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If you’re in the market for online convenience, social distancing, and no mandatory lender fees on your mortgage, then Better.com is a great place to start your search.
This online mortgage lender is well-rated for its all-digital mortgage process and unique borrower incentives. Plus, you can get pre-approved in just minutes!
But Better Mortgage isn’t for everyone. To start, the lender isn’t licensed to originate mortgagesin every state.
And with no brick-and-mortar branches, those who require a personal touch are left in the dark.
Better is a digital mortgage lender established in 2016 that claims to cut the average closing time in half.
The company provides 24/7 mortgage assistance through its technology and network of live customer service agents.
They are also known for their competitive rates, quick closing times, and lack of mandatory lender fees.
Although Better primarily provides conventional and refinance loans, the lender also works with various situations that some lenders may reject.
For example, borrowers with rental and restricted stock earnings, student loan debt, and self-employed income are welcome to apply.
Additionally, Better reports that:
But this mortgage provider is far from perfect. Like all lenders, Better bases your rate on your personal situation, meaning some borrowers pay more.
Moreover, the company doesn’t offer key government-backed loans, reverse mortgages or construction loans.
As an online-only lender, the entire Better mortgage process (minus the occasional phone call) occurs online.
You can start on the Better homepage with the “Get Started” button, after which you’ll be prompted to:
Note that your basic preapproval letter is just an outline of what Better estimates you could borrow. Your verified preapproval letter will include a more detailed outline of your terms.
If you decide to continue with the mortgage, you’ll also be assigned a dedicated loan officer to walk you through the process.
You can take advantage of Better’s rate lock (for a fee) at any time during the mortgage. Their online portal also makes it easy to upload documents, manage your account, and e-sign your way to the final dotted line.
Moving the mortgage process online and providing only non-commissioned – read: neutral – agents to assist homebuyers, Better boasts that it saves more overhead.
Then, it passes these savings along to you in the form of fewer fees and below-average interest rates. And barring any unusual circumstances, you can close in just 14 days.
Better offers a variety of conventional, jumbo, and refinanced loan products for primary and investment properties.
The lender also says it’s resumed providing FHA loans in select states following Covid-19-induced pauses.
For borrowers with good credit scores and a down payment of at least 5-10%, Better offers competitive purchase and refinance rates in line with (and often below) its peers.
For instance, according to public records sourced under the Home Mortgage Disclosure Act, Better’s average 30-year fixed-interest mortgage rate in 2020 came in at 3.03%.
As to terms, borrowers can take out both fixed- and adjustable-rate mortgages (ARMs). Fixed-rate options come in 15, 20, and 30-year terms.
If you opt for an ARM, you can lock your interest rate for the first 5, 7, or 10 years, after which your rate will adjust every 6-12 months.
Better is an unusual lender in that it charges no origination, commission, underwriting, or application fees.
In 2020, the lender’s total median loan costs came out to $2,440, including rate lock, discount point, and third-party closing costs.
However, borrowers can offset some of these with Better’s incentive programs, which effectively pay YOU. For instance, you can earn:
To qualify for a Better mortgage, you’ll need a median credit score of 620 for conforming mortgages or 700 for jumbo loans.
Better usually requires a 3-10% down payment (depending on the loan type) and a debt-to-income (DTI) ratio of 43%.
But bear in mind that these are just averages. As such, your exact thresholds may vary based on your situation.
For instance, Better also works with borrowers who have thin or no credit files using alternative credit data.
And if you put more money down or have a higher credit score, you can qualify for a home loan with a DTI as high as 50-55%.
Every mortgage lender comes with its pros and cons. Let’s look at what makes Better worth consideration first.
Better prides itself on its “radically transparent” approach to the lending process. The lender offers plenty of information about its process and rates, a basic rate quote in minutes, and a verified preapproval letter within 24 hours.
As an online-only lender, Better prioritizes its digital services, such as its:
And while a lack of face-to-face communication hinders some, in an increasingly technological and socially distant world, Better’s forward-facing approach to mortgage lending stands out.
While your personal circumstances may affect your rates, Better’s average fixed interest rates tend to fall in line or below the national average.
And with no mandatory application, origination, commission, or underwriting fees, you can save thousands on closing costs. You’ll still have to pay for third-party services.
Better can provide a basic preapproval in “as little as 3 minutes” online with a little information.
If you complete a full application, Better will send you a verified preapproval letter within 24 hours (for most borrowers). That’s quite a bit faster than the 1-3 days many of its peers offer.
Once you’ve submitted your application, Better claims that its online-only process can see you close on your mortgage in 14 days. That’s over twice as fast as the average 30-60-day period!
Better promotes its “Better Price Guarantee,” which states that:
“If you think another lender has a more competitive price, just send us their loan estimate within one business day from the date it was issued. We’ll either do better by at least $100 or send that $100 to you; you win either way.”
Still, you have to navigate the fine print to collect your cash.
For instance, you must close your mortgage with the same company and loan offer you used to challenge Better’s pricing.
That means your loan amount, sales price, and interest rate can’t change even a cent. Plus, you have to furnish proof of your funded loan within 30 days.
Better offers average refinance rates similar to or below other large mortgage lenders. But even when its rates sit higher, its lack of fees can still potentially save you thousands of dollars.
Plus, low-income borrowers can participate in the Fannie Mae RefiNow and Freddie Mac RefiPossible programs through Better, providing help to the homeowners who need it most.
>> More: How to Refinance Your Mortgage
I’ve waxed plenty poetic about Better’s upsides. Now, let’s dive into the nitty-gritty underbelly.
Better’s loan menu is admittedly limited – in fact, the lender’s list of what it doesn’t offer is longer than what it does.
For instance, Better borrowers can’t access HELOCs, VA Loans, USDA, home improvement, or home equity loans.
Moreover, Better doesn’t fund purchase loans for:
While Better doesn’t list a price for locking your rate, borrowers have reported that the service isn’t free.
Typically, lenders that charge for rate locks – and not all of them do – charge less than 0.5% for the initial lock, plus 0.38% or less per extension.
If you’re searching for an online mortgage, chances are, a lack of branch locations isn’t a big deal.
But if you run into trouble during the process, you’ll have to be content with online and over-the-phone communication – even if a face-to-face meeting makes more sense.
Rocket Mortgage is the digital lending site for Quicken loans. Despite a longer-than-average closing time, it remains popular for its:
That said, its limited loan menu, minimum credit score, and down payment requirements aren’t much different from Better’s.
>> More: Rocket Mortgage Review
Guild Mortgage offers online mortgages in 48 states and in-person mortgages in 31.
The lender claims that it can take borrowers from preapproval to close in just 17 days (despite a longer preapproval window). It offers a robust product menu, including:
Guild Mortgage’s minimum credit score falls about 20 points below the competition, with a minimum down payment of 0-3.5%.
That said, the lender is also less transparent about its rates online.
>> More: Guild Mortgage Review
LoanDepot’s claim to fame is its proprietary mello smart loan software, which can shave 17 days off the average closing period.
Borrowers can qualify for various conventional, government-backed, and refinance loans with a credit score of 580-620 and a down payment of 0-5%.
Plus, the lender’s “Lifetime Guarantee” ensures you don’t pay a dime in lender or appraisal fees if you refinance the same property they mortgage.
That said, LoanDepot’s average mortgage rates and origination fees sit higher than the national averages.
Moreover, prospective borrowers have to contact a loan officer and hand over their contact information to receive a rate quote.
>> More: LoanDepot Mortgage Review
Better.com is an ideal mortgage lender if you’re looking for an online-only approach to taking out a home loan.
They offer transparency, competitive rates, low to no fees, and quick closing times. Plus, they’re willing to work with borrowers who have unusual financial circumstances and higher levels of debt.
Better’s mortgage rates tend to fall slightly below the national average in a given year. But to get the best rates, you’ll need a decent credit score and (may need to pay for discount points).
Better offers a sparse loan menu, including fixed- and adjustable-rate, conventional, FHA, and jumbo loans.
And while you can buy investment properties, you can’t buy manufactured, co-op, mixed-use, or large multi-family units, among others.
Yes! Better does offer mortgage refinance loans. It also participates in the Fannie Mae RefiNow and Freddie Mac RefiPossible programs for lower-income borrowers. These are just a few reasons why Better is the best place to refinance a mortgage.
Yes! Better.com has a B rating with the Better Business Bureau and is fully BBB-accredited.
You need a minimum credit score of 620 and a 3% down payment for most conventional mortgages. Jumbo loans typically come with much higher minimum limits.
Currently, Better.com offers loans in 46 states, and Washington, D.C. Buyers in Nevada, New Hampshire, Hawaii, and Massachusetts will have to find another lender.
Better.com is a good lender if you want a fully online (or hybrid online over the phone) mortgage experience.
The lender offers a transparent view into its practices, few to no fees, and incentives worth up to $4,100 or more for going with an all-Better experience. Plus, they’re willing to work with borrowers who have unusual financial circumstances.
That said, Better also has a limited loan selection and no branch locations. And because it doesn’t service every state, some borrowers won’t be able to take advantage of what Better has to offer.
Jordan Blansit is a Senior Writer, Researcher, & Product Analyst for SimpleMoneyLyfe with an inexplicable predilection for mortgages, investing, and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her in the California Redwoods or Oregon Siskiyous. Jordan’s areas of expertise are mortgages, personal loans, credit cards, and investing.
