Mortgages

Apache is functioning normally

A 10 basis point decline in mortgage rates last week wasn’t enough to spur consumer demand for mortgages, according to the latest figures from the Mortgage Bankers Association.

For the week that ended June 2, mortgage applications fell 1.4% from the prior week. That was despite mortgage rates dropping to 6.81% from 6.91% during roughly the same period.

“Mortgage rates declined last week from a recent high, but total application activity slipped for the fourth straight week,” said Joel Kan, MBA’s vice president and deputy chief economist. “Overall applications were more than 30% lower than a year ago, as borrowers continue to grapple with the higher rate environment.”

After more than a year of steady rate increases by the Federal Reserve, the FOMC is expected to pause hikes at its upcoming meeting next week. But that might depend on the upcoming inflation reading scheduled on June 13, the same day of the  meeting.

The MBA data showed that the average 30-year fixed rate for conforming loans ($726,200 or less) decreased to 6.81% last week from 6.91% the previous week. For jumbo loan balances (greater than $726,200), the rate decreased to 6.74% from 6.78% in the same period, according to the MBA.   

However, at Mortgage News Daily, rates were even higher on Wednesday morning, at 6.89%.

Last week, federal lawmakers reached a deal on the U.S. debt ceiling and avoided a default on June 1, which could have pushed rates up by several percentage points.

Refinancing applications declined 1% last week compared to the previous week and were 42% lower than the same week one year ago. However, the refinance share of mortgage activity increased to 27.3% of total applications from 26.7% the previous week. Meanwhile, the purchase index decreased by 2% from one week earlier and was 27% lower than last year’s level on an unadjusted seasonal basis. 

“Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers,” said Joel Kan.

Regarding loan types, the adjustable-rate mortgage (ARM) share of mortgage apps remained unchanged at 6.8% of total applications, the MBA data shows. 

The Federal Housing Administration loans’ share rose to 13.2% from 12.7% the week prior. The U.S. Department of Veteran Affairs loans’ share increased to 12.5% from 12.1% in the same period. And the U.S. Department of Agriculture loans’ share decreased one basis point to 0.4% of the total applications.

Source: housingwire.com

Apache is functioning normally

LOS ANGELES — The average long-term U.S. mortgage rate rose this week to its highest level since mid March, driving up borrowing costs for prospective homebuyers facing a housing market that’s constrained by a dearth of homes for sale.

Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.57% from 6.39% last week. The average rate a year ago was 5.10%.

High rates can add hundreds of dollars a month in costs for homebuyers, limiting how much buyers can afford in a market that remains unaffordable to many Americans after years of soaring home prices and limited housing inventory.

The median monthly payment listed on applications for home purchase loans in April rose to $2,112, up nearly 12% from a year ago and a 0.9% increase from March, the Mortgage Bankers Association said Thursday.

The average rate on a 30-year home loan has risen two weeks in a row, echoing moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans.

The 10-year Treasury yield has been mostly rising of late, climbing to 3.79% in afternoon trading Thursday. Two weeks ago, it was at 3.39%.

The move up in bond yields comes as investors react to stronger-than-expected economic data and the implications that could have on whether the Federal Reserve will raise interest rates again next month.

Bond traders are also factoring in the possibility that the U.S. government may default on its debt as the White House and GOP leadership wrangle over a deal to raise the federal government’s debt ceiling so it can avoid an unprecedented default as soon as June 1.

“The U.S. economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week,” said Sam Khater, Freddie Mac’s chief economist.

Jitters over the possibility that the government ends up defaulting on its debt could cause creditors to ask for higher interest rates on U.S. Treasury bonds, which could lead to a “significant increase” in borrowing costs, including mortgages, said Jiayi Xu, an economist at Realtor.com.

“Resolving the debt impasse sooner, rather than later, would mitigate potential adverse effects on the housing market, which is already contending with high prices and elevated mortgage rates,” Xu said.

Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates influence rates on home loans.

The Fed has raised its benchmark interest rate 10 times in 14 months. At its last meeting of policymakers, the central bank signaled that it could finally pause its yearlong campaign of rate hikes, though a pause would likely only nudge mortgage rates slightly lower.

Low mortgage rates helped fuel the housing market for much of the past decade, easing the way for borrowers to finance ever-higher home prices. That trend began to reverse a little over a year ago, when the Fed started to hike its key short-term rate in a bid to slow the economy and cool the highest inflation in four decades.

The spring homebuying season got off to a lackluster start this year as prospective buyers grappled with higher borrowing costs and a near record-low inventory of homes on the market.

Sales of previously occupied U.S. homes fell 23.2% in the 12 months ended in April, marking nine straight months of annual sales declines of 20% or more, according to the National Association of Realtors. The national median home price fell to $388,800 last month — down 1.7% from a year earlier and the biggest year-over-year drop since January 2012.

The modest pullback in home prices reflects heated competition among buyers, especially those vying for the most affordable homes. At least one-third of the homes sold last month went for more than their list price, according to the NAR.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, rose to 5.97% this week from 5.75% last week. A year ago, it averaged 4.31%, Freddie Mac said.

Source: abcnews.go.com

Apache is functioning normally

Lately, there’s been a lot of talk about buying now and refinancing later, once mortgage rates drop.

Of course, that’s if mortgage rates do indeed fall at some point in the near-future.

There’s no guarantee they will, but if inflation does settle down, we could see a return to more reasonable interest rates before long.

And that would support the marry the house, date the rate supporters, who believe it’s better to buy now while rates are high.

After all, if rates drop again, competition to buy a home could heat up fast.

Enter the Navy Federal No-Refi Rate Drop

While there’s logic to buying now and refinancing later, it still involves a pesky mortgage refinance.

And even if rates are lower, there are downsides to refinancing. For one, it’s time-consuming and paperwork-intensive.

There are also closing costs involved, stress, and of course you need to qualify for the thing. That’s never a guarantee if your situation changes. Or if home prices fall, etc.

To alleviate some of this concern, select lenders have been offering to waive fees on subsequent refinances if you use them for a home purchase loan.

But this still requires the borrower to go through the entire home loan process a second time. Not fun.

That’s where Navy Federal Credit Union’s  “No-Refi Rate Drop” comes in. They’ve taken both the big cost and hassle out of it.

As the name implies, you can refinance your high-interest rate mortgage into a lower-rate mortgage without refinancing.

That way you can take advantage of lower mortgage rates without all the hoops and hurdles, and the closing costs.

And it seems super easy, with apparently only one document to sign.

How It Works

If you buy a home and use Navy Federal to get your mortgage, keep an eye out for lower mortgage rates.

After six consecutive monthly payments, you can take advantage of their No-Refi Rate Drop if they fall by at least 0.25% versus your existing rate.

For example, if your current interest rate is 7%, and rates fall to 6.75%, you could take advantage.

Aside from needing to make six payments, you also must be current on your loan with no more than one 30-day late payment within six months of the rate drop request.

Additionally, your loan must be a Homebuyers Choice, Military Choice, or 15- or 30-year jumbo fixed-rate loan.

Note that cash-out refinances are not eligible for the no-refi rate-drop option, nor are adjustable-rate mortgages.

Assuming you fit that criteria, and rates drops enough, all you have to do is call them to start the process. If eligible, they’ll send you a single document to sign within five business days.

Simply return that signed form and a $250 payment and your new lower rate will take effect within 30-60 days.

They say you’re guaranteed to get the mortgage rate that is offered on the day you call in, similar to a traditional mortgage rate lock.

So it doesn’t matter if rates increase while they process your application.

What’s more, you’re able to lower your rate multiple times during the loan term as long as you are eligible and pay the $250 fee each time.

Another perk is your loan term will stay the same. So if you make the request two years into a 30-year loan term, you’ll still have 28 years remaining.

It won’t increase the loan term like a standard refinance could.

Is the No-Refi Rate Drop a Good Deal?

As always with promotions like these, you have to use the company now for the promise of future, potential savings.

In other words, you won’t get to take advantage of No-Refi Rate Drop if you don’t use Navy Federal initially.

That means you need to compare loan rates and fees with Navy Federal versus other options.

If you plan to use them regardless, it’s an added perk that may or may not come to fruition.

If you’re deciding between them and other lenders, you need to consider if this potential benefit tips in their favor.

Of course, mortgage rates may not fall in the future, there’s no guarantee that they will.

But if they do, the mere $250 fee to lower your rate 0.25% or more sounds like a pretty good value.

Not just from a monetary standpoint, but the time savings as well.

Read more: Can you lower your mortgage rate without refinancing?

Source: thetruthaboutmortgage.com

Apache is functioning normally

Loyalty? Not in the mortgage business. That is, if you actually want to save money on your home loan.

A few years back, an HSBC survey revealed that 52% of U.S. homeowners “switched providers” (sorry, they’re British) when obtaining subsequent mortgages.

This was mainly driven (53%) by the desire to get a better deal, aka a lower mortgage rate with fewer closing costs.

That survey also found that 46% of consumers investigated a mortgage switcheroo, again either to save money or to lock in a new low rate due to rising interest rates.

Other reasons homeowners decided to go with another mortgage company were because they moved and purchased a new property.

Or due to their current mortgage deal was expiring. I think they mean an adjustable-rate mortgage resetting.

Is It Bad to Switch Mortgage Lenders?

mortgage retention

A new report from Black Knight claims that loan servicers retained just 18% of the estimated 2.8 million homeowners who refinanced a mortgage in the fourth quarter of 2020, the lowest share on record.

Interestingly, those who refinanced to improve their rate and/or term were retained at a higher rate (23%) versus those pulling cash out as part of the transaction (11%).

This could be due to cash out refinances being harder to come by lately, and thus offered by fewer lenders. Or it just feeling more complex to the homeowner.

But here’s the biggie – among higher-credit quality rate and term refinances, borrowers who switched mortgage lenders received more than an eighth of a percent lower rate than those who refinanced and remained with their current lender/servicer.

In other words, you might get a lower mortgage rate if you switch mortgage lenders, instead of remaining loyal.

So is it bad to switch mortgage lenders? Not if you want to save money! Of course, your old lender might not feel the same way.

Mortgages Are Mostly a Commodity

  • Home loans aren’t all that different from one another
  • This is why lenders are increasingly coming up with unique ways to sell you one
  • The vast majority are 30-year fixed products whose only difference might be the interest rate or fees involved
  • And the majority just follow the underwriting guidelines of Fannie Mae, Freddie Mac, or HUD

It’s really no surprise that a lot of consumers don’t stay with their original mortgage lenders and/or loan servicers.

Aside from some existing lenders sometimes talking borrowers out of a refinance, the product is mostly the same no matter where you get it.

That makes customer retention difficult, especially when other lenders are aggressively marketing to homeowners.

These days, the majority of home loans are backed by the agency guidelines of Fannie Mae, Freddie Mac, or the government via FHA loans and VA loans. I think it’s something like 90% of mortgages.

This means mortgage loans are pretty homogeneous, despite what channel they’re originated in, or which institution provides the financing.

You could get the same exact home loan from a local credit union, a big bank, an online mortgage banker, or a mortgage broker.

And who really cares where you get your mortgage as long as the company is competent enough to close the thing, and honest in terms of rate and fees?

It’s not like you’re going to walk around and brag about your cool mortgage from X bank after the fact. It’s certainly not a status symbol, or a conspicuous transaction.

I’m pretty sure I’ve never had a conversation about someone’s branded mortgage before.

And I doubt an “influencer” is going to post about theirs on Instagram. Well, I take that back, they might…because someone paid them.

Mortgage Advertising Is Following the Insurance Model

  • Like mortgages, most forms of insurance are similarly boring and unoriginal
  • But that doesn’t stop mega insurers like Geico from advertising to you 24/7
  • Other insurers create catchy new names for run-of-the-mill coverage that isn’t really unique
  • Mortgage lenders are beginning to do that too in a bid to separate themselves from the crowd

This is exactly why insurance companies use celebrity endorsements and smart marketing gimmicks to get you to switch, or conversely, to stick around.

Car insurance isn’t cool or exciting and never will be, nor are mortgages, as much as I want them to be.

Ultimately, we’re all being sold the same thing, it’s just that some companies try to differentiate themselves by slapping clever names onto their products.

For example, Quicken Loan’s Rocket Mortgage is about reinventing the mortgage process, not the mortgage itself.

You’re still probably going to get a 30-year fixed home loan or some other ordinary mortgage that you would get anywhere else.

It’s just the way you get it that might change. Instead of meeting face-to-face with a banker, you might upload documents on your smartphone and authorize the release of documents electronically.

This could make the experience a lot easier and more pleasant, but it doesn’t mean you’re necessarily getting anything different.

Because everyone is basically offering their customers same thing, it comes down to price, customer service, and now perhaps clever marketing.

The one exception is portfolio home loan programs, which are actually unique to the mortgage lender providing them. These are loans kept on the originating bank’s books that contain distinct underwriting guidelines.

We’re starting to see more of them, though most lenders remain fairly cautious with the mortgage crisis still a not-too-distant memory, despite taking place a decade ago.

For example, a lot of the zero down mortgages you see are unique to the companies offering them, the latest one I came across from Ideal Credit Union.

And some of the so-called fintech disruptors like SoFi Mortgage are actually providing unique offerings like a 5/1 ARM with an interest-only option and jumbo loans as high as $3 million with just 10% down.

Be Careful Not to Pay More for the Same Exact Mortgage

  • While it’s important to use a mortgage lender you can trust
  • Such as one that can actually close your home loan competently without major delays
  • It doesn’t really matter what “brand” the mortgage it is after it funds
  • And there’s a good chance it’ll be resold to a different company shortly after closing anyway

Those exceptions aside, many of us have very similar mortgages that are only unique in terms of where they originated from.

As noted, most of today’s mortgages are conforming loans, meaning they meet the guidelines of Fannie and Freddie. Or they’re simply backed by the government via the FHA, VA, or USDA.

And just about all of them are 30-year fixed-rate loans that function exactly the same.

That’s why you have to ask yourself – if the company isn’t offering anything different, why pay more?

Might as well bargain shop and find the best mortgage rate with the lowest closing costs, instead of simply going with a household name because of a funny commercial.

At the end of the day, as long as they get you to the finish line, you’ll probably never think about your mortgage company again. Just make sure they’re reputable first…

Chances are your mortgage will be sold off in a matter of months anyway, so the company you get it from likely won’t even service it.

In fact, your final correspondence might be a notice of your home loan changing hands…

(photo: lamdogjunkie)

Source: thetruthaboutmortgage.com

Apache is functioning normally

All 12 Federal Reserve districts have seen issues with a lack of housing inventory, which is largely due to existing homeowners holding back on listing their homes after previously locking in low mortgage rates. 

Demand from the buyer side has remained steady or increased, however, and new home builders have responded to inventory shortages by increasing speculative inventory production, according to the Federal Reserve Beige Book, released Wednesday. 

The Beige Book is a compilation of data and interviews with bank and branch directors, community organizations and economists from on or before May 22.

“Residential real estate activity picked up in most Districts despite continued low inventories of homes for sale,” the report states. 

The Beige Book also notes that “home prices and rents rose slightly on balance in most Districts, after little growth in the prior period.”

In return, the lack of inventory of homes for sale pushed demand for rental properties in some areas — including New York, Chicago, St. Louis, Kansas City Federal Reserve districts.

Following are excerpts of statements on housing conditions from each of the 12 Federal Reserve districts. 

***

Boston – Contacts around the District attribute the still-low sales numbers to low inventories more than to weak demand, as slightly lower mortgage rates have helped bring more buyers to the market.

House price appreciation has slowed on average but remains slightly positive, with the exception that home prices in Massachusetts (not including Boston) have experienced modest declines from a year earlier. The modest price growth in the Boston area marks a trend reversal from the preceding few months. 

Contacts anticipate that, despite healthy buyer demand, home sales are likely to experience only a modest seasonal increase moving forward, owing to extremely low inventory levels.

New York – The residential sales market has been strong across the District. A New York City-area contact reports that the sales market in and around New York City has picked up strongly in recent weeks after a brief pause in early April, which was due to uncertainty in the banking sector.

After a slow start to the year, housing markets in upstate New York have also started to pick up, with bidding wars and multiple offers becoming more common. Inventory remains exceptionally low and is restraining sales activity in much of the District. A key factor suppressing new listings is the prevalence of homeowners with historically low interest rates on their existing mortgages, reducing the incentive to sell and move.

A strong economy and relatively high mortgage rates have pushed some movers to the rental market, boosting demand.

Philadelphia –  High interest rates have continued to dissuade existing homeowners from listing their house and losing their low interest rate. Existing home sales have fallen moderately in this district, and prices have continued to rise as the market heats up again. New home builders have benefited from the unseasonably modest sales of existing homes as the resale market has slowed. 

Cleveland – Demand for residential construction and real estate has stabilized in this District, and contacts attribute this stabilization to the arrival of spring and flattening interest rates.

Homebuilders have reported an increase in speculative construction projects in this District, as many buyers want to purchase and move into homes immediately, in part to avoid further rises in interest rates.

Richmond – Residential real estate respondents indicate in the report that the spring market is off to a good start, with sales prices continuing to appreciate, but not at the same pace as last year. For-sale inventory remains constrained due to fewer people putting their homes on the market, but buyer traffic has been steady while the days on market has increased slightly in the last month. 

However, fluctuations in mortgage rates have caused buyers to pull back, with pending sales and closed sales both down in this District. Builders have been offering strong incentives to close deals. 

Atlanta – Housing demand throughout the District has remained strong despite interest rate and home price volatility. Though home sales are down compared to a year ago, sales in many markets in this District have increased on a monthly basis, as buyer sentiment has modestly improved. 

The supply of existing homes for sale has remained low as homeowners have showed increased hesitancy to list homes for sale, especially if they financed at a low interest rate. Home prices remain down from peak levels but have recently shown month-to-month improvement.

New home builders have responded to inventory shortages by increasing speculative inventory production, and some have begun to reduce buyer incentives.

Chicago – Residential construction activity has been down modestly in this District. Contacts report that high-interest rates have led some projects to be postponed or canceled and that while construction costs had fallen, the decline isn’t enough to offset higher financing costs. 

Residential real estate activity has decreased modestly as well. Prices and rents have declined, and the low inventory of homes for sale has helped to prevent larger declines.

However, there have been reports of rising retail rents in some areas because of a lack of high-quality new construction.

St. Louis – Rental rates for residential real estate have increased slightly in this District. The number of new listings in residential real estate have dropped sharply in Louisville since our previous report, while new listings in the Memphis and Little Rock regions have remained unchanged. Seasonally adjusted home sales have remained unchanged since the previous report. 

Minneapolis – Residential construction has remained subdued. Single-family permitting in April was more than 40 percent lower year over year in the Minneapolis-St. Paul region; most other large markets in the District saw even bigger declines. Discounts have started to appear for some speculative developments.

Closed (residential real estate) sales in April fell notably year over year across the District, with many larger markets seeing declines of 30 to 50 percent. Median sale prices have declined in western and central Montana and have been flat in several other markets. 

Kansas City – Housing rental rate growth has remained elevated in several western District states, but the pace of increases has declined broadly and swiftly from the growth rate experienced during the past year. 

Dallas – Housing demand broadly has held up in the Dallas District, though sales have continued to be weaker than a year ago. Contacts have noted a decent spring selling season, with prices largely stable, and builders have been able to raise prices slightly in selected areas.

Outlooks have been cautious, however, with some voicing concern about whether demand would hold up beyond the spring selling season.

San Francisco – Activity in residential real estate has slowed further in this District. Contacts across the District have reported stable demand for single-family homes, although high mortgage rates have restrained prices. Existing single-family inventory has been low, and owners appeared hesitant to forego their existing low-rate mortgages by listing their homes.

Despite reported improvement in the availability and cost of materials, construction of new homes has been flat-to-down as developers responded to higher financing costs.

Source: housingwire.com

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The four-day business week accompanying the Memorial Day Holiday contributed to a further slowdown in mortgage applications. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 1.4 percent on a seasonally adjusted basis and dropped 12 percent on an unadjusted basis.

The Refinance Index decreased 1.0 percent from the previous week and was 42.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 27.3 percent from 26.7 percent the previous week.

The seasonally adjusted Purchase Index dipped 2.0 percent. The unadjusted index was down 13.0 percent week-over-week and 27 percent on an annual basis.

“Mortgage rates declined last week from a recent high, but total application activity slipped for the fourth straight week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate dipped to 6.81 percent; 10 basis points lower than last week but still the second highest rate of 2023 to date.  

“Overall applications were more than 30 percent lower than a year ago, as borrowers continue to grapple with the higher rate environment. Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers. There was less of a decline in government purchase applications last week, which was consistent with a growing share of first-time home buyers in the market.”

 Highlights from MBA’s Weekly Mortgage Applications Survey

  •  Loan sizes dropped by about $10,000 last week. The overall loan size was $381,200 with purchase loans averaging $429,700.
  • The FHA share of total applications increased to 13.2 percent from 12.7 percent and the VA share increased to 12.5 percent from 12.1 percent. USDA loan applications accounted for 0.4 percent of the total.
  • The 6.91 percent average rate for conforming 30-year fixed-rate mortgages (FMR) was accompanied by a point drop from 0.83 to 0.66.
  • Jumbo 30-year FRM had an average rate of 6.74 percent compared to 6.78 percent the prior week. Points fell to 0.56 from 0.76.
  • Thirty-year FRM with FHA guarantees declined from 6.85 percent, with 1.26 points to 6.73 percent with 1.15 points.
  • The rate for 15-year fixed-rate mortgages decreased to 6.25 percent from 6.41 percent, with points decreasing to 0.62 from 0.84.
  • The average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) increased to 5.93 percent from 5.39 percent, with points increasing to 0.96 from 0.46.
  • The ARM share of activity was unchanged at 6.8 percent.  

Source: mortgagenewsdaily.com

Apache is functioning normally

Mortgage rates rose at their fastest pace in decades in 2022 and if only one thing could take the blame, it would be inflation.  There are several ways to link inflation to upward pressure on rates, but the simplest is to consider that rates are based on bonds and inflation lowers the value of bonds.

In other words, if you are an investor who buys mortgages, you might be willing to accept a 6.5% rate of return today.  Now let’s say inflation skyrockets.  If you still charge 6.5%, the payments you receive will buy a lot less “stuff.”  So you have to increase your rates in order to get the same financial benefit.

Because of the inflation focus, the biggest inflation reports have been closely-watched indicator for rate momentum for more than a year now.  None are bigger than the Consumer Price Index (CPI), and the latest installment will be out on Wednesday morning, May 10th, at 8:30am Eastern Time. 

There is always a catalog of multiple professional forecasts for big economic reports.  Markets adjust to those forecast levels, or close to them well ahead of the official release of the data.  Then if the data hits the forecast, markets don’t need to move much.  But if CPI were to fall much higher or lower than forecast, the market would view this as an indication that inflation was trending higher or lower relative to previous expectations.  Rates would react accordingly (i.e. higher for high inflation and lower for low inflation). The farther from forecast the actual number falls, the bigger the reaction could be.  

As for today, there was just a bit of extra upward momentum for interest rates with the average lender moving up by less than an eighth of a percent for a conventional 30yr fixed loan.  This level of volatility isn’t really worth writing home about considering how big Wednesday might be.

Source: mortgagenewsdaily.com

Apache is functioning normally

Most mortgage lenders offer both home purchase loans and refinances. But Direct Access Funding is all about the refis.

In fact, the Southern California based lender refers to itself as a the “refinance division” of its parent company.

Seeing that most refinances are driven by the desire to obtain a lower mortgage rate, there’s a good chance their pricing is competitive.

They say they’ve got the best refinancing rates period and quality customer service to boot, which their reviews seem to back up.

So if you’re an existing homeowner looking for a better mortgage, they could be worth looking into. Let’s dig into the details.

Direct Access Funding Fast Facts

  • A direct-to-consumer mortgage lender that offers home refinance loans
  • Founded in 1998, headquartered in Irvine, California
  • The refinance division of Absolute Home Mortgage Corporation
  • Licensed to do business in 15 states and the District of Columbia
  • Their parent company funded $2 billion in home loans last year
  • Claim to offer the best mortgage refinance rates

As the name implies, Direct Access Funding is a direct-to-consumer mortgage lender based in Irvine, California, which is in the heart of Orange County.

Instead of a physical branch network, they work remotely with customers from a central call center to help you process and close your loan.

The company is located near many other mortgage lenders, including CashCall Mortgage, ClearPath Lending, loanDepot, and Watermark Home Loans.

As noted, they dabble only in mortgage refinancing, meaning their target market is existing homeowners as opposed to home buyers.

They are actually a division of Absolute Home Mortgage Corporation based out of Fairfield, New Jersey, which originated about $2 billion in home loans last year.

They’re currently licensed to do business in 15 states and the District of Columbia.

Those states include Arizona, California Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, and Virginia.

How to Apply with Direct Access Funding

To get started, you can call them on the phone or simply visit their website and begin on your own.

Your best move might be to get in touch with a licensed loan officer first to discuss mortgage rates, lender fees, and overall eligibility.

Once you get the information you need to proceed, you can fill out their digital mortgage application online.

It allows you to complete the form 1003 electronically, eSign disclosures, and upload supporting documents via a secure portal.

Once your loan is submitted, you’ll be able to manage your loan online from start to finish.

It’s unclear if the processing and underwriting of your loan is completed in-house or at their parent company’s headquarters.

Regardless, their goal is to make refinancing stress-free and they employ the latest technology and solutions to make that happen.

Because they focus on existing homeowners only, the process should be faster than traditional banks and lenders.

Loan Programs Offered by Direct Access Funding

  • Rate and term refinances
  • Cash out refinances
  • Streamline refinances
  • No cost refinances
  • Conforming loans backed by Fannie Mae and Freddie Mac
  • FHA loans
  • Fixed-rate mortgages in various loan terms

Direct Access Funding seems to be solely focused on mortgage refinances for existing homeowners.

This includes rate and term refinances, cash out refinances, and streamline refinances.

They can also structure your loan as a no cost refinance through the use of lender credits so nothing needs to be paid out of pocket.

In terms of loan types, I believe they only originate conforming loans backed by Fannie Mae and Freddie Mac, along with FHA loans.

It’s unclear if they offer VA loans or jumbo loans as well.

You can get a fixed-rate mortgage such as a 30-year fixed or a 15-year fixed, and possibly an adjustable-rate mortgage too.

They lend on primary residences, second homes, and investment properties, including condos/townhomes.

All in all, their product menu isn’t vast but should cover most of the population.

Direct Access Funding Mortgage Rates

While they claim to have the “best” mortgage rates for a refinance loan, they don’t list their rates online. At least not on their website.

However, you might find them on third-party websites alongside other lenders in mortgage rate tables.

My assumption is their rates are very competitive since they’re a branchless, refinance-only lender.

And because refis are generally pursued to save money, they will need to beat your existing rate to earn your business.

But do take the time to compare their quote to other lenders to be sure. And also ask about any lender fees, such as a loan origination fee or application fee.

I’d classify them as a low-cost mortgage lender because of their lightweight business model (lack of branches and advertising), which is a good thing if you’re looking for lowest possible rate/fee.

Direct Access Funding Reviews

On Experience.com, Direct Access Funding has an impressive 4.91-star rating out of a possible 5 from over 1,000 customer reviews.

You are able to filter the reviews by loan officer to see how certain individuals have performed in the past. If a certain person stands out, be sure to ask for them when calling in.

Over at Google, they have an even better 4.9-star rating from nearly 200 reviews, which is pretty close to perfection.

Lastly, they’ve got a 4.9 rating on Bankrate from 15 reviews, with 100% of reviewers indicating they’d recommend the company to others.

Their parent company Absolute Home Mortgage Corp. is an accredited company with the Better Business Bureau (since 2013) and currently holds an ‘A+’ rating based on complaint history.

All of these reviews give them some legitimacy, even if they’re not a household name like some of the larger lenders out there.

In closing, Direct Access Funding seems to be a streamlined refinance shop that could be a good fit for an existing homeowner looking for a lower mortgage rate or cash out.

They’re probably best suited for those with plain vanilla loan scenarios (e.g. W-2 employee, conforming loan amount, single-family residence).

If that’s you, they might be able to beat your existing mortgage rate and save you money each month.

But those with more complex loan scenarios (self-employed borrowers, investors, jumbos) may want to look elsewhere.

Direct Access Funding Pros and Cons

The Pros

  • Can apply for a home loan online in minutes without a human
  • Offer a digital mortgage application (paperless process)
  • Say they offer the best refinance rates
  • Excellent reviews from past customers
  • Parent company is accredited, A+ BBB rating

The Cons

  • Not licensed in all states
  • No branch locations
  • Only offer refinancing products (not home purchase loans)
  • No mention of lender fees

Source: thetruthaboutmortgage.com