that come with choosing a more expensive mortgage. The best way to avoid this calamity is spending some time to shop around and compare rates, closing costs, and the other details of various loans.

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The 7 Best Mortgage Lenders for 2020

  • LendingTree – Best for Comparison Shoppers
  • Quicken Loans – Best for Loan Program Guidance
  • Rocket Mortgage by Quicken Loans – Best for Online Lending Platform
  • North American Savings Bank (NASB) – Best for First Time Homebuyers
  • Veterans United Home Loans – Best for VA Loans
  • Citibank Mortgage – Best for Citibank Customers
  • NBKC Bank – Best for Subsidized Loans

#1: LendingTree: Best for Comparison Shoppers

You’ve probably seen ads with this company’s catchy phrase: “When banks compete, you win.” LendingTree has always been a loan aggregator, and they have been around a while. In fact, they have been connecting home buyers with lenders online since 1996.

This means that LendingTree does not originate loans. Instead, they focus on creating a one-stop shop consumers can utilize to compare multiple loan products in one place.

Along with this valuable service, LendingTree’s tools for borrowers can help you figure out how much home you can afford, what your monthly payment will be, and more. You can even check current mortgage rates and check your debt-to-income ratio as you shop around for home loans.

#2: Quicken Loans: Best for Loan Program Guidance

Quicken Loans has garnered some pretty good name recognition through television and online advertising. Founded in 1985, Quicken Loans has also grown into one of the largest mortgage lenders in the nation.

The company offers a wide variety of loans of all sizes. They’re authorized for VA mortgage lending and other federal loan programs, jumbo mortgages, and adjustable or fixed-rate plans.

The Quicken Loans website makes it easy to find out what kind of loan fits your needs, how much you can qualify for, and what kind of interest rate you’ll pay. However, you can also call in to speak with a customer service representative who can answer your questions and give personalized advice. 

 

#3: Rocket Mortgage by Quicken Loans: Best for Online Lending Platform

Quicken Loans, which I’ve already listed, launched Rocket Mortgage in 2016 to streamline the mortgage lending process. With Rocket Mortgage, you can go through the entire lending process online and without ever visiting a mortgage lender’s office.

Some of the company’s early ads said you could complete the process within eight minutes, although it may take an hour to find all the information you need to apply and submit your application. Either way, it’s hard to find a more streamlined approach to the mortgage lending process, especially considering the wide variety of loan programs Rocket Mortgage offers. If you’re refinancing, I’d start here.

 

#4: North American Savings Bank (NASB): Best for First Time Homeowners

You won’t see as many ads for North American Savings Bank, but they are still known as a high-qualify mortgage lender who offers exemplary customer service. This bank lets you get pre-approved for a mortgage online, which gives you a great idea how much you can borrow and the type of home you should be looking for.

Once you negotiate a successful offer on a home you want to buy, North American Savings Bank offers personalized counseling to help guide you through the process. Best of all, NASB offers very competitive rates for consumers with good credit.

 

#5: Veterans United Home Loans: Best for VA Loans

Veterans United Home Loans focuses on home loans from the VA, which are only available to veterans, certain active duty military, and qualifying spouses. These loans let you qualify for some of the lowest mortgage rates available today with easy qualification requirements.

You can use a VA loan from Veterans United to buy your first home or refinance a home you already own. While this lender won’t work for you if aren’t eligible for a VA loan, they should be one of your top options if you are.

 

#6: Citibank Mortgage: Best for Citibank Customers

Citibank also offers a variety of mortgage products for consumers who want to purchase a new home or refinance an existing mortgage. They even let you get pre-approved online, which makes it easy to figure out how much home you can afford to buy before you start shopping.

Citibank also offers periodic promotions for their mortgage products, which may include a specific amount off your closing costs and lower interest rates for existing Citi customers.

Overall, Citibank is worth exploring — particularly if you bank with them already.

 

#7: NBKC Bank: Best for Subsidized loans

NBKC, formerly known as National Bank of Kansas City, started back in 1999 with the goal of serving online customer’s mortgage needs.

The bank specializes in subsidized loans, but especially VA loans for veterans and their families. They are also well known for their excellent customer service, with previous customers giving them 4.9 out of 5 stars in their reviews

Loan applicants may be surprised to find they receive personalized customer service from an assigned customer service agent after they apply in some cases. While actual, in-person customer service is available only in Kansas and Missouri, the bank’s phone support makes the process easier for customers in all 50 states.

 

How Your Credit Score Can Impact Your Rate

Your mortgage lender charges interest as a percentage of the amount you borrow paid over the life of your loan. The higher your interest rate and the longer it takes to repay the loan, the more you’ll fork over in interest payments.

That’s why many homeowners will refinance their homes over and over as interest rates drop. By switching to a new loan with a much lower rate, they can save considerable amounts of money on interest even after accounting for additional closing costs required to refinance their loan.

Unfortunately, nobody really knows where mortgage rates will end up one year, five years, or twenty years from now. Since mortgage interest rates are mostly a function of the broader economy, especially the secondary mortgage market and its investors, nobody really knows if they’ll remain low like they are now — or rise slowly over time.

A borrower can, however, access more competitive rates by maintaining a good credit score. It’s not too early to start improving your credit — even if you may not buy a house for a few more years.

If you want to start building your credit now so it’s in great shape once you’re ready to buy, you should check out free apps such as Credit Karma and Credit Sesame. Both apps give you constant access to your credit score with plenty of suggestions on how you can improve it.

While it may seem like interest rates don’t matter, keep in mind that even a half-point difference in your mortgage interest rate can grow into some noticeable savings as your loan plays out.

Here’s a good example:

Imagine for a moment your dream home will set you back $275,000. As you’re comparing mortgage rates, you realize you can put $25,000 down and borrow the remaining $250,000.

  • If you were able to secure a 30-year home loan at 4%, the total cost of your home (including principal and interest) would amount to $429,673 and some change.
  • At 4.5%, the total cost of your mortgage would wind up being $456,016 and some change — a difference of over $26,000.

That’s a huge difference and one you should care about, especially since you have the power to improve your credit score over time. If you’re curious about the best ways to build credit and improve your score, keep in mind that the two main determinants of your credit score are your payment history and how much debt you owe. If you start paying all your bills early or on time and pay down debt to lower your credit utilization, you may be surprised at how quickly you can improve your credit score on your own.

Consider More than One Kind of Mortgage

The example above included only 30-year mortgage loans, which are common especially among first-time home buyers. However, you can save a lot of money on interest if you’re willing to consider a loan with a shorter repayment timeline.

With that same $250,000 mortgage at 4% interest, for example:

  • You’d pay $429,673 over 30 years
  • You’d pay $363,588 over 20 years
  • You’d pay $332,859 over 15 years
  • You’d pay $303,735 over 10 years

With these kind of savings on the table, you may be wondering why anyone would consider a 30-year home loan. However, you must keep in mind that loans with shorter timelines come with a much higher monthly payment. That’s the main reason many consumers choose home loans with longer timelines. This helps them qualify for a larger home loan so they can buy the house they want, but a longer loan also means a more affordable monthly mortgage payment that won’t be difficult to pay each month.

In addition to fixed-rate mortgages like we’ve talked about above, you can also consider an adjustable-rate mortgage, or ARM. With these loans, you can get a low initial interest rate for the first few years of the loan followed by a variable rate that changes along with broader market conditions.

If you’re planning to sell the property quickly, or if you expect to have more financial flexibility in a few years, the low introductory interest rate of an ARM may be attractive. If you’re planning to stay in your home for the long haul, however, a fixed-rate loan offers a lot less uncertainty.

Why Your Down Payment Matters

Making a down payment on your new house tells your lender (and your realtor and the home’s seller) that you’re serious about buying the property. Many lenders require a minimum down payment of 3% or more, although you’ll typically get a loan with the best terms and rates if you can put down at least 20% of the cost of your home.

Putting down 20% of the home’s value also means you’ll never have to pay private mortgage insurance (PMI). Paying PMI is mostly a waste since this insurance premium protects the lender if you default and not you. If you can save up the money to put down 20% or more on your home, you’ll never have to pay this wasteful, added expense.

Also keep in mind that your down payment will affect your monthly mortgage payment. A larger down payment will leave you with a smaller loan amount, whereas a smaller down payment means you’re stuck borrowing more. If your goal is securing the lowest monthly payment you can qualify for, you should try to save up the biggest down payment you can.

How the Federal Government Can Help

Uncle Sam has a stake in the mortgage industry, which is why the government goes out of its way to offer affordable mortgage programs that help people get into homes.

Let’s take a look at some of the leading federal loan programs:

  • Federal Housing Administration (FHA) Loans: This government-backed home loan lets you purchase a property with as little as 3.5% down. Credit requirements are also lower, so these loans are a good option for consumers with imperfect credit.
  • U.S. Department of Agriculture (USDA) Loans: This program has been designed specifically for homeowners in rural areas, and it offers up to 100 percent financing in some cases, meaning you can get a loan with no money down.
  • Department of Housing and Urban Development (HUD) Loans: This program also offers 100 percent financing to consumers who have little to no down payment and imperfect credit scores.
  • Department of Veterans Affairs (VA) Loans: For military veterans and their spouses, a VA mortgage lender can make borrowing significantly easier. VA loans also do not require borrowers to pay for Private Mortgage Insurance (PMI).

Borrowers should also be aware there are a few limitations with federally subsidized mortgages:

  • Some federal loan programs, including FHA loans, require borrowers to pay mortgage insurance throughout the life of the loan. Conventional loans allow you to cancel PMI when you’ve paid off at least 20 percent of the loan amount.
  • Federal financing can limit how you use your property. An FHA loan, for example, will finance only an owner-occupied home. If you’re buying a home to rent or for someone else in your family to live in, you may need a conventional loan.
  • For safety reasons, federal lenders often balk at older homes that weren’t built up to current standards. If you’re buying a fixer-upper or planning to restore the architectural marvel at the end of the block, go with a conventional loan.

Closing Costs: Know What You’re Paying

Real estate closings can be stressful for new homeowners, and for good reason. You’re sitting at a conference table signing document after document, committing yourself to a huge amount of debt for a long time. Worse, you’re forced to read over a variety of fees and closing costs that you may not even understand.

Before you head to the closing table, it helps to know which loan closing costs are completely normal and just part of the process. Common mortgage-associated fees include:

  • A loan origination fee: usually around 1% of the loan amount, charged by your lender
  • An appraisal fee: usually a few hundred dollars, because your lender wants to make sure they’re not financing more than the home’s value
  • Title search fees: this fee is typically a few hundred dollars and it helps make sure the home you’re buying has a clear title
  • Flood certification fees: this fee pays for a certification the ensures your home isn’t in a flood zone — if it is, you’ll need to buy flood insurance 
  • Attorney’s fees: these fees can vary

Collectively, we call these expenses — and others depending on your lender and your locale — closing costs. Ideally, you can negotiate with the seller to help pay some of these costs. In some markets, you could ask the seller to pay all your closing costs.

Mortgage Lender Reviews

At Good Financial Cents, we make sure to cover as many financial institutions as we can. Below are our reviews of mortgage lenders across the country.

Best Mortgage Lenders by State

The best mortgage rates can also vary depending on the state you live in.

To see the best lenders in your state, click any of the links below:

Your Home, Your Loan, and Your Future

Mortgages are common. In fact, banks, credit unions, and other lenders originate 6 to 8 million of them every single year. However, the only mortgage that should matter to you is the one you have. 

To make sure you wind up with a loan you love, you should arm yourself with information and decide what you really want. For starters, think long and hard about how many years you want to pay off your home loan. It can also help to play around with a mortgage calulator to see how much you can borrow while still getting a monthly payment you can afford.

Also spend some time comparing home loans, interest rates, and fees, before you settle on a lender you’ll be stuck dealing with for decades or longer. When you build a mortgage to match your needs, you’re getting more than just a loan. You’re getting a tool to help build a more stable financial future.

The post The 7 Best Mortgage Lenders for 2020 appeared first on Good Financial Cents®.



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