Ally Bank Mortgage Pros and Cons
- Excels in online convenience
- Offers near-instant preapprovals
- Transparent interest rates
- No lender fees
- No government-backed loans or home equity products
- Ally Home services unavailable in five states
- 12-month reserve requirement for first-time jumbo borrowers
- High number of customer complaints
Ally Home Mortgage Overview
Ally Financial is a Detroit-based online bank founded in 2009. In 2016, the firm branched out into direct-to-consumer mortgage lending via its Ally Home arm. Now, the lender boasts a seamless digital mortgage process, jumbo lending expertise, and three-minute preapprovals.
Additionally, the application and loan tracking process is 100% digital, allowing the lender to speed up the closing process. And as a full-service bank, you can explore their checking, savings, and investing accounts while the underwriting concludes.
What Types of Mortgages Does Ally Bank Offer?
Ally Home only services a small range of home loans.
The lender’s bread-and-butter loans are jumbo mortgages, which comprise over 50% of Ally’s home lending. Borrowers can get $4 million in funding with 20% down, though Ally may consider exceptions “on an individual basis.”
Ally also services a small range of fixed- and adjustable-rate conventional loans. Fixed-rate terms range from 15-30 years, with 10/6, 7/6, and 5/6 ARMs available. (Instead of adjusting with the market annually, Ally’s variable interest rates fluctuate up to twice a year.)
Ally Bank does not lend to borrowers under the VA, FHA, or USDA loan programs. Nor does this originator offer home equity loans, HELOCs, reverse mortgages, renovation loans, or other niche products.
How Do Ally Bank Mortgages Work?
You can get started with Ally Home online via its “fully guided digital experience,” starting with your application. After getting preapproved – which only takes about three minutes – Ally’s portal will walk you through a series of question-and-answer pages.
At any point in the process, you can contact a loan consultant to answer questions or concerns. But if you prefer to go it alone, the mortgage lender makes it plenty easy to navigate their website without assistance. Ally Home also offers a comprehensive mobile app if you want to apply on the go.
Once your application is in, it’s time to upload, sign, and submit various documents and disclosures. You can also digitally lock your rate, track your loan, and receive alerts when you complete important milestones.
Ally claims that they can move you from application to closing 10 days faster than the industry average. But, unusually for an online-only lender, when it’s time to close, Ally insists that you finalize your loan in person. (Don’t worry – they’ll tell you where to go and what to bring!)
Ally Bank Mortgage Rates and Fees
Ally Bank lists detailed rate information online with daily updates. The lender also boasts lower-than-average rates despite not charging lender fees, 75-day rate lock fees, or prepayment penalties. Borrowers also get a discount on closing costs for being a member of Ally Bank at least 30 days before applying.
That said, you do have to pay fees for your appraisal, title search, title insurance, and escrow deposits. Some borrowers may also have to pay prepaid interest on their mortgage. And if you opt for mortgage points, you’ll have to pay those at closing or bundle them into your loan.
Refinancing Home Loans with Ally Bank
Ally Home offers both rate-and-term and cash-out refinancing. You can easily apply through the lender’s website using all the same tools given for purchase loans.
How to Qualify for an Ally Bank Mortgage
Ally Home adheres to the conforming loan requirements set by Fannie Mae and Freddie Mac. These include a minimum credit score of 620 and a 3-5% down payment. You’ll also want a debt-to-income ratio (DTI) under 43%, though Ally may accept DTIs as high as 50%.
Jumbo borrowers have to meet more stringent requirements, including a 20% down payment a DTI no higher than 43%. You’ll also have to have at least 12 months’ reserve in the bank to qualify. That said, the lender also notes it may take special circumstances and sources of income into consideration during underwriting.
Ally Bank Mortgage Features and Benefits
Digital Mortgage Experience
Ally Home’s “fully guided digital experience” is one of its strongest selling points. You can do everything from preapproval to signing documents online or from the app. In fact, the only thing you can’t do online is finalize your mortgage. With all these tools at hand, Ally Home claims to close your loan at up to 10 days faster than the industry average.
Ally offers tons of sample rates online, complete with a clear breakdown of how much you’re paying in points or credits to achieve the rates shown onscreen. You can sort by popular products or fixed- and adjustable-rate loans. The calculator also lets you input your ZIP code, property information, and credit details to get a personalized quote with no personal information required.
Fast Closing Times
Ally Home claims to close up to 10 days faster than the industry standard. Most borrowers can see their applications moving from initialization to close in 38 days or less.
Ally Home partners with Fannie Mae’s HomeReady program to help lower-income borrowers with limited funds get into a home. Borrowers who make 80% or less than the area median income can save on PMI with just 3% down and a DTI of 50% or less.
Easily Speak to Ally Home Loan Experts
In keeping with its modern appeal, Ally Home experts are available by text, phone, and email for personalized guidance.
Ally Home Loan Drawbacks
Must Close in Person
Unlike many online-only lenders, Ally requires you to close your loan in person. Though they tell you where to go and when to finalize your loan, this step does make getting a loan with Ally slightly less convenient.
Strict Requirements for Jumbo Loans
Ally requires a 700-credit score and 20% down payment for all of its jumbo loans. You also need at least 12 months of cash reserves saved up to qualify.
Limited Loan Menu
Ally has a limited loan menu, with absolutely no government-backed home loans available. You also can’t get reverse mortgages, renovation loans, or home equity products of any description.
According to the Consumer Financial Protection Bureau, Ally saw a higher-than-average number of customer complaints against it in 2020. Most of these complaints were about the loan modification, collection, and foreclosure process, its loan payments and servicing, and trouble during the payment process. And despite not being accredited with the Better Business Bureau, Ally has a C rating with the firm.
How Does Ally Bank Compare to Other Lenders?
#1. Ally Home Mortgage vs. Rocket Mortgage
Rocket Mortgage is an online lending platform that services self-sufficient borrowers in all 50 states. The lender boasts perks such as preapprovals in just 10 minutes, flexible terms, and the expertise of the Quicken Loans ecosystem behind it. Unfortunately, Rocket’s loan menu is primarily constrained to the basics, and you may wait up to a couple of months to close.
>> More: Rocket Mortgage Review
#2. Better Mortgage vs. Ally Mortgage
Better.com is a 24/7 online lender that claims to save borrowers up to $3,000 in closing costs by eliminating lender fees. Eligible borrowers can get preapproved in minutes and close in as few as 14 days. Plus, if you need on-demand rate locks or want to qualify with unusual financial circumstances, Better may be able to work with you – just not in every state.
>> More: Better Mortgage Review
#3. NASB Mortgage vs. Ally Home Loan
North American Savings Bank is an FDIC-backed financial institution that originates home loans from the comfort of its Kansas City, Missouri home. This hybrid lender specializes in VA lending, though it also provides a number of niche products to serve borrowers from all walks of life. Unfortunately, some loan products are limited to its home territory. Plus, its online capabilities are somewhat stunted, with no loan tracking to speak of.
>> More: NASB Mortgage Review
#4. Ally Mortgage vs. Movement Mortgage
Movement Mortgage is another hybrid lender that originates loans in all 50 states. It offers a wide range of mortgages and is one of the fastest lenders in the U.S. With its “6-7-1” process, this lender strives to underwrite your loan in 6 hours, process your loan in 7 days, and fund you in 1 day. All of this is possible from its in-person branches, online portal, or mobile app.
>> More: Movement Mortgage Review
Ally Home Loan FAQS
What Credit Score Do You Need for Ally Bank Mortgages?
Ally requires a minimum credit score of 620 for most conventional loans, though you’ll need a FICO score of 700 for a jumbo loan.
Is Ally Bank a Good Choice for Mortgage Refinancing?
Ally offers competitive refinancing rates and an entirely online process for refinancing your mortgage. Plus, the lender promises to close on your refinance up to 10 days faster than the national average.
Is Ally a Direct Mortgage Lender?
Yes, Ally is a direct mortgage lender.
Is Ally Bank a Good Place to Get a Mortgage?
Ally Bank is a good place to get a mortgage if you’re a well-qualified or wealthier borrower interested in their smaller loan palette. Lower-income borrowers can also qualify through Fannie Mae’s HomeReady program with just 3% down.
How Do Ally Home Mortgage Rates Compare to the National Average?
Ally Home’s mortgage rates are competitive with the national average, though mortgage rates are lowest on shorter loan terms.
Bottom Line: Ally Home Mortgage Review
Ally Bank is a newer lender that specializes in digital convenience, jumbo loans, and top-notch customer service. Though it doesn’t have options for borrowers who want government-backed loans, it can still work with lower-income borrowers via Fannie Mae’s programs. And it’s tough to beat near-instant preapprovals, easy loan comparison tools, and full-service banking products all rolled into one.