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Mortgage Lenders

Learn about the mortgage loan process and how you can find the best lender for your mortgage.

Home ownership is the foundation of the American dream, and often, a mortgage is necessary to make that dream come true. Finding the right mortgage loan is arguably just as important as finding the right property. You’ll be paying off your mortgage for years, and the best terms can save you thousands of dollars over time.

This guide explains how mortgages work, the basics of mortgage fees and the mortgage process, and the different types of loans available. You’ll get an overview of the top mortgage lenders in the United States so you can find the best deal for your loan.

What Are the Best Mortgage Lenders of 2019?

U.S. News conducted an in-depth review of leading direct mortgage lenders. Research was based on program availability, customer satisfaction ratings and qualification requirements. Because each consumer has different needs, the top finishers in several key areas were chosen.

Top Lender for Customer Satisfaction

Quicken logo


Quicken Loans is a nationwide mortgage lender with several mortgage options. Known for customer service, the lender has an A+ Better Business Bureau rating and received a rating of five (among the best) in the 2018 U.S. Primary Mortgage Origination Satisfaction Study.


  • Mortgage types offered: Conventional, jumbo, ARM, VA FHA, refinance
  • Minimum FICO credit score: 580 (FHA), other loans vary
  • Maximum debt-to-income ratio: Varies
  • J.D. Power satisfaction rating: Five out of five

Best for 100% Loan-to-Value Options

Bank of America logo

Bank of America

A major financial institution serving homeowners nationwide, Bank of America has good customer satisfaction ratings. The bank has an A+ Better Business Bureau rating and a J.D. Power rating of four, which is better than most.


  • Mortgage types offered: Conventional, VA FHA, refinance, home equity
  • Minimum FICO score: 620
  • Maximum loan-to-value ratio: 100%
  • Maximum debt-to-income ratio: 55%
  • Loan amounts: Up to $5,000,000
  • Total closing costs: Varies
  • J.D. Power overall satisfaction rating: Four out of five

Best for Extensive Loan Options

Guild logo


Guild Mortgage serves homebuyers nationwide with multiple mortgage options. Mortgage shoppers can choose from conventional or agency loans with this lender, which has an A+ BBB rating and a four out of five J.D. Power satisfaction rating.


  • Mortgage types offered: Conventional, jumbo, ARM, VA, FHA, USDA, refinance
  • Minimum FICO credit score: 620
  • Maximum debt-to-income ratio: 45%
  • J.D. Power satisfaction rating: Four out of five

Best Home Equity Lender for Fair Credit

loanDepot logo


LoanDepot was established in 2010 and since then has financed more than $70 billion in mortgages. It offers FHA, conventional and other mortgage options. Borrowers may qualify for a loan with a FICO credit score as low as 580.


  • Mortgage types offered: Conventional, jumbo, ARM, VA, FHA, home equity
  • Minimum FICO credit score: 580
  • Maximum debt-to-income ratio: Not disclosed
  • Maximum combined loan-to-value ratio: 90%
  • J.D. Power satisfaction rating: Four out of five

Top Lender for Adjustable-Rate Mortgages

Chase logo


Chase Bank is a major financial institution with several mortgage options, including adjustable-rate mortgages. Borrowers can choose from 5/1, 7/1 and 10/1 ARMs.


  • Mortgage types offered: Conventional, jumbo, ARM, VA FHA
  • Minimum FICO credit score: 620
  • Maximum debt-to-income ratio: 50%
  • J.D. Power satisfaction rating: Three out of five

Best for VA Loan Specialization

Veterans United Home Loans logo

Veterans United Home Loans

Veterans United Home Loans is a full-service mortgage lender. Veterans United Home Loans specializes in VA loans and is the largest VA home purchase lender.


  • Mortgage types offered: Conventional, ARM, VA FHA, USDA, refinance
  • Minimum FICO credit score: 620
  • Maximum debt-to-income ratio: Varies
  • J.D. Power satisfaction rating: Not rated

Best for USDA Loans

Fairway Independent logo

Fairway Independent

Fairway Independent Mortgage was established more than 20 years ago and has funded more than $50 billion in loans. The lender has excellent customer satisfaction ratings and offers most mortgage products, including USDA loans.


  • Mortgage types offered: Conventional, jumbo, ARM, VA FHA, USDA refinance
  • Minimum FICO credit score: 580 (FHA), other loans vary
  • Maximum debt-to-income ratio: 43%
  • J.D. Power satisfaction rating: Five out of five

How Do Mortgages Work?

When you take out a mortgage, you borrow money from a lender to buy your home. A mortgage is a secured loan with your home as collateral, so the lender will hold the title to the property until the loan is paid in full. You will make payments on the loan each month, including interest, until it is paid off. At that point, you’ll hold the title and own your home outright.

When you choose a mortgage, you have four major decisions to make: the lender, loan type, loan term and interest rate type.

Types of Mortgage Loans

There are two major types of mortgage loans: government-backed and conventional. Government-backed mortgage programs offer guarantees to lenders that reduce their risk and can make it easier for borrowers to qualify for a mortgage. Conventional loans do not offer the same guarantees but may have lower interest rates.

Government-Backed Mortgages

FHA loans. The Federal Housing Administration, part of the U.S. Department of Housing and Urban Development, offers loan programs that make it easier for homebuyers to qualify for mortgages. The FHA doesn’t lend money; instead, it insures mortgages and reimburses lenders if borrowers default on the loan.

With government backing, it’s easier to qualify for FHA loans than conventional ones. You could qualify with a lower credit score and a smaller down payment, as little as 3.5%. However, you need to pay the FHA an upfront fee of 1.75% of the loan amount, plus annual mortgage insurance for at least 11 years. With these fees, FHA loans can be more expensive than conventional ones.

But programs like the FHA 203(k) Rehabilitation Mortgage Insurance program could help you finance a fixer-upper, offering funds in your mortgage to pay for renovations and improvements.

Bob Blackhurst, Realtor with BHHS Fox & Roach Real Estate Agents & Associates in Greenville, Delaware, finds these loans come in handy for many of his clients. “Housing inventory is tight, and it’s not easy to find properties in perfect condition. The FHA 203(k) loan program is a great tool to have at your disposal.”

VA loansThe U.S. Department of Veterans Affairs offers a loan guarantee to help active-duty members of the military, veterans and their surviving spouses qualify for mortgages. There are zero-down-payment VA loans, and lenders may charge a lower interest rate compared to conventional loans. However, funding fees are higher the smaller your down payment.

USDA loans. The U.S. Department of Agriculture Single Family Housing Guaranteed Loan Program encourages people to purchase homes in rural areas. Borrowers in these areas can qualify more easily for these loans and at a lower intereOKst rate because the USDA guarantees the loan. However, USDA loans are only available in certain rural areas. They require an upfront fee of up to 3.5% of the mortgage amount and an annual fee of up to 0.5% of the unpaid balance.

State and local mortgage programs. State and local governments often have their own mortgage programs to help people buy homes. There are programs that help first-time buyers, encourage buyers in underdeveloped areas and support public sector employees such as firefighters and teachers. Check with your state or local housing department to see what programs are available in your area.

Conventional Mortgages

Conventional mortgages aren’t part of a government program. They’re a contract between homebuyers and private lenders. These loans can be more difficult to qualify for because they don’t have a guarantee if you default. However, they don’t have any rules limiting who can apply.

Conventional mortgage lenders typically require a down payment from 5% to 20%, though some offer loans with a down payment as low as 3%, according to the Consumer Financial Protection Bureau. If you have a down payment of less than 20%, your lender will likely require you to buy private mortgage insurance, which pays the lender if you default.

Loan term. Loan term is the length of your mortgage, or how long you are scheduled to make payments. Mortgage loan terms are usually 15 or 30 years.

Your loan term significantly influences how much you pay per month. With a longer mortgage term, your monthly payments are smaller because you have more time to pay the loan back. However, a longer term will cost more in total interest, and long-term mortgage interest rates are usually higher than short-term ones.

For example, compare a $200,000 mortgage with a 15- or 30-year term. Each loan charges a 3.5% interest rate. With the 15-year mortgage, the monthly payment is $1,430 with $57,358 in total interest. With the 30-year mortgage, the monthly payment is $898. However, the total interest is $123,312, more than twice as much as the 15-year loan’s interest.

Interest Rate Type

Fixed rate. A fixed-rate mortgage keeps the same interest rate throughout the entire term. Your monthly payment will always stay the same, and it is easy to budget. You will know exactly what your mortgage payments are going to be for the entire term and won’t have to worry about costs going up. But you can’t benefit if market interest rates fall unless you refinance.

The monthly payments on a fixed-rate mortgage are typically higher than the initial monthly payments on an adjustable-rate mortgage. Lenders charge higher interest rates on fixed-rate mortgages because they can’t increase your interest rate later. Over time, the payments on an adjustable-rate mortgage could go higher, but they will generally start lower than on a fixed-rate mortgage.

Adjustable rate. The interest rate on an adjustable-rate mortgage can change over time, which means your monthly payments can change depending on market interest rates. Adjustable-rate mortgage interest rates are based on a benchmark rate, such as the prime rate. When these rates go up, the interest rate and monthly payment for your mortgage go up. When they do down, so will your interest rate and monthly payment.

Adjustable-rate mortgages have rules for how often the interest rate can change. For example, on a 5/1 ARM, you’ll keep the same rate for the first five years and adjust only once per year after that. Similarly, 3/1 ARMs keep the same interest rate for the first three years and can adjust once per year after that. Each adjustment has a cap and the loan have a lifetime cap on how much your rate can increase overall.

Before signing up, calculate how much the payments would be if the ARM hits the maximum rate under the lifetime cap. Consider whether you can still afford the loan payments even in the most expensive scenario.

U.S. News Survey: Most Homebuyers Are Well-Informed Before Getting a Mortgage, but Many Aren’t Doing Enough Research

U.S. News conducted a survey of U.S. mortgage holders to identify how well homebuyers are researching mortgage loans. Overall, homebuyers know what they’re getting into. They’re typically spending more than an hour researching home loans and comparing at least two mortgage lenders, including comparing APRs and closing costs. However, there are many homebuyers who don’t spend enough time researching home loans or comparing lenders.

More than half of respondents spent at least one hour researching home loans.



Although 41% of respondents spent less than one hour researching home loans, most respondents spent an hour or more. Almost a third (30%) invested more than five hours of research before choosing their mortgage.

Nearly half of homebuyers surveyed didn’t shop around before committing to a lender.



The majority of respondents (54%) obtained quotes or preapprovals from at least two different lenders, but 46% only got them from one lender. Just 6% of respondents compared quotes or preapprovals from five or more lenders.

Most homebuyers aren’t considering all loan types.



Only 37% of respondents investigated all loan types, including conventional, FHA, VA, USDA and local programs. More than a quarter (28%) only considered one type of loan, and 10% didn’t know there is more than one type of loan available.

About 65% of respondents compared home loan costs before choosing a lender.



Before choosing a final lender, 65% of respondents compared APRs and closing costs. But 23% did not compare costs, and 12% didn’t know if they compared costs or not.

Mortgage shoppers are generally well-informed of loan costs before closing. About 79% of respondents indicated they had an accurate idea of how much their total monthly mortgage payment would be.



Homebuyers are preparing financially before applying for a mortgage.



Most homebuyers (70%) are taking steps to prepare before applying for a mortgage. They are most commonly checking their credit report and/or score, saving for a down payment or paying down debt. However, 30% aren’t taking some of the most important steps that should be addressed before applying for a home loan.

Most homebuyers chose a lender based on existing relationships.



Many homebuyers are choosing lenders based on personal experience and trust. More respondents chose a lender they already have a relationship with than any other response, and 25% went with a lender recommended by a realtor, friend or relative.

Survey methodology:

  • U.S. News ran a nationwide survey through Google Surveys between June 26 and July 1, 2018.
  • The sample size was the general American population and the survey was configured to be representative of this sample.
  • The survey asked 10 questions relating to obtaining a mortgage.
  • All winning answers were statistically significant at the 95% confidence level.
  • See the full survey data, questions and results.

How Is Mortgage Interest Determined?

Interest Rate Factors

When lenders set your mortgage interest rate, they consider a wide range of factors, including your credit, loan term, home price and down payment, and whether it’s a fixed- or adjustable-rate mortgage. Knowing these factors can help you figure out how to qualify for a better rate.

The Consumer Financial Protection Bureau offers a calculator for average interest ratesbased on your credit score, state, house price, down payment and other factors.

Credit score. When you apply for a mortgage, the lender considers your credit score. Your credit score is based on your credit history and represents how safe you are as a borrower. FICO, the most commonly used credit score, ranges from 300 to 850. The higher your score, the better the chances you’ll qualify for a low interest rate.

You need a minimum credit score of 620 to qualify for a mortgage under Fannie Mae or a score of at least 500 to qualify for an FHA mortgage. If your score is between 500 and 579, you could qualify for an FHA loan, but with a down payment of at least 10%. If your score is 580 or higher, your down payment can be as low as 3.5%. VA loans do not have a minimum credit score requirement as lenders will consider your entire financial situation to make a decision. USDA loans require a minimum credit score of 640 for automated underwriting, though you may be able to qualify with a lower score if the lender manually underwrites your application.

Home price and loan amount. The more money you borrow for your loan, the higher the interest rate will likely be. Lenders are risking more money with larger mortgages, so they may charge a higher interest rate. There are maximum limits for loans. FHA loan limitsvary by area and can be as low as $275,655 and as high as $636,150, depending on the cost of living in each area of the country.

The maximum loan amount for conventional mortgages in most of the country is $424,100, though this can be higher in certain areas or for multiunit properties. If you want to buy a property that costs more than these limits, you can apply for a jumbo loan, also known as a nonconforming loan. Jumbo loans typically charge a higher interest rate because there is a higher amount at risk.

Down payment. Your down payment is the amount you pay upfront for the property, while the mortgage covers the rest. A larger down payment leads to a lower interest rate on your mortgage. You’ll be borrowing less money, so lenders are taking on less of a risk.

Loan term. The longer the length of your loan, the higher the interest rate may be. Rates are higher on a 30-year mortgage compared to a 15-year mortgage.

Loan type. Government-backed loans typically charge lower rates than conventional mortgages, but FHA loans can be more expensive once you factor in other fees, like mortgage insurance.

Points. Mortgage points are a fee you can pay at the start of the mortgage to lower your interest rate for the duration of your fixed-rate mortgage. Each point costs 1% of your total loan amount. The interest rate reduction depends on the lender, but it is common to lower your interest rate by 0.25% in exchange for every point purchased.

You can also purchase points to lower the initial interest rate on an adjustable-rate mortgage. On a 5/1 ARM, buying points would lower the interest rate for the first five years before the rate adjusts.

The longer you plan on staying in a property, the more it makes sense to pay points. You’ll benefit from the lower interest rate for a longer period of time.

Property type. Lenders change their interest rate depending on the type of property. Single-family homes are considered less risky and have lower rates. Multifamily properties, condos, co-ops and mobile homes are considered riskier, so mortgages for these properties often have a higher interest rate.

Property use. If you plan on using the property as your primary residence, you’ll get a lower rate because people are less likely to default on their homes. On the other hand, if you’re buying a property as an investment or a vacation home, your interest rate will be higher. People are more likely to default on these properties because they’ll still have their primary residence to live in.

Market interest rates. Lenders base their interest rates on market benchmarks, such as the prime rate.

Interest variations by state. Where you plan on buying a home can have an impact on your mortgage interest rate. There’s a significant difference between states. Counties, cities and even neighborhoods can have different mortgage rates as well.

Interest rate vs. APR

Lenders are required to provide the annual percentage rate and loan interest rate. When you’re comparing different mortgages, you should consider both the interest rate and APR as you make a decision.

The interest rate is the percentage of the loan you pay for borrowing the money. The APR includes the interest rate and the upfront costs of taking out the mortgage, such as loan underwriting fees, origination fees and points. If you need mortgage insurance, those premiums should be included in the APR.

The APR spreads these expenses over the life of the loan, so you can see how much it costs per year to borrow money once you factor in these charges. A loan with a 3.5% interest rate might have an APR of 3.65% after it adds in the other expenses.


Amortization is how a loan is paid off over time. When you take out a mortgage, the payment schedule is set up so that at the beginning, most of your payment goes to paying interest, not paying down the principal. Later on, more of your money goes to paying off the principal and less to interest.

This mix has an impact on your finances. You get a tax deduction for paying interest on a mortgage for your primary residence, but there’s no deduction for paying off the principal. However, as you pay off your principal, you own more of the property outright, which builds your net worth. Paying off interest does not build your net worth.

What Are Additional Mortgage Costs?

Your mortgage will have other costs on top of the principal and interest to close and maintain your loan. These expenses include homeowners insurance, property taxes, closing costs and local fees.

Homeowners insurance. Lenders usually require you to buy homeowners insurance as part of your mortgage. This insurance would pay to repair damages after problems like fires, lightning strikes and vandalism. Lenders use your home as collateral in case you default, so they require insurance to protect their investment.

Property taxes. Local governments charge property taxes to fund their operations. Property taxes can be a substantial part of your monthly payment and, in some areas, may be more than what you’re paying for the loan. Be sure to research local property tax rates before buying a home.

Association fees. Your property may be part of a homeowners association that maintains the neighborhood. You will pay the association a fee to cover your share of the maintenance.

Private mortgage insurance. If your down payment is less than 20% of the total purchase, the lender will likely require you to buy private mortgage insurance. This insurance pays the lender if you stop making payments and default on your mortgage. You’ll need to pay private mortgage insurance premiums as part of your mortgage payment.

Once you’ve paid off 20% of the property, you can request that the lender end the PMI. The lender is legally required to remove the insurance requirement once you’ve paid off 22% of the property. Make sure to ask once you’ve paid off 20% so you don’t pay for this insurance any longer than you have to.

FHA, VA or USDA fees. If you take out a mortgage through the FHA, VA or USDA, the government agencies will charge their own fees to support the program. Even with these fees, VA and USDA loans are typically less expensive than conventional mortgages. However, the extra FHA fees can make these loans more expensive than conventional mortgages.

Mortgage closing fees. Property evaluation fees, loan fees and title fees are part of your closing costs. These are generally 2% to 5% of the loan amount.

[Read: What Are Closing Costs?]

What Should You Do Before You Apply for a Mortgage?

Before you apply for a mortgage, make sure you’re in a good position to qualify for the best loan possible. Check and improve your credit, compare lenders, get preapproved and make a plan for your down payment and closing costs.

1. Check and improve your credit reportLenders will check your credit report, so you want to identify and fix problems with your credit report before you apply.

Order a free copy of your credit report from each of the three credit bureaus at Your report will list your borrowing history, including any negative marks. You can pay extra to access your credit score with your report. Alternatively, some websites, banks and credit card issuers give customers free credit score access.

Check your report for errors and contact the credit bureau if you find any. You can take steps to improve your credit score, such as always making your monthly payments on time and paying down your balances.

Although improving your credit before applying for a mortgage can help you with approval and better terms, don’t rule yourself out of applying just because you have a less-than-perfect credit score, says Rob Sickler, loan originator with Mortgage Network Solutions. You can make up ground by finding the right lender and putting together a solid mortgage application.

2. Get preapproved. You should get preapproved for a mortgage before you start looking at properties. It can identify how much loan you are likely to be approved for, so you can avoid looking at houses that are out of your range. And it can make you more attractive as a buyer, since a preapproval letter tells sellers your lender is on board.

3. Compare multiple lenders. Don’t sign up with the first lender you speak with unless you’ve researched others. Getting multiple quotes increases the chance you’ll find the best rate for your situation. You can get prequalified with multiple lenders to check rates without getting locked into a commitment.

4. Submit mortgage applications within a short window. When you apply for a loan, the lender will pull your credit report and score to evaluate your application. The resulting hard inquiry remains on your credit report for up to two years and may negatively impact your credit score. However, you can minimize the impact on your score by applying for multiple mortgages within a 45-day window. Multiple inquiries for mortgages within that window are treated as a single inquiry.

While a prequalification typically only results in a soft pull of your credit, your credit may be hard pulled when you apply for a preapproval, apply for the mortgage and right before the closing. To limit the potential negative impact on your score and increase your chances of securing better terms, you may want to try to shop for a loan in a short period of time.

5. Don’t apply for other loans and credit cards. In the months leading up to your mortgage application, do not apply for any new loans or credit cards. Each application can shave a few points off your score, which could prevent you from qualifying for the best mortgage rates. Hold off until after you’ve bought your home.

6. Don’t spend all your savings on the down payment. Maximizing your down payment gets you closer to owning your home outright. However, you might need to fall back on your savings for repairs or underestimated costs, or if you lose your job.

Often, things go wrong with a house within the first six months of ownership, says Blackhurst. “The house might have been vacant for a few months, which means water hasn’t been going through the pipes. If the seasons have changed, the different temperatures could create trouble for the heating and AC units.”

He points out that you’ll need money for expenses like new furniture, painting the living room and landscaping, in addition to repairs.

You should also budget for property taxes, homeowners insurance, private mortgage insurance, association dues and utilities.

How Does the Mortgage Loan Process Work?

Obtaining a mortgage requires several steps before closing, including preapproval, appraisal and underwriting.

1. Prequalification. Prequalification will give you a quick estimate of how much you can borrow for your mortgage. You’ll share basic financial information, including your income, savings and outstanding debts. There’s usually no fee to get prequalified, and you can apply quickly by phone or online. However, getting prequalified doesn’t guarantee you’ll qualify for the mortgage.

2. Preapproval. Preapproval is much more thorough than prequalification. The lender will review your financial situation, similar to when you officially apply for a mortgage. You may be required to pay an application fee.

Expect to submit complete financial documents, including:

  • W-2s for the previous two years
  • Pay stubs
  • Proof of bonuses
  • Your most recent federal tax return
  • Two to three months of bank and investment statements (such as brokerage, 401(k), IRA, Roth IRA, 403(b) and pension statements)
  • Profit and loss statements or 1099 forms (if you own a business)
  • A list of your debts, including credit cards, car loans and student loans, along with your minimum monthly payment for each
  • Canceled checks for your current rent or mortgage
  • Social Security or disability statements
  • Alimony and child support payments
  • Bankruptcy discharge paperwork

The lender will review your credit report during preapproval. With a preapproval, you’ll learn the maximum amount you can borrow for a mortgage. There could be restrictions to the agreement, such as the lender may need to approve the property, and the preapproval may be rescinded if you lose your job. However, getting preapproved shows your financial situation is most likely strong enough to qualify for a loan with the terms offered.

3. Application. After you’ve found your property, you can formally apply for a mortgage. The mortgage application will ask you questions about the property and your financial situation. A typical application could ask for:

  • The address of the home you want to purchase
  • The type of home
  • The size of the property
  • The expected sale price
  • An estimate of the home’s value
  • The annual property taxes
  • The homeowners association dues
  • The loan amount you want to borrow

If you’ve been preapproved, the lender has already reviewed your financial documents and checked your credit. Otherwise, you’ll need to send in the documents listed for preapproval as part of your application.

Sickler recommends that you be as upfront and accurate with your application as possible, especially with financial issues. That way, you can avoid delays. For example, you may report your W-2 income as $50,000, but it could be lower if you took a few months off for disability. The lender will identify this discrepancy eventually, so it’s best to be clear from the start.

4. Loan estimate. After you send in your application and documents, the lender must give you a loan estimate within three days of completion as required by federal law, according to the Consumer Financial Protection Bureau. The loan estimate gives you an overview of the mortgage that the lender would give you, based on a preliminary inspection of your application. It will include the interest rate, monthly payment, total closing costs, estimated taxes, insurance fees and other details of the proposed loan.

The loan estimate is not an official offer, but a prediction. The lender still needs to verify your information, so the actual loan could be different. You have 10 business days to make a decision on the loan estimate.

5. Processing. If you accept the estimate, the lender will send your application, credit report and financial documents to be reviewed by a mortgage processor. This company will review your financial documents to make sure they’re accurate, as well as the property title to make sure the house can be legally sold. If there are any financial red flags, such as missed payments on other loans, the processor will ask you to explain the situation in a letter of circumstances.

6. Additional documentation. The mortgage processor could ask you to submit other documents as part of its review, sometimes due to errors such as a missing page from your tax return.

Government programs may ask for additional documents that aren’t part of the typical application. For example, with VA loans, you’ll be asked for a certificate of eligibility to prove your military service. Be sure to send in these documents as soon as possible to keep your application on schedule.

“Delays happen here because clients didn’t know what to report,” says Sickler. “For example, someone sends in their paycheck, but doesn’t mention they’re paying alimony and child support. The processor’s going to need this information before they can move forward.”

7. Appraisal. The lender will hire a professional to complete an appraisal of the property. The appraiser inspects the property to come up with an opinion of how much it’s worth. This could be different than the price you agreed to with the seller.

The lender could deny your mortgage if the appraised value is less than the agreed sales price because the property might not be enough collateral for your loan. In this situation, you can make a larger down payment to cover the difference between the sales price and appraisal, negotiate to a lower sales price or ask the seller to lend you the money through a second mortgage. Another option is challenging the appraisal.

“Appraisers typically do a great job, but sometimes they make mistakes, especially if the appraiser isn’t local and doesn’t know the area,” says Blackhurst. “If you think an appraisal is off, you could make a list of comparable sales in your area to show what the price should actually be. There’s no guarantee it’ll work, but it happens.”

8. Underwriting. Once the mortgage processor has finished the review, a report goes back to the lender so it can decide whether to approve the loan. The lender might approve your mortgage, deny it or ask you for more information. If the lender is satisfied, it will approve your loan after underwriting.

9. Closing disclosure. After the lender has approved your mortgage, it must send you a closing disclosure document. This document is similar to the loan estimate. The difference is that the numbers on this document are no longer estimates. It lists information about the mortgage including the monthly payment, interest rate and closing costs.

You should compare the closing disclosure to your loan estimate. The Consumer Financial Protection Bureau offers a free tool that you can use to analyze your disclosure. If the numbers are significantly different and throw off your budget, you may need to rethink the purchase. The lender must give you the closing disclosure at least three business days before your closing date so you have time to review before finalizing the sale.

10. Insurance. You’ll need to apply for insurance after you’re approved for the loan. The insurance company might not have enough time to complete your application before the closing date. In this case, you’ll receive an insurance binder, which is temporary coverage for the property that lasts 30 days. With an insurance binder, you can close the deal and your regular insurance policy will be ready after the sale.

11. Closing: Closing is the last step of the entire process. The seller, the real estate agents, a title company representative and possibly a representative from the lender will be present. You may need to have an attorney present, depending on the rules in your state. During this meeting, you’ll review the final documents for the sale, sign the necessary forms to complete the transfer and pay your down payment plus the closing costs.

Once you close, you’ll be given the keys to your new home.

How Can You Choose a Mortgage Lender?

There are many mortgage lenders to choose from. You should evaluate lenders on four key factors:

  • Interest rates
  • Closing costs
  • Product offerings
  • Customer satisfaction

Interest rates. Lenders charge different interest rates, so by shopping around, you could find a better deal for your mortgage. Choosing a lender with a rate a few tenths of a percentage lower could still save you hundreds, potentially thousands, over the course of the loan.

Closing costs. When you factor in closing costs, including the application, appraisal and loan origination fees, the lender with the lowest interest rate may not offer the best deal. Compare closing costs between lenders, using the APR to find out how much you’d owe per year for a loan when you factor in every cost.

Product offerings. Your lender may offer different loan terms like 15-, 20- and 30-year mortgages with fixed or adjustable interest rates. There are many variations of adjustable-rate mortgages based on how often the rate can change and by how much, such as 3/1, 5/1 and 5/5. If you want an adjustable-rate mortgage, look for a lender with multiple options so you can find the right fit.

If you want an FHA, VA or USDA loan, find a lender that participates in that program.

Customer satisfaction. You should use customer satisfaction reviews to research lender performance. Lenders that don’t treat their customers well might not be worth signing up with, even if they offer great loan rates. You’ll be working with your lender for years, so you want one that will treat you well and that won’t make mistakes.

Check the 2018 U.S. Primary Mortgage Origination Satisfaction Study from J.D. Power, which rates areas of customer satisfaction: overall satisfaction, loan offerings, application/approval process, interaction, loan closing, onboarding and problem resolutions. Also, check the Better Business Bureau for the lender’s rating and customer reviews.

“Customer service is the most important factor when you’re looking to apply for a loan,” says Sickler. “A mortgage is a pretty standard product. What sets the best lenders apart is that when problems come up, they’re going to give you the personal attention you need.”

How Can You Refinance a Mortgage?

After you close on a mortgage, you aren’t locked in permanently until it’s paid off. With refinancing, you can get a new loan for your mortgage balance with new terms, like a different length of the loan or a new interest rate.

When you refinance, the lender pays off your existing mortgage and replaces it with a new one. You can refinance to get a new loan with your existing lender or move to a new lender.

“Refinancing is an effective and popular strategy,” says Sickler. “You shouldn’t be afraid to look for new offers for your loan.”

[Read: Best Mortgage Refinance Lenders]

What Can You Do if You Can’t Make Your Mortgage Payments?

If you’re in a tough financial position and can’t make your mortgage payments, you need to move quickly to protect your home. Miss too many payments and the lender can foreclose on your property, forcing you to move out.

There are options to help you through this tough stretch and increase the chance that you can keep your home, even if you can’t keep up with your current mortgage payments.

Reach out to your lender immediately. You should contact your lender as soon as you realize you’re going to miss a mortgage payment. Don’t wait until you’ve already missed several payments and your credit has taken a hit. Miss too many payments and the lender will eventually foreclose on your home. But if you let your lender know about your situation, they may have options that can help.

“Servicers understand things happen, and they’re willing to work with you,” says Sickler. “The more proactive borrowers are at the beginning of a problem, the better the results will be.”

When you ask for help with your mortgage, your lender will ask you to fill out paperwork explaining why you can’t make the payments, whether it’s a temporary or permanent problem, your current income and any other assets you have besides the house. Based on this information, the lender could create a new payment plan or give you a temporary forbearance, which delays your mortgage payments for a set amount of time.

Speak with a HUD counselor. After speaking with your lender, you should contact a HUD counselor. HUD counselors can offer free advice to help you avoid foreclosure. They can help you review your budget to see if there’s anything you can do to make your mortgage payments and will try to work out a payment plan with your lender if you haven’t already done so.

HUD counselors can identify whether you qualify for any government mortgage assistance programs available to help struggling homeowners. These programs could lower your monthly payment, delay your payments or help you refinance to a more affordable plan.

Beware of scams. People get desperate when they fall behind on their mortgage payments, and this makes them good scam targets. You should only work with your lender and HUD counselors to sort out your mortgage issues.

If a company contacts you with a promise to solve your mortgage problems, don’t sign up. In the best-case scenario, the company will charge you for services you could get for free from the government. Worst case: It could steal your money and your identity.


The mortgage industry has unique terms that can be confusing if you’ve never heard them before. This glossary offers definitions for the most common ones so you can be informed when shopping for a mortgage.

Term Definition
Adjustable-rate mortgage (ARM) A mortgage with an interest rate that can change over time, based on a market index. If the interest rate goes up, so do the monthly mortgage payments. If the interest rate goes down, payments also fall.
Amortization The repayment schedule of a loan over time. When you have a mortgage, you’ll receive an amortization schedule showing how much of each monthly payment goes toward the interest and the principal.
Annual percentage rate (APR) The cost of borrowing money over the course of the year, factoring in the interest rate, points, loan underwriting fees and broker fees.
Assets Something valuable that you own and could potentially sell to settle a debt. Your house, car, bank accounts and investment accounts are examples of assets.
Collateral An asset used to secure a loan. If you don’t pay off the loan, the lender can take the collateral. When you take out a mortgage to buy a house, the property will be collateral for the loan until you pay it off.
Closing Costs Expenses you need to pay to set up your mortgage and complete the purchase of a house.
Closing Disclosure A document that explains the final details of your mortgage, including the monthly payment and interest rate. The lender will send you a closing disclosure after underwriting, and you will decide whether to accept the offer in the closing disclosure.
Co-Borrower Someone who is legally responsible for paying back your mortgage and is also a part owner of the property.
Co-Signer Someone who backs up your mortgage loan with his or her credit. That person is also legally responsible for the payments. However, the co-signer does not own any part of the property.
Commitment Letter A letter that lenders send to mortgage applicants after they pass underwriting. The letter states that you’ve been approved for a loan and for how much. You can show this letter to sellers to prove you’ve qualified for financing and are a serious buyer.
Default When you fail to make your mortgage payment and a certain amount of time goes by, your loan is considered in default. It’s typically three missed payments for conventional mortgages. At this point, a lender could move forward with foreclosure.
Down Payment The amount of the home purchase you pay upfront. The mortgage covers the difference between the sales price and your down payment.
Earnest Money An initial payment you make to the sellers after they accept your offer. In exchange, they take the home off the market. The earnest money is held in escrow until you finalize the deal. If there are problems before then, like the property had hidden damage, you get this money back. There are other circumstances where the seller can keep the earnest money, even if the deal doesn’t go through – like if the contract has a time deadline and the buyer fails to close the sale by then.
Escrow When money is held by an independent third party during negotiations between the buyer and seller of a property.
Equity The value of your ownership in a property, based on how much of the mortgage you’ve paid off and the current market value. If your house is worth $200,000 and your mortgage is $150,000, your equity is $50,000.
Fixed-Rate Mortgage A mortgage with an interest rate that doesn’t change. Your monthly payments will stay the same during the entire loan.
Foreclosure When a lender seizes a property because the owners defaulted on the payments.
Interest Rate What a lender charges you every year to borrow money.
Lien A legal claim against a piece of property for an unsettled debt. When you sell a property, you have to pay off any liens before you receive proceeds.
Loan Estimate This letter predicts your mortgage terms, listing your possible interest rate and monthly payments. A lender must give you a loan estimate within three business days of receiving your application. Your actual mortgage loan could have different terms.
Loan Officer Someone who works for a bank or other lender. His or her job is to work with applicants to find the right mortgage loan and help them through the application process.
Lock-In Agreement When the lender promises a set interest rate for your upcoming mortgage in exchange for a fee. You’ll keep the same rate, even if market rates go up during this time. These agreements typically last between 30 to 60 days, according to Zillow.
Mortgage A loan to buy a piece of real estate.
Mortgage Broker An independent professional who matches borrowers with different lenders for a mortgage. Brokers work with multiple lenders and can present options for multiple loans.
Mortgage Insurance Insurance that will pay a lender if borrowers don’t make their mortgage payments. Lenders can require you to buy mortgage insurance if your down payment is less than 20 percent.
Mortgage Note A signed document that says you’ve borrowed a certain amount of money to buy a house. The note will list the interest rate and when you should pay off the loan.
Mortgage Servicer A company that manages a mortgage loan, including collecting payments. While this could be the original lender, it doesn’t have to be. Your lender could pass this responsibility to a third party.
Origination Fee An upfront fee a lender could charge to cover the costs of evaluating and setting up your mortgage. The origination fee is usually a percentage of your entire loan amount, typically between 0.5 to 1 percent of the loan.
Principal The current amount you owe on the money you borrowed for your mortgage. As you pay off the loan, part of your payment goes to interest and part pays down your principal.
Title A document indicating who legally owns a piece of property. When you buy a house, the seller signs a contract to transfer the title to you. Your lender will retain the title until you pay off the mortgage. Once you’ve paid off the mortgage, you’ll get the title because you own the property outright.
Title Insurance Insurance to cover the legal fees in case of a problem with the title to a property. For example, this would cover a lawsuit that alleged the seller didn’t have the right to sell you the property. This insurance covers title issues that happened before you bought the property – not issues caused by you.
Underwriting When a lender reviews your mortgage application and financial information to decide whether you qualify for a mortgage and at what terms.


Jason Scott

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