Established in 2014, Better Mortgage revolutionizes the home loan industry with its online platform, offering mortgage rates, homeowner’s insurance, and connections to top real estate agents nationwide. Unlike traditional lenders, Better Mortgage operates entirely online, enabling borrowers to obtain rate quotes, apply for loans, and complete necessary paperwork seamlessly. What sets Better Mortgage apart is its commitment to transparency and affordability. Unlike many lenders, Better Mortgage doesn’t charge commissions or fees to borrowers for its services. Instead, institutions purchasing the loans compensate Better Mortgage, ensuring that borrowers can access their services at no additional cost. To date, Better Mortgage boasts $7.9 billion in home loans and $1 billion in insurance transactions, reflecting its growing influence in the mortgage market.
What Better Mortgage Offers
As of September 2020, Better Mortgage offers a range of loans and services tailored to simplify the homebuying process:
- Online Mortgages: Processed entirely online, Better Mortgage’s mortgages boast no origination fees and offer pre-approval in as little as three minutes.
- Refinancing: Easily refinance existing mortgages online with a streamlined process and the ability to lock in an interest rate at any time.
- Real Estate Agent Access: Connect with a local real estate agent through Better Mortgage’s platform, with the promise of saving $2,000 off closing costs when funding a mortgage or refinancing through the company.
- Title Insurance: Protect legal ownership of your property with title insurance, a requirement for most mortgages.
- Homeowners Insurance: Choose from a variety of homeowners insurance options and finalize your policy entirely online.
While Better Mortgage offers conventional loans with a 3% down payment and 10% down payment on jumbo loans without mortgage insurance, it does not provide FHA-backed loans crucial for many first-time homebuyers. Additionally, Better Mortgage does not offer home equity loans and lines of credit, veteran loans, or home improvement loans, narrowing its offerings compared to some competitors.
Better Mortgage provides mortgage rates on its website for first-time mortgages and refinancing, but access to current rates requires visitors to input personal information and email addresses. These rates are then emailed to customers, unlike other online mortgage companies that display rates openly on their websites.
Better Mortgage caters to homeowners with Airbnb earnings, self-employed individuals, and those with outstanding student loan debt, offering mortgage solutions tailored to their unique financial situations.
Fees and Terms
As previously noted, one of the standout features of Better Mortgage is its fee-free structure. Unlike many other mortgage providers, Better Mortgage does not impose origination fees, application fees, or charges for services like title searches and underwriting, typically found in the mortgage process. This fee transparency translates to significant savings for customers. Moreover, Better Mortgage pledges to reduce customers’ mortgage or refinance closing costs by $2,000, resulting in an average total savings of $3,500 per customer, as per the company’s data. This substantial cost reduction is a compelling incentive for individuals to opt for Better Mortgage when securing a new mortgage or refinancing an existing one.
How Better Mortgage Works
Similar to many online mortgage providers, Better Mortgage operates through a streamlined six-step application process, entirely conducted online. Here’s a breakdown of the steps involved:
- Choose between applying for a first-time mortgage or refinancing an existing one.
- Provide basic personal information and details about the property you intend to purchase or refinance.
- Input essential financial data and undergo a “soft credit inquiry,” which doesn’t impact your credit score.
- Select from various mortgage options tailored to your input.
- Connect with a dedicated online loan consultant who offers additional guidance and assistance throughout the application process.
- Receive an official loan estimate outlining the approved loan amount and the corresponding interest rate for your mortgage or refinance.
While Better Mortgage boasts a quick preapproval process, with estimates available in as little as three minutes, the time to complete the entire mortgage application and closing process may extend up to 21 days.
To receive a loan estimate, you’ll need to provide the following basic information:
- Name and contact details
- Social Security number
- Government-issued identification (e.g., driver’s license)
- List of assets, including bank statements and investment records
- List of debts, such as credit card bills and student loans
- W-2 statements for the past two years
- Recent paycheck stubs
Borrower Requirements
Better Mortgage adheres to conforming loan standards set by government-sponsored enterprises Fannie Mae and Freddie Mac. For conventional loans, applicants typically need a good credit score, usually a FICO score of 620 or higher, and a debt-to-income ratio of up to 55%. Depending on the specific loan, a minimum down payment of 3% is required. However, for larger jumbo mortgages, the minimum down payment increases to 10%.
Better Mortgage extends its services to borrowers in 44 U.S. states. Residents from all states except Nevada, Minnesota, Virginia, Vermont, New Hampshire, and Massachusetts, along with Washington D.C., can avail themselves of loan opportunities through Better.com.
Pros
Better Mortgage distinguishes itself by refraining from charging any fees or commissions. They offer rate quotes within seconds, preapproval within minutes, and aim to complete the closing process within 21 days. Additionally, they pledge to save customers up to $2,000 in closing costs.
Cons
Better Mortgage does not provide loans backed by the Federal Housing Administration (FHA). Additionally, they do not offer home equity loans or home equity lines of credit. Furthermore, Better Mortgage operates exclusively online, with no brick-and-mortar locations.
What Others Are Saying
Better Mortgage has garnered positive feedback from various sources. NerdWallet awarded it a flawless five-star rating, while Bankrate gave it a commendable score of 4.5 out of 5. Praised by The Motley Fool for its seamless online experience, Better Mortgage has earned recognition for its user-friendly platform. Additionally, discussions on online forums and chat rooms reflect the satisfaction of consumers who have availed themselves of Better Mortgage’s services.
In Conclusion
Although Better Mortgage may not cater to every individual’s needs, its absence of fees and commissions is an attractive feature for those seeking a new mortgage or refinancing. The potential savings of up to $3,500 during the mortgage application process is substantial and shouldn’t be underestimated. While the company’s lack of offerings such as home equity loans or FHA-backed loans may limit options for some first-time homebuyers, it still provides an affordable and streamlined mortgage and refinance experience for many consumers. Considering these factors, Better Mortgage presents itself as a viable option worth exploring.