Guide: The Best Places to Get a Mortgage Loan in America
In the United States, there are few aspirations more commonly-shared than the dream of owning one’s own home. And, as with many large purchases, most people do not have the full amount of cash on hand to purchase a home outright; this is where home mortgages come into play.
However, as we saw with the collapse of the housing market in 2008, consumers must be cautious when selecting the best place to get a mortgage to ensure their investment is secure.
In this review, we will investigate the best place to get a home loan and the best way to get a mortgage, as well as outline some of the things you, as the consumer, should be aware of before taking the plunge into homeownership. But first, let’s do a quick primer on home mortgages.
In short, a mortgage is a loan used to secure the purchase of a home. There are two types of mortgages: fixed-rate, and variable-rate.
As the name implies, fixed-rate mortgages have an interest rate that remains the same throughout the life of the mortgage; on the other hand, variable-rate mortgages offer an introductory rate (often known as a “teaser” rate) that is lower than the rate on a fixed-rate mortgage for a set amount of time.
Image Source: Best Places to Get a Mortgage Loan in America
Once the teaser rate expires, the interest on variable mortgages adjusts to reflect the current prevailing market rate.
Each has its own benefits and drawbacks, so when considering the best way to get a mortgage and the best bank for a mortgage loan, you’ll need to be sure to take these factors and your own financial situation into consideration.
As a prospective mortgage holder, banks will calculate what is known as your “eligibility requirement.”
The general rule of thumb is that your monthly mortgage payment shouldn’t exceed 28% of your gross income; however, as we saw during the housing crisis of 2008, many banks were turning a blind eye when it came to customers they knew couldn’t afford their mortgages.
Therefore, the best bank for a mortgage will not allow you to overextend yourself when it comes to figuring out exactly how much you can afford to pay for a house.
For those who don’t have enough money for the traditional down payment (which can be up to 30% of the value of the home, depending on where you live), there are alternatives, which you should take into consideration when searching for the best place to get a home loan.
BankRate.com has a list of mortgage options for lower-income individuals and families; while the majority of them are only available to those who have served (or are serving) in the military, there is one option that can help you if you didn’t serve and have a less-than-perfect credit score.
It’s called an FHA (Federal Housing Administration) Loan, and with a credit score of 580 or higher, you can qualify for it and have a down payment as low as 3.5%.
In fact, if your credit score is between 500 and 579, you can still qualify; however, you will then be required to put down a 10% deposit. You can find further details on FHA loans here.
Trying to find the best place to get a home loan is largely dependent on what you’re looking for. Some lenders only offer certain types of loans (for example, variable-rate loans).
AdvisoryHQ’s List of the Best Places to Get a Mortgage Loan in America
This list is sorted alphabetically (click any of the above names to go directly to the detailed review for the best places to get a mortgage loan in America)
The Best Places to Get a Mortgage
Best Firms to Get a Mortgage
|Bank of America||https://www.bankofamerica.com/|
|Caliber Home Loans||https://www.caliberhomeloans.com/|
(List is sorted alphabetically)
Bank of America
Considered one of the architects of the 2008 housing market collapse, Bank of America appears to have done little in the intervening years to re-establish itself as a best place to get a mortgage.
Image Source: Bank of America
While post-collapse federal regulations have made it more difficult for banks to get themselves into the same trouble they faced in 2008, Bank of America still demonstrates an unwillingness to work with borrowers who are having trouble keeping up with their mortgage payments.
Caliber Home Loans
Based in Irving, Texas, Caliber Home Loans was established in 2008. Since then, they have built a mortgage portfolio of more than $75 billion, and it is clear that many consumers consider them the best bank for mortgage loans in the United States. Caliber is also approved for FHA direct endorsement and lending authority, as well as VA automatic lending approval.
Of all the consumer reviews found online, the overwhelming majority indicate Caliber may be the best place to get a mortgage, depending on what you are looking for.
Users consistently cite Caliber’s professionalism, ethical lending practices, and consumer-first approach, and we were unable to find any reports of predatory lending practices (though this does not mean there aren’t any; always do further research when deciding if a place is right for you).
Another online mortgage lender, LendingTree seems to have largely avoided the same mistakes that have plagued Quicken Loans in recent years.
That said, a quick search of consumer reviews shows some dissatisfaction with LendingTree’s credit checks and constant phone calls to consumers seeking approval, casting some doubt on whether or not LendingTree is the best place to get a home loan.
However, for the consumers who have actually received loans through LendingTree, the reviews are largely positive.
Image Source: LendingTree
Many individuals consider LendingTree the best way to get a mortgage, citing their national reach and ability to secure loans at fair rates for consumers in a variety of financial circumstances.
Of course, as with any online lender, there are questions as to whether LendingTree is the best place to get a home loan, considering the consumers have little face-to-face contact with the person who is securing the loan for them.
For a long time, Quicken Loans was considered the best place to get a mortgage. Because it is entirely online, consumers with fewer or more risk-averse banks in their immediate physical area were grateful to have another option, and many considered it the best place to get a home loan. Quicken Loans’s reputation as the best place to get a mortgage loan is confirmed by the fact that it’s the largest online mortgage lender in the United States (and the third-largest mortgage lender in the country overall).
However, recent investigations and lawsuits have threatened Quicken’s standing as the best place to get a mortgage in the United States.
This Deadspin article outlines some of the unethical practices in which Quicken Loans was engaged, the result of which has been numerous legal judgments being handed down in favor of the consumer.
One such example is the provision in one West Virginia mortgage that required the mortgage holder to pay a $107,015.71 balloon payment at the end of their 30-year mortgage.
Quicken Loans was able to establish itself as the best place to get a home loan in part by taking advantage of the lower down payment rates offered by the FHA, allowing more people to purchase homes. Unfortunately, this meant that even in cases where the borrower was clearly not qualified for a loan of that size, Quicken would distort the numbers to ensure the individual qualified with no regard for the high possibility of default. (The full Justice Department filing can be found here.)
So while many people believe that the best way to get a mortgage is through online lenders like Quicken who promise approval for the majority of their applicants, it has become increasingly clear that the best place to get a mortgage is one that will not allow the consumer to borrow more than they can afford.
Wells Fargo is the largest bank operating in the mortgage-lending space, and could therefore be considered a best bank for mortgage loans in the United States. In 2015, the bank made more than $100 billion in loans to home buyers.
However, this Consumerist article lists Wells Fargo and Bank of America as the “most complained-about mortgage issuers” in the country (Bank of America is #1, and Wells Fargo is #2).
The majority of the complaints focus on excessive delays in receiving appropriate paperwork, as well as a lack of transparency on Wells Fargo’s part when it comes to restructuring payments or requesting necessary paperwork.
While it is comforting to know you can walk into a financial institution to discuss your mortgage face-to-face with someone, with this feedback in mind, it is difficult to endorse Wells Fargo as the best place to get a mortgage.
And while Wells Fargo might be considered a best bank for a mortgage loan given its national reach, it is not a requirement that you work specifically with a bank on your mortgage.
Local Banks & Credit Unions
Local banks and credit unions are often overlooked when considering the best way to get a mortgage. This can be attributed in part to their lack of a national reach; that is, you will have a hard time purchasing a house in California using a credit union that only operates in Pennsylvania.
That said, local banks and credit unions have something that the larger banks and the online mortgage lenders do not: a complete picture of your financial situation. So while the best bank to get a mortgage on a property halfway across the country might be Wells Fargo or Bank of America, if you have your eye on a local property and have been a member of a local bank or credit union for a long time, your best option may be with them.
Most credit unions will not offer loans to individuals until they have had an account with them for a set amount of time, and they are also much more cautious about approving loans, especially in cases where they aren’t completely satisfied that the borrower can fulfill their financial obligations during the length of the agreement.
This may mean that you won’t be approved for a mortgage of the same size as you would with a larger bank, but it also serves as a form of protection if you’re unable to make your mortgage payments down the road.
As with any institution, the best way to get a mortgage depends largely on your particular financial situation: if you’re confident your financial situation won’t change, and you’re simply searching for the best rates, your criteria for the best place to get a mortgage will have specific areas of focus.
On the other hand, if you want to ensure that you aren’t overextending yourself and will be able to afford your monthly mortgage payments, the best bank to get a mortgage may be one that has a clearer understanding of you, your financial situation, and the amount of debt you’re able to take on.
Conclusion—Best Placed to Get a Mortgage
As with any financial discussion, this advice is largely dependent on your personal financial situation. Institutions that some may consider the best place to get a mortgage may not be right for you; by the same token, you may find that the best place to get a home loan is a bit off the beaten path.
The important thing to consider when deciding the best way to get a mortgage is whether the terms of that mortgage are aligned with your financial situation. Too many Americans believe that the best bank for mortgage loan is the one that will give them the largest amount of money, regardless of whether they can afford the monthly payments.
It is imperative that you always exercise caution and reason when choosing the best place to get a mortgage loan. Failing to do so can turn the American dream of homeownership into a nightmare.
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