The Laborers’ International Union of North America (LIUNA) has suggested that a new assembly bill be introduced in California to bar homebuilders from involvement in the mortgage business.
In their new report, they argue that corporate homebuilders in California systematically pressured homebuyers to finance their new home purchases via directly-owned or affiliated mortgage lenders that pushed exotic, high-risk loan programs.
“Corporate homebuilders profited from the loans and from the artificial inflation of the housing market bubble. Their practices contributed to the current housing and economic crisis and families and communities were devastated when the bubble burst,” the release said.
One example cited in the report found that the mortgage subsidiary of homebuilder DR Horton increased its use of subprime lending in Riverside and San Bernardino Counties from six percent in 2004 to 36 percent by 2006.
Once subprime lending phased out, builders turned to FHA loans for financing; 5.5 percent of the government-backed loans originated by Lennar’s mortgage subsidiary Universal American in 2007-2008 have already defaulted.
That compares to a 2.8 percent default rate seen within the first two years on the FHA loans the company originated in 2005 and 2006.
LIUNA is pushing Assembly Bill 1534, which would prohibit homebuilders from writing mortgages on the homes they build, protect buyers from “pressure tactics,” and provide buyers with more options and the ability to make more responsible choices.
So just to review, the homebuilders created the tremendous oversupply of housing and provided toxic funding to get the overpriced properties off their hands, and pushed for low mortgage rates to shed inventory without reducing prices.
While the housing outlook has certainly improved significantly, some 5.1 million homeowners remain underwater on their mortgages.
This means they are unable to sell their homes because they owe more than their properties are worth, and possibly barred from a mortgage refinance unless they can take advantage of a program like HARP.
While 5.1 million is a lot less than it used to be, it still represents more than 10% of all homes with a mortgage, per data from CoreLogic.
Additionally, some two million of these unlucky homeowners owe at least 25% more than their homes are currently worth.
Clearly this doesn’t provide much motivation to stick around and make costly monthly mortgage payments, especially if these homeowners can’t take advantage of the current low mortgage rates.
Principal Reduction Today for Your Appreciation Tomorrow
Enter a new bill aimed at tackling the problems associated with underwater mortgages, like high default rates and zombie foreclosures, the latter of which results in property blight.
The so-called “Preserving American Homeownership Act,” introduced this week by U.S. Senator Robert Menendez (D-NJ) is essentially a shared equity mortgage modification program.
It’s supposed to be a win-win situation for both homeowners and lenders, giving each party motivation to modify and keep up with payments, respectively.
The way it works is fairly simple. A borrower with an underwater mortgage has their principal balance reduced to 100% of the current value, provided the borrower can make payments.
The principal reduction takes place over a period of three years or less, in increments of one-third each year. So if borrowers make timely payments their principal balance will be reduced further over time.
The mortgage rate may also be cut if the principal reduction isn’t enough to make payments affordable.
Once it comes time to sell or refinance, the bank (or investor) will received a fixed share (up to 50%) of the increase in the home’s value. This amount cannot exceed twice the dollar amount of the principal reduction.
The value will be assessed via appraisal when the borrower first enters the pilot program, and again when they sell or refinance.
The program would be available on primary and secondary homes, and borrowers would be eligible regardless of how deeply underwater they are.
The plan is to launch two pilot programs, one under the FHFA and another under the FHA.
Menendez noted that a similar program launched by a private mortgage servicer led to a near-80% participation rate and a re-default rate of just 2.6%.
That sounds pretty good, especially when you’re giving away half of your future appreciation. The question is whether this type of relief comes a little too late in the game.
But for those who really love their homes and want to remain in them, it could be a lifesaver seeing that widespread principal reduction never came to fruition.
Fickle mortgage rates rose once again last week, this time four basis points to an average of 2.99%, according to Thursday data from Freddie Mac‘s PMMS. However, despite fluctuating sub-3% mortgage rates, borrowers are still competing in a supply strained and overheated market.
“Home prices continue to accelerate while inventory remains low and new home construction cannot happen fast enough,” said Sam Khater, Freddie Mac’s chief economist. “There are many potential homebuyers who would like to take advantage of low mortgage rates, but competition is strong. For homeowners however, continued low rates make refinancing an option worth considering.”
The overall housing index hit its lowest point since February, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting. Even though rates have been below 3.2% over the past month, they are still around 20 to 30 basis points higher than the record lows in late 2020, he said.
“Tight housing inventory, obstacles to a faster rate of new construction, and rapidly rising home prices continue to hold back purchase activity,” said Kan.
While the COVID-19 crisis has kept mortgage rates lower and suppressed inventory, these two factors have also facilitated higher levels of price growth as COVID-19 happened amid a housing market sweet spot.
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“We have an increase in the number of buyers and a total collapse of inventory driving home-price growth,” said Logan Mohtashami, lead analyst at HousingWire. “In the last expansion, the only thing that kept home-price growth from taking off was the higher mortgage rates of 4% to 5%. We are currently enjoying the lowest mortgage rates ever, so we don’t have that to dampen the market.”
According to Mohtashami, the new home sales marketplace is unhealthy, but when mortgage rates rise, this sector will get hit harder than the existing home market, like it always does. This won’t result in an epic housing crash, but it will impact future construction.
April’s existing home sales painted a familiar picture of a market still grappling with low supply as sales dropped for the third month in a row, down 2.7% from March to 5.85 million. Last week’s data on pending home sales proved that like new and existing sales, pending home sales also felt the strain of exhausted home inventory in April ― dropping 4.4% from the previous month to an index of 106.2, according to the National Association of Realtors.
The average 30-year fixed-rate mortgage fell three basis points from the week prior to 2.93%, according to data released Thursday by Freddie Mac‘s PMMS. This marks the first time in over two months mortgage rates have fluctuated outside a five basis point range above or below 3%.
“Mortgage rates continued to drift down as markets concur with the view that inflation increases are temporary,” said Sam Khater, Freddie Mac’s Chief Economist.
Fannie Mae‘s economic and strategic group mirrored a similar outlook on inflation’s transitory effects on both mortgage rates and the housing market. Though uncertainties over consumer behaviors related to reopening and COVID-19 developments remain, the group believes temporary factors are largely responsible for current strong inflation.
U.S. inflation jumped from 1.68% in February all the way up above 5% by June. If the fed were to tighten policy, Fannie Mae’s ESR Group expects this to drag on upcoming housing market growth and even stifle home sales, house prices, construction and mortgage originations.
“While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices,” said Khater. “With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”
Increasing Lending and Servicing Capacity – Regardless of Rates
The low-rate environment won’t last forever, and both lenders and servicers need to be able to keep their costs down while managing volume fluctuations once things start to normalize.
Presented by: Sutherland
Where borrowers may lose out in an inflated price on their future home, they may save on continued low mortgage rates. Fannie Mae’s economic group said its outlook on mortgage rates will remain the same: 30-year fixed contract rate at 3% in 2021 and 3.3% for 2022.
The Mortgage Bankers Association on Wednesday noted that mortgage applications increased 4.2 percent from the prior week, with refinancing applications up 6% and purchase applications rising 2%.
“The jump in refinances was the result of the 30-year fixed rate falling for the third straight week to 3.11%, which is the lowest since early May,” said Joel Kan, the MBA’s vice president of economic and industry forecasting. “U.S. Treasury yields have slid because of the uncertainty in the financial markets regarding inflation, and how the Federal Reserve may act over the next few months.”
U.S. single-family homebuilding fell in June, but permits for future construction rose to a 12-month high on the weakness of the existing home sales market. The decline in housing starts came after a massive 18.7% surge in May, which propelled the number of starts on single-family projects to an 11-month high.
Housing starts in June dropped to a seasonally adjusted annual rate of 1.43 million, under economists’ expectations for 1.48 million, according to the U.S. Census Bureau. That was down 8.1% from a year ago.
In June, only 600,000 existing homes were listed for sale across the U.S., noted Bright MLS Chief Economist Lisa Sturtevant.
“While new construction will not immediately solve the supply problem in the housing market, the recovery in the homebuilding industry and the delivery of more new homes is essential for meeting the nation’s housing needs and easing housing affordability challenges for prospective home buyers,” she said in a statement.
Overall, single‐family housing starts in June came in at a rate of 935,000, 7% below the revised May figure of 1,005,000. The June rate for units in buildings with five units or more was 482,000.
Issued permits, an indicator for future completions, also decreased 3.7% overall from May, and they were 15.3% lower from a year ago. But single-family permits increased (+2.2%) while the more volatile multifamily permits declined (-12.8%). June permits increased in the Midwest (+5.9%) and declined in South (-2.6%), West (-4.0%), and Northeast (-23.4%).
Completed homes fell 3.3% from the prior month, but were 5.5% above the May 2022 level.
The number of single-family homes under construction remains high. Meanwhile, a record number of multifamily units are under construction even if the pace is slowing.
“When these units are completed, it should put some downward pressure on prices,” said First American Deputy Chief Economist Odeta Kushi.
Homebuilder sentiment regarding single-family sales in the next six months dropped slightly in June, pointing to more uncertainty. This comes at a time when increasing new home inventory is critically important as existing homeowners aren’t moving, handcuffed to their low mortgage rates, noted Nicole Bachaud, a senior economist at Zillow.
Stubbornly high mortgage rates might pose a threat to builders’ ability to bring more homes on the market. Reduced affordability alongside ongoing supply-side challenges and tighter lending standards for acquisition, development and construction (AD&C) loans could also throttle builder momentum, added Kushi.
There’s been a lot of speculation that home prices would crash as mortgage rates surged.
The argument was especially convincing after the 30-year fixed climbed from around 3% to over 7% in less than a year.
This was unprecedented movement, even if mortgage rates remain below those crazy double-digits from the 1980s.
Sure, they are still low historically, at around 6/7%, but the doubling in less than 12 months is what you need to pay attention to.
Going from 12% to 15% isn’t fun either, but it’s not as much of a payment shock percentage-wise.
Do Higher Mortgage Rates Mean Lower Housing Prices?
At first glance, you’d think that mortgage rates and home prices have an inverse relationship.
In that if one variable goes up, the other must come down. And vice versa. So if mortgage rates shoot higher, home prices must tumble lower.
But here we are, looking at new all-time highs for home prices while the 30-year fixed averages nearly 7%.
How is it possible that both home prices and mortgage rates rose in tandem?
Well, for one, history reveals that they aren’t negatively correlated. In other words, they can rise together, or fall at the same time.
As to why, remember how mortgage rates are determined. Much of their direction is based on the health of the economy.
At the moment, the economy is strong, if not too strong, which is why the Fed began tightening the screws and raising its own fed funds rate in the first place.
This was meant to cool off the overheated housing market, which was experiencing unprecedented demand.
And it seemed to work, pushing home price appreciation back to much more normal levels, instead of double-digit annual gains.
However, the Fed could really only fiddle around with the demand side of things. By that, I mean cool demand by making mortgage financing more expensive.
And they accomplished that goal. There’s a lot less demand out there, whether it’s driven by a lack of affordability or just less willingness to buy at this combination of prices/rates.
But the Fed can’t really do anything about the supply piece, which is the other key part of the equation.
They can attempt to rein in inflation with monetary policy, but they can’t build more homes.
Unfortunately, low inventory was an issue before the Fed got involved. So their attempt to tame the housing market might be in vain, at least partially.
This might also explain, why despite markedly higher mortgage rates, the typical U.S. home value surpassed $350,000 for the first time ever in June.
Per Zillow, national home prices increased 1.4% from May to June, their fourth monthly gain in a row.
That put the typical home at $350,213, nearly 1% above the price seen the previous June, and just enough to beat out the old Zillow Home Value Index (ZHVI) record set last July.
It’s All About the Inventory, or Lack Thereof
If we shift our attention away from mortgage rates, and instead focus on available inventory, the current state of the housing market begins to make a lot more sense.
When you realize there are virtually no homes for sale, it begins to explain why home prices are up in spite of near-7% mortgage rates.
The latest piece of data on the inventory front comes courtesy of Redfin, which reported that the turnover rate is the lowest it has been in at least a decade.
This is defined as the number of homes that are listed divided by the total number of sellable properties that exist in a given area.
It includes all residential properties, including single-family homes, condos/townhouses, and 2-4 unit properties.
Just 14 out of every 1,000 U.S. homes changed hands during the first half of 2023, compared to 19 of every 1,000 during the same period in 2019.
Looked at another way, prospective home buyers have 28% fewer homes to choose from versus four years ago.
And it was already slim pickings back then, before the pandemic upended the U.S. housing market.
California appears to be the hardest hit, with roughly six of every 1,000 homes in San Jose selling this year. Similar low turnover rates can be found in nearby Oakland, as well as down south in San Diego.
They add that the “pandemic homebuying boom depleted supply, and it hasn’t been replenished because homeowners are hanging onto their relatively low mortgage rates.”
This is known as the mortgage rate lock-in effect, or golden handcuffs to some.
Simply put, homeowners can’t (due to affordability) or are unwilling (due to the price disparity) to give up their current 2-3% mortgage rate.
As such, existing home supply is basically nonexistent. And the only supply in town is coming via the home builders, who incidentally are enjoying this odd dynamic at the moment.
Last week, the National Association of Realtors 2023 Member Profile revealed that a shortage of housing supply was the biggest impediment to their clients buying a home.
NAR also noted that housing inventory fell to the lowest level recorded since the year 1999.
Home Prices Defying Gravity Thanks to Low Supply
Zillow said there were 28% fewer new listings this June versus last June. We’ll find out soon if inventory gets even worse.
But they added it might be “the low water point for year-over-year comparisons in new listings” because inventory plunged last July.
So we might not see as many startling headlines regarding low supply since it’ll be hard to go much lower, at least relative to recent readings.
Regardless, it’s clear that a lack of supply, well below healthy levels of 4-5 months, is allowing home prices to defy gravity as interest rates remain elevated.
This differs tremendously from the boom years of the early 2000s, when there was an oversupply of homes (8-9 months), similar mortgage rates, and exotic financing to boot.
It also explains why home prices aren’t dropping, despite much higher mortgage rates and poor affordability.
And why many forecasts now have home prices gaining steam, with CoreLogic predicting an increase of 4.5% by May 2024.
In other words, don’t expect home prices to fall anytime soon because of high mortgage rates. Instead, watch inventory.
If inventory starts rising, you can begin to make the argument for falling home prices.
The average 30-year fixed-rate mortgage fell four basis points from the week prior to 2.98%, according to data released Thursday by Freddie Mac‘s PMMS. Within the past almost three months, mortgage rates have only peaked above 3% one time.
“Economic growth remains steady and is bolstering more segments of the economy,” said Sam Khater, Freddie Mac’s Chief Economist. “Although low and stable mortgage rates have kept the housing market booming over recent months, a deterioration in affordability and for-sale inventory has led to a market slowdown.”
Borrowers are still shopping at a feverish pace, at least by historic standards. Pending home sales metrics released by the National Association of Realtors on Wednesday revealed pending home sales reached its highest mark for the month of May since 2005, up 8% from the previous month of April. Even Lawrence Yun, NAR’s chief economist, said this came as surprise given the number of would-be buyers getting priced out in numerous markets.
More recently, however, mortgage applications dipped 6.9% last week, according to data from the Mortgage Bankers Association. That almost 7% dip brought application volume to its lowest level in almost 18 months, according to Mike Fratantoni, MBA’s senior vice president and chief economist.
“Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals — including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth,” Fratantoni said.
Increasing Lending and Servicing Capacity – Regardless of Rates
The low-rate environment won’t last forever, and both lenders and servicers need to be able to keep their costs down while managing volume fluctuations once things start to normalize.
Presented by: Sutherland
For some economists, rising rates are the better option for counterbalancing the market. The effect of higher mortgage rates, which in late 2018 crested at 5%, also contributed to more stability in housing prices. The solid demographics for home purchasing and historically low mortgage rates — which have been in a downtrend for four decades — have created a housing market where prices are rising too fast, said Logan Mohtashami, lead analyst for HousingWire.
“Even though we have good demographics for housing, we are not seeing a growth in sales that would account for the rate of growth in prices,” said Mohtashami.
According to Mohtashami, once the 10-year yield gets above 1.94%, mortgage rates could finally rise above 3.75%, giving the market enough time to cool down.
With the July 4th weekend nearly upon us, it’s time to reflect on all that we have been through in the past year and how, as a country, we have overcome so many daunting obstacles, including what we have been through in the housing market.
The first thing that pops into my shriveled brain is how the housing market looked in February of 2020. Data from that month showed that housing was breaking out — but because we received this data in March of 2020, we were all too busy trying to survive to take notice.
Once the fear of the virus calmed down, we began a truly remarkable economic comeback, perhaps the fastest economic comeback from a significant economic downturn in the history of the U.S., with the housing market leading the way.
But for every silver lining there is a cloud.
The solid demographics for home purchasing and historically low mortgage rates — which have been in a downtrend for four decades — have created a housing market where prices are rising too fast. Even though we have good demographics for housing, we are not seeing a growth in sales that would account for the rate of growth in prices.
Before COVID-19 was even a whisper in our minds, I thought that in the years 2022 and 2023, price pressures for housing could be the big story. But I expected that higher mortgage rates of over 4% would keep prices from escalating out of control.
Instead, demand picked up early and because of the effects of COVID-19 on the world economies, mortgage rates are down to all-time lows. Rates haven’t even gotten to 3.5% recently — forget getting above 4%. These low mortgage rates are being sustained in a climate of some of the best economic growth in the 21st century and hotter-than-normal inflation data.
In this first year of economic expansion, we continue to have a good savings rate and healthy household formation demographics.
I anticipate that by September 2022, we will have all the jobs back that were lost due to COVID-19. When one considers that we currently have the most job openings ever recorded in U.S. history, (9.3 million) this date does not seem to be a stretch. Note, too, that all this good economic mojo is going on before we have even started fiscal spending on infrastructure.
With this recipe of excellent national economics, good demographics for housing, an improving employment picture and low mortgage rates, it makes sense that home prices would be hotter than normal. But as I have said before, the high rates of growth in home prices have been more a function of low housing inventory than extreme credit growth in demand.
But all is not hopeless: There are several reasons why housing inventory should pick up in the next several months and going into 2022.
First, the higher prices we are seeing in the current market are making it difficult for some buyers to compete. Clearly not all buyers, but enough to keep the extreme low housing inventory levels hard to maintain. This is a key point, but because we got to all-time lows in housing inventory, a move higher from these extreme low levels isn’t saying too much.
From the NAR:
Second, forbearance programs and the eviction moratorium will be ending soon. Because loan holders started their forbearance programs at different times they will exit the programs at different times, too, so don’t expect a flood of housing inventory to appear at once. Forbearance programs have gone from near 5million loans to a tad over 2 million. A lot of primary-residence households on forbearance programs have already exited the program and housing inventory remains chronically low.
Nevertheless we can expect some of these homes to come on to the market. These homes might be mom and pop landlords who were unable to collect rent during COVID-19 and want out of the rental game or some investors looking to cash in on high home prices. In any case, to think that we would have zero housing inventory created from this crisis is highly unlikely.
Third, while demand is solid in 2021, and we should have slightly more total home sales than we had in 2020, we are not seeing growth in credit (number of mortgages taken out). To think that we would have double-digit price growth with essentially slight home sales growth is the essence of bad inflation. As you can see below, what we experienced from 2018 to 2021 looks nothing like the credit growth we saw from 2002-2005.
We got to all-time lows in housing inventory recently so any increase is going to be a high percentage increase and that is going to fool some folks that the housing inventory picture has changed dramatically. The actual number of homes making up that increase is not going to be much, however, so don’t look at it like that. Instead look to see if total housing inventory gets back to the levels we saw in early 2020.
Getting back to 2020 levels with days on market going past the teens is the No. 1 priority for the housing market. We need more than the typical rise due to seasonality that happens every spring. We want total inventory levels to go above 1,520,000 at minimum.
In 2018-2019, total housing inventory was in the range between1,520,000 – 1,920,000and that level of inventory helped to drive real home-price growth in 2019 into negative territory briefly. Existing home sales during those years stayed in the monthly sale range of 4,980,000 to 5,610,000 homes. More importantly, the days on market were higher than what we see today — and as such we had fewer bidding wars and less price growth.
The effect of higher mortgage rates, which in late 2018 got to 5%, also contributed to more stability in housing prices. 2018 and 2019 were more balanced markets, so in my view it was a healthier housing market compared to what we have today.
Once the 10-year yield gets above 1.94%, which should bring mortgage rates above 3.75%, then things should cool down enough to stabilize the unhealthy price gains we are currently experiencing. The 10-year at 1.94% is not a very high bar, but even so, that is higher than what I have forecasted for 2021.
If housing demand is better than I thought going into the demographic sweet spot years of 2022 and 2023, then housing inventory may not improve much. I still believe in my replacement buyer premise rather than a credit boom housing market. However, if I am wrong, then we will see it for sure in years 2022 and 2023. The price gains in 2020 and 2021 have already met the target that I anticipated to be cumulative for the five-year period of 2020 to 2024. This pathway explains my concern over what has happened recently.
During the years 2020 to 2024, I anticipated total sales (new and existing homes combined) to stay at 6.2 million or higher. The only way I saw this not happening was if home prices got out of hand early on, and guess what, that has happened. While we won’t break lower than 6.2 million in 2021, I am mindful of these recent price gains in both exiting and the new home sales market. Demand for existing homes will come from first-time homebuyers, cash buyers, investors, move-up and move-down buyers. The bump in demographics in the years 2020-2024 has already showed itself to be a powerful economic force for the United States of America.
All these buyer types will create steady replacement demand for the existing home market. The new home sales market, on the other hand, is driven by wealthier older buyers with mortgages. For this reason, new home sales are more dependent on mortgage rates. I recently expressed some concern in this market here.
More than anything, I am hoping that what happened in 2013-2014 and 2018-2019 happens again. During those periods, interest rates went up, which increased housing inventory and days on the market. The additional supply cooled the rate of growth of home prices and stopped the bidding wars. Unless we get an increase in housing inventory from softening demand or end-of-forbearance selling, only an interest rate increase will get us above 1,520,000 total housing inventory and out of the low housing inventory/high price quagmire we have been in since the summer of 2020, which has been most unhealthy housing market post-2008. Still, these are first world problems. I mean, come on, it’s not like we are having a bubble crash like some bros wanted to see.
Average mortgage rates tumbled yesterday following a first-class inflation report. In some cases, they are now back below 7% for an excellent borrower wanting a conventional, 30-year, fixed-rate mortgage. Phew!
First thing, markets were signaling that mortgage rates today might fall but perhaps only a little. However, these early mini-trends often switch speed or direction later in the day.
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.122%
7.147%
+0.15
Conventional 15-year fixed
6.297%
6.321%
+0.1
Conventional 20-year fixed
7.34%
7.403%
+0.03
Conventional 10-year fixed
6.872%
6.985%
+0.05
30-year fixed FHA
7.065%
7.685%
+0.02
15-year fixed FHA
6.503%
6.972%
+0.16
30-year fixed VA
6.75%
6.959%
+0.25
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
The chances of mortgage rates falling far and for long later this year improved yesterday. That day’s inflation report helped a lot.
But I reckon we’ll probably need a heap more similarly rate-friendly data in order to bring about that significant and sustained fall. And, while it’s possible such a heap will be delivered quickly, it’s probably more likely we’ll see any improvements late this year or sometime in 2024.
So, my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:
The yield on 10-year Treasury notes tumbled to 3.81% from 3.91%. (Very good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were higher. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $75.65 from $75.94 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,964 from $1,959 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — held steady at 81 out of 100. (Neutral for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Yesterday
Yesterday’s consumer price index (CPI) was a real tonic for mortgage rates. Comerica Bank’s chief economist said that “the fever is breaking“ for inflation.
And The Wall Street Journal (paywall) suggested: “Inflation cooled last month to its slowest pace in more than two years, giving Americans relief from a painful period of rising prices and boosting the chances that the Federal Reserve will stop raising interest rates after an expected increase this month.“
Note that the Journal’s writers (and many others) still expect a rise in general interest rates on Jul. 26. And that might limit how far mortgage rates can fall in the short term.
But other things could also limit the extent and duration of further decreases in mortgage rates. More and more people are talking up the possibility of a “soft landing.“ That refers to the Fed successfully driving down inflation without throwing the country into a recession.
But those of us wanting lower mortgage rates were kind of hoping for a recession. Of course, we didn’t want the bad stuff for the wider population. But mortgage rates tend to fall when the economy is in trouble and rise when it’s doing well.
So, while some falls in mortgage rates might be on the cards later in the year or in 2024, they might not be as big as we’d once been able to hope.
The rest of this week
This morning’s producer price index (PPI) for June was nothing like as important to mortgage rates as yesterday’s CPI. It and tomorrow’s import price index (IPI) are generally seen as secondary inflation measures. But, with markets hyper-sensitive to inflation news right now, they’re worth observing.
Today’s PPI was probably good for mortgage rates. The headline figure (PPI for final demand) came in at 0.1% in June, compared with the expected 0.2%. Just don’t expect it to have as positive an effect as yesterday’s news.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jul. 6 report put that same weekly average at 6.81%, up from the previous week’s 6.71%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. They were both updated in June.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.5%
6.6%
6.3%
6.1%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
It’s time for another mortgage review, this time we’ll take a hard look at “New American Funding” to see if they should be included in your home loan search.
They call themselves a family-owned business dedicated to helping other families improve their quality of life.
That sounds like they have your best intentions in mind, especially when navigating what is arguably one of the biggest life decisions, buying a home.
New American also refers to themselves as the “largest Hispanic-owned mortgage company in the United States.”
And their mission is to increase lending to underserved communities, including Black and Latino borrowers. Let’s find out more about them.
New American Funding Fast Facts
Retail direct-to-consumer mortgage company with 180 branches nationwide
Launched in 2003, headquartered in Tustin, California (Orange County)
Started by husband and wife team Rick and Patty Arvielo
Originally a 40-employee call center, workforce now close to 5,000
Offers home purchase financing and refinance loans
Licensed to do business in all states except Hawaii
Funded $31.5 billion in home loans during 2021 (nearly a top-25 lender nationally)
Services more than 200,000 loans worth approximately $54 billion
Ranked #1 loan servicer by J.D. Power in the 2022 study
New American Funding got started back in 2003, which was around the time the housing market was booming.
Just a few short years later, the subprime mortgage crisis hit, and hundreds of lenders didn’t survive.
So I suppose that’s a testament to the resolve of New American Funding, which is a DBA of parent company Broker Solutions, Inc.
Despite being a young company at the time, they were able to get through the Great Recession and become a mortgage powerhouse just a decade later.
As noted, they are a family company, with husband and wife team Rick and Patty Arvielo the founders. Rick is currently CEO, while Patty is the president.
The direct lender is based out of Tustin, California, which is in the heart of Orange County, home to scores of mortgage lenders and related real estate companies.
The pair grew New American Funding from a 40-employee call center into one of the largest mortgage lenders in the country in less than 20 years.
Today, they count 4,700 individuals as employees, have nearly 200 branches nationwide, and maintain a loan servicing portfolio consisting of over 200,000 loans worth about $54 billion.
Last year, the company funded more than $30 billion in home loans, which puts them very close to the top-25 mortgage lenders nationally.
Roughly two-thirds of their business consisted of refinance loans, with the remainder home purchase loans.
Note: They do not lend in the state of Hawaii at this time.
New American Is the #1 Hispanic Mortgage Lender
As noted, New American is on a mission to increase homeownership for underserved communities, especially Black and Latino borrowers.
Last year, 36% of their home purchase loans went to minority borrowers, compared to just 25.5% for all lending institutions, based on 2020 HMDA data.
They are also the #1 lender to Hispanic borrowers, with a larger percentage of their loans going to Hispanic borrowers versus any other lender in the top-25.
Additionally, their share of purchase lending to Black borrowers was 85% higher than the industry average, a result of their “New American Dream” initiative launched in 2016.
They are also committed to lending $25 billion in new mortgages to Hispanic borrowers by the year 2024, and $20 billion to Black borrowers over the next seven years.
When it comes to diversity at the company itself, 23% of the company’s workforce is Hispanic, 45% of the company’s employees are minorities, and 60% are women.
What Loan Types Does New American Funding Offer?
Home purchase financing
Home renovation loans
Refinance loans: rate and term refi, cash out refi, and streamline refis
Conventional loans: Conforming and jumbo
Government loans: FHA, VA, and USDA loans
ARMs: 5/1, 7/1, 10/1 varieties
Fixed mortgages: 30-year and 15-year options
Choose your own term mortgages
Renovation loans and Energy Efficient loans
Non-QM loans (self-employed borrowers)
Interest-only mortgages
HELOCs
Buydown Loans (such as a 3-2-1- buydown)
One great thing about New American Funding is that you can get pretty much any type of home loan under the sun.
This includes home purchase loans, home renovation loans, rate and term refinances, cash out refinances, and streamline refinances.
They are a Fannie Mae, Freddie Mac, and Ginnie Mae direct lender, seller, and servicer, so they’ve got all the conforming and government loan options you can think of.
That includes the usual suspects like conforming mortgages, FHA loans, USDA loans, and VA loans. But that’s not all.
They also offer interest-only mortgages, jumbo loans, non-QM loans, reverse mortgages, and some proprietary offerings like the “I CAN Mortgage.”
So what is an I CAN Mortgage you ask? Well, it’s simply a choose your own term mortgage, that allows for custom terms ranging from 8 to 30 Years.
For example, if you’re 7 years into a 30-year fixed and want to refinance your mortgage to take advantage of today’s low mortgage rates, you could go with a 23-year term instead of restarting the clock.
This also works for new purchases, so you can just start with a 24-year fixed instead of the standard 30-year fixed to save some dough and own more of your home sooner.
Their so-called Self Employed Mortgage, which may be considered non-QM, allows for the use of bank statements, asset depletion, or just one-year of tax returns to qualify.
They also offer HELOCs, including fixed-rate, adjustable, and hybrid options for those looking to tap equity, along with renovation loans such as the FHA 203k refinance loan and Fannie Mae Homestyle.
New American also operates both a builder and real estate lending division, so they may be a good fit for someone buying a brand-new home or building a home (new construction).
Lastly, they offer Energy Efficient Loans for those looking to finance a home that is already energy-efficient or to make an existing property simply greener.
Pathway to Homeownership Initiative
In February 2023, NAF launched its “Pathway to Homeownership” initiative to help customers purchase their first home in designated areas throughout the country.
It provides up to $8,000 in assistance that can be used for down payment or other closing costs. And best of all it doesn’t need to be paid back.
There are no income limitations, and it can be combined with other down payment assistance programs.
To qualify for Pathway, you must be a first-time home buyer with a minimum credit score of 620. And the property must be a one-unit, single-family home.
Down payments as low as 3% are acceptable. Be sure to inquire with your NAF loan officer to determine if you’re eligible.
NAF also recently partnered with Uqual, “a full-service loan readiness company,” to help prospective home buyers make the leap from renting.
It seeks to turn a loan denial into an approval by improving an applicant’s credit, lowering their debt, and increasing their savings.
Those who complete the loan readiness program and use NAF for their mortgage needs are eligible for a $500 lender credit.
Exclusive Mortgage Provider for Patch
In late February 2023, New American Funding announced that it became the exclusive mortgage provider for “hyper-local news” website Patch.
The partnership will result in NAF placements on the mortgage and real estate hub on each of Patch’s community websites.
And the lender will feature in Patch’s weekly newsletters in over 1,200 communities nationwide.
The link up makes sense because NAF is licensed in all 50 states and has loan officers located throughout the country.
Applying for a Mortgage with New American Funding
They have a short form you can fill out on their website to get started
Then a loan officer will call you to go over your loan scenario and options
You can also call them directly or use their branch/loan officer directory to find someone specific in your area
Loan process appears to be somewhat digital, allowing for document uploading and loan tracking online
New American Funding a direct-to-consumer retail mortgage lender, meaning you work directly with the company to close your loan.
At one time, they ran a wholesale division, but chose to close it in 2016 to focus on their growing retail operations.
They say you can get pre-approved for a mortgage in as little as 24-48 hours, which is a bit slower than some fully digital lenders that can do the same in minutes, such as Rocket Mortgage or Better Mortgage.
But they do offer the ability to apply online or over the phone. If you get started via the website, you basically fill out what amounts to be a lead form. Then someone will contact you by phone.
You can also look up specific loan officers via the branch directory on their website if you want to ensure you get someone local and highly recommended.
Once your loan is submitted, they offer a digital process that includes uploading necessary loan documentation, along with the ability to track your loan progress online via the borrower portal.
You also get a dedicated loan officer that will help you along the way, which differs from some of the startups that only provide assistance as needed.
New American Funding’s Mortgage Rates
I’m all about transparency, and fortunately New American is too when it comes to their mortgage rates.
They openly advertise them right on their website for all to see. You can check rates daily for the 30-year fixed, 15-year fixed, FHA 30-year fixed, and VA 30-year fixed.
It should be noted that their rate assumptions are very tough, calling for a 740+ FICO score, 60% LTV, primary residence, with up to one discount point on their standard 30-year fixed mortgage.
In other words, if you have a lower credit score, less equity in your home, need cash out, or don’t occupy the property, the interest rate could be substantially higher.
The good news is their advertised rates appear to be quite low, so if you are a good borrower, they might be quite competitive.
As always, take the time to check out the rates of other lenders to ensure you do your due diligence.
In terms of lender fees, it’s unclear if they charge a loan origination fee or separate fees for underwriting and processing. Be sure to inquire when speaking with your loan officer.
New American Funding 14 Business Day Close Guarantee
If you happen to be buying a home, the company has a “14 Business Day Close Guarantee” to ensure you get to the finish line quickly, especially in a competitive market.
They say they have industry leading turn times because they’re an “all-inclusive mortgage banker.”
Their operations staff, including loan underwriters, doc drawers and funders, work under one roof, enabling them to close loans fast.
They offer 24-hour credit approval by senior underwriters and 24-hour underwriting turn times on conditions.
The 14-day window begins when your initial application package is complete and you have authorized credit card payment for your home appraisal.
If they fail to perform as agreed, a credit of $250 will be applied toward closing costs. While it’s not much money, the fact that they can close purchase loans in just two weeks is pretty attractive.
New American Funding and EasyKnock
In late January 2023, New American Funding and EasyKnock announced partnership “to offer innovative solutions to underserved communities.”
It’s unclear exactly what those solutions are, but my assumption is that the lender will offer home loan programs to EasyKnock customers.
These will allow borrowers ” to access their home equity through credible and non-traditional means,” which in turn helps keep them in their local communities and schools.
This tells me it might be a home equity product, such as a HELOC.
EasyKnock allows homeowners to sell to EasyKnock but remain in the properties as renters.
New American Funding Reviews
New American has a 4.87-star rating out of 5 on Experience.com from around 180,000 reviews.
Yes, nearly 200,000 customer reviews and a near-perfect rating. That’s truly impressive.
They also have a 4.91-star rating out of a possible 5 on Zillow from 8,500+ customer reviews.
Many of their reviews on Zillow indicate a lower interest rate and/or lower closing costs than expected.
Similarly, they have a 4.9/5 rating on LendingTree from nearly 60,000 reviews, with 99% of customers saying they’d recommend them to others.
Lastly, the company boasts an A+ Better Business Bureau rating and has been accredited since 2004.
So they appear to be very well-liked, though experiences can always vary based on individual circumstances, especially at a large company.
Tip: You can view the ratings of specific loan officers near you if you go the branches tab on their website, select a location, then scroll down to “Meet the Team.”
This allows you to see the staff who work in a particular office, along with their individual ratings as loan officers.
If you like what you see, you can apply for a home loan directly with that individual, or simply get in touch if you have questions.
Pros and Cons of New American Funding
The Good:
Offer virtually every home loan type imaginable including reverse mortgages and HELOCs
Can select your loan officer from an online directory and/or visit a physical branch
Direct lender, seller, and loan servicer with quick turn times and fast closings
Appear to offer competitive mortgage rates
Excellent customer reviews across all ratings websites
A+ BBB rating, accredited company since 2004
14 Business Day Close Guarantee for home purchase loans
Can manage your funded loan with the New American Funding My Mortgage App
They service their own loans instead of transferring them
Free mortgage calculators, mortgage glossary, and market update on their website
Potential Bad:
You must speak to a loan officer before you can apply
Not available in Hawaii
New American Funding vs. AmeriSave
AmeriSave
New American Funding
Digital application
Yes
Yes
Branch locations
No
Yes
Loan types offered
Conventional, FHA, USDA, VA, jumbo
Conventional, FHA, USDA, VA, jumbo, reverse, HELOC