Best Mortgage Lenders

Learn more about the eight different mortgage loans. Find out how to secure a mortgage loan by going through either a lender or mortgage broker.

Mortgage is a housing term that refers to the loan you use to buy or maintain your home. In order to get one of these loans, you must go through a mortgage lender. A mortgage lender is any bank, financial institution or private service that provides home loans. Lenders must follow specific guidelines to determine what type of loan you qualify for. This also includes the conditions of your loans, including interest rate, repayment schedule, late fees, minimum payments and the maximum amount you can borrow.

If you do not want to directly negotiate with a lending company, you can go through a mortgage broker instead. A mortgage broker acts as an intermediary between you and your potential lenders. Your broker does not have any control over the details of your loan, including whether or not you are ultimately approved. Instead, they speak with lenders, presenting your financial history to find the best deal. A mortgage broker will present you with a list of potential lenders, along with the details of their loans.

Researching your Options

Whether you decide to search for a lender on your own or go through a mortgage broker, the process is largely the same. The biggest difference is how much help you receive. With a mortgage broker, most of the work is done by the brokerage, but you are still encouraged to participate in the initial steps. The first step to getting a loan is researching lenders in your area. Whenever you search for a loan, mortgage or otherwise, you are strongly encouraged to research multiple options to find the best possible rates. You also want to research different types of mortgages to determine which one is best for you.

15- or 30-Year Mortgages

There are eight primary mortgages to choose from. Some of the categories share many details, with the only difference being how long it takes to repay the mortgage. For example, two of the most common mortgages are 15- and 30- year fixed mortgages. With these options, you make monthly payments until you pay off your mortgage, with the payment plan lasting either 15 or 30 years. A 30-year plan has lower monthly payments, but you end up paying more in interest rates. With both options, your interest remains fixed during the entirety of the loan.

Adjustable-Rate Mortgages

The next type of mortgage is adjustable-rate. These loans begin with a fixed interest rate, but it gradually adjusts after the initial period. These loans typically promise a much lower interest rate for the first couple years, but have the potential to increase based on what the housing market looks like. The initial rates are locked for either one-, five-, seven- or 10-year periods. They are recommended for homeowners who want a shorter mortgage or believe interest rates are expected to go down over the next several years.

FHA Mortgages

FHA mortgages are backed by the Federal Housing Administration. These loans have fixed interest rates and minimal credit requirements. However, you are required to pay an insurance premium. Because these loans are intended for lower-income applicants, your financial history will determine your eligibility.

VA and USDA Mortgages

There are some mortgages only available to select applicants. With a VA home loan, the Department of Veterans Affairs acts as the lender. This service is available to both enrolled military members and veterans. Some family members are also eligible for VA loans. With a VA mortgage, no down payment is required and you are guaranteed low interest rates.

USDA loans are provided through the Department of Agriculture. Like VA loans, there are no down payments required. You can also apply for home improvement grants if you are buying a house in need of repairs. Interest rates are typically lower than other types of mortgages, but this varies based on where you live. These loans are primarily available in rural or suburban areas.

Jumbo Mortgage

Jumbo mortgages provide substantial loans and are mostly used to purchase expensive property. They have either fixed or adjustable interest rates, depending on the property and your financial history. Jumbo lenders often have the strictest requirements, wanting a credit score of at least 700 to even be considered for a mortgage. You are also required to put down a large down payment on the property, ranging from 10 to 20 percent, based on the lender.

Interest-only Mortgages

Interest-only mortgages are only available for short periods, lasting on average between five and 10 years. Instead of paying back the amount borrowed, you only pay the interest on the loan. This means you do not build any equity on your home. Equity is the total value of your home. Interest-only mortgages are typically used by borrowers who do not intend to live in the property for a long time and want to sell the house at a later date. As with a jumbo mortgage, lenders have much stricter requirements for these loans.

Rocket Mortgage

Rocket, formerly known as Quicken Loans, stands out as one of the best lenders for a variety of loans. They largely provide 15- or 30- year mortgages, but they have options for most other types of loans, including jumbo. What sets them apart from other lenders is the minimum requirements. With the exception of jumbo loans, you only need a credit score of 580 to apply. They also provide generous minimum down payments, starting at 3 percent.

Lending Tree

Applying for a mortgage is a complicated process. Lenders typically require multiple forms, going back and forth with applicants to get all the required information. If you want a simpler experience, Lending Tree is an excellent mortgage lender. The company simplifies the application process as much as possible, reducing it to a three-step process. You can also request assistance from a loan officer if you are confused during the initial application. They have a wide range of loans available, including VA and USDA loans. They also run a counseling program for applicants with poor credit scores.

Guild Mortgage

Guild Mortgage offers a wide range of loans, but they are most known for having some of the best FHA mortgages of any lender. Their FHA loans are geared towards lower-income applicants, requiring only a credit score of 540. They also run a Zero Down program for applicants who are unable to afford a down payment. In comparison, there are other loans that normally require at least 3.5 percent as a down payment. They are also one of the quickest lenders, approving loans and completing the closing process within a few days. As of writing, they are available all throughout the United States except for New York and New Jersey.

Caliber Home Loans

Caliber is similar to Rocket Mortgage. Both lenders provide mortgages with only 3 percent down payment, and accept applicants with lower credit scores. What makes Caliber unique is how they weigh financial history. Caliber allows applicants to present greater financial data for consideration. Instead of relying on your credit score, you can use bank statements and investments to prove your wealth and secure lower interest rates. However, this unique application process takes longer to process compared to other lenders.