An online lender called “Owning” is looking to shake up the mortgage industry with what it refers to as “ridiculously low rates.”
In the past, they doubled as a mortgage lender and real estate company, offering mortgage refinancing at low rates and a variety of home buying and selling tools including iBuying.
But in early 2021, Owning was acquired by Chicago-based Guaranteed Rate, and will act as its lead generator going forward.
The company now focuses on helping aspiring home buyers finance a property and existing homeowners interested in securing a lower rate on their home loan.
Aside from attempting to make the process easier via new technology, they also offer an on-time closing guarantee. Read on to learn more.
Owning Fast Facts
Direct-to-consumer mortgage lender offering home purchase loans and refinances
Founded in 2018, headquartered in Orange, California
Acquired by Guaranteed Rate in early 2021
Licensed to lend in 43 states and the District of Columbia
Specialize in low-rate mortgage refinances and home purchases
BBB accredited with an ‘A+’ rating at the moment
4.9-star rating on Google based on over 2,100 customer reviews
Not available in Alaska, Kentucky, Nevada, New York, Rhode Island, Utah, or Vermont
What Owning Offers
Home purchase loans
Refinance loans (rate and term and cash out)
Conventional loans backed by Fannie Mae and Freddie Mac
Jumbo loans that exceed the conforming limit
FHA/VA/USDA loans
Fixed-rate and adjustable-rate options
Lend on primary, second, and investment properties
The Orange, CA-based company offers two core products to consumers looking for a home loan.
A refinance product for existing homeowners. And a home purchase product for those looking to purchase a property.
In the past, they offered more, including a no cost refinance, a zero-down home purchase, an iBuyer service, and a real estate agent rebate.
But since being acquired by Guaranteed Rate in 2021, they essentially became the online lead generator for their parent company.
This means keeping things simple, leading with their mortgage rates, and leaning on the latest technology to do things quickly and efficiently.
It’s unclear if Owning will still refinance your existing home loan with no closing costs, including third-party fees like appraisal, credit report, escrow, title insurance, and more.
That offering was similar to CashCall’s No Closing Cost Mortgage and the companies appeared to compete in the SoCal market.
But nowadays many lenders require borrowers to pay discount points to keep interest rates at reasonable levels.
Anyway, my guess is you can utilize a lender credit to keep closing costs down if that’s your desire.
Owning Mortgage Rates
As noted, Owning has become a streamlined, online-only mortgage lender. This means they offer a fully-digital process and in their words, “low rates.”
But you don’t have to take their word for it. If you visit their website, you’ll see their mortgage rates front and center at the top of the page.
They also have a calculator that lets you adjust a couple inputs to generate a real-time quote.
Both a 30-year fixed and 15-year fixed are listed as options, though other loan types may also be available depending on market conditions.
If you click on “rates,” you can access the more robust version of their online rate calculator.
Be sure to click on the loan assumptions to see what they’re basing rates on, e.g. purchase price, down payment, FICO score, discount points required, etc.
How to Apply
To get started, simply visit their website from your computer or smartphone. From there, you can use their rate calculator to determine today’s rates.
Or you can click on “get started” to fill out a short online lead form. You’ll also see a phone number and email address if you want to reach out directly.
Once you move forward, their loan process is mostly paperless. It allows for the e-signing of disclosures, importing bank account information, and uploading documentation.
All in all, they appear to make it easy to apply for a home loan. And they aim to close in as few as 14 days.
On Time Closing Guarantee
If you’re concerned about timing, take comfort in Owning’s On Time Closing Guarantee.
Simply put, if your loan does not close by the original specified closing date (purchase or refinance) the company will mail a check for $2,000 within 90 days of the request being submitted.
Eligible borrowers must request a refund check in the mail by submitting a request to [email protected] within 30 calendar days of loan closing.
However, there a lot of exclusions. The borrower’s down payment must be 5%+, it can’t be a USDA loan, and the borrower can’t own two or more properties.
It’s unclear if that total includes the subject property. And of course the standard exclusions apply like appraisal delays, force majeure events, and so on.
Be sure to speak to your loan officer ahead of time to iron out these details.
Owning Reviews
On Google, Owning has a stellar 4.9/5-star rating from over 2,100 customer reviews at last count (March 2023).
Over at Zillow, they’ve got a 4.80/5 from about 265 reviews, and at Bankrate a 4.9/5 from roughly 40 reviews.
They aren’t Better Business Bureau (BBB) accredited, but they do hold an ‘A+’ rating based on customer complaints.
And they have a solid 4.81/5 rating from nearly 100 customer reviews on the BBB website, which is pretty impressive.
To sum things up, this streamlined, no-frills online lender offers the basics that most consumers are probably looking for.
A possible negative might be a lack of physical locations, but for those savvy enough to go the online route, they could be a breath of fresh air.
Assuming their mortgage rates are competitive, they could be a good option for those refinancing or even a prospective home buyer.
Just be sure to take the time to compare Owning to other companies to ensure you get the best deal and quality service.
Owning Pros and Cons
The Good
Advertise their mortgage rates online
Offer a fully-digital home loan process
Can apply online or via smartphone
Plenty of loan programs to choose from
Excellent customer reviews
A+ BBB rating
On-time closing guarantee
Staff also speak Spanish and Vietnamese
The Maybe Not
Aren’t licensed in Alaska, Kentucky, Nevada, New York, Rhode Island, Utah, or Vermont
(Yicai Global) July 17 — Chinese banks have yet to respond to the People’s Bank of China’s suggestion that they lower the interest rates of existing mortgages. This is because home loans make up a large percentage of their lending and the move will have a negative impact on them, Yicai Global has learned.
Lenders are mulling rate adjustments based on their particular circumstances, a person working at a joint stock bank told Yicai Global, adding that the implementation schemes are expected to vary from bank to bank.
Commercial banks and other kinds of lenders are encouraged to amend contracts with borrowers through voluntary negotiations in accordance with market-oriented principles and the rule of law, Zhou Lan, head of the department of monetary policy at the People’s Bank of China, said on July 14.
Banks can also issue new loans at a lower rate to consumers to replace existing loans at a higher rate, Zhou said.
Most of the bank staffers contacted by Yicai Global, including Bank of China, China Construction Bank, Bank of Hangzhou and Bank of Ningbo, said that they are still using the mortgage rates based on the original contracts as they have yet to be notified of rate policy adjustments by their respective supervisors.
A rate cut scheme has not been rolled out yet, said the Guangdong province branch of a major bank.
The PBOC’s proposal can help apartment buyers to cut their financing costs, and to some extent, reduce the risk of them breaching their borrowing agreements by repaying their mortgages earlier, which could cause the bank to lose out on the income it earns from interest, said Xue Hongyan, deputy director at research body Star Atlas Institute of Finance.
But according to banking insiders, the move will just make things harder for banks, especially those with a high proportion of personal mortgages, said Liao Zhiming, chief banking industry analyst at China Merchants Securities.
‘For banks, especially big ones, lowering the rate of existing mortgages will cause short-term pain,” said Dong Ximiao, chief researcher at Merchants Union Consumer Finance.
Difficult Decisions
China’s six state lenders as well as China Merchants Bank and Industrial Bank all had extended over CNY1 trillion (USD139.4 billion) each in home mortgages as of the end of last year, according to Wind Information data.
Among them, China Construction Bank had issued the most home loans at CNY6.5 trillion, taking up over 79 percent of its overall personal loans. While the ratios at Industrial and Commercial Bank Of China, Agricultural Bank of China and Bank of China were all over 70 percent.
“Lowering the rate of existing mortgages will put huge pressure on these banks but it seems that they have little choice or they face losing customers,” a credit loan manager at a big state-owned bank said.
“If a lender does not reduce its mortgage lending rate, a customer could pay off the loan by borrowing from another bank at a cheaper rate, and thus switch banks,” said Zheng Dayuan, general manager at a mortgage agent firm based in Guangzhou city.
The loan prime rate for loans of five years or more has been adjusted seven times since 2019 as the macroeconomy slows. And the lower limit on mortgages for first-time buyers sank to under 4 percent in over 40 cities, according to the China Index Academy.
In the first half, the weighted average rate of newly issued individual mortgages tumbled 107 basis points year on year to 4.18 percent, the lowest level since statistics began.
Between 2018 and 2021 rates were above 5.4 percent at most banks and reached a peak of 5.7 percent, according to data from CSPI Ratings, a unit of China Securities Credit Investment. Homeowners who signed their mortgage contracts during this period will be highly motivated to look for refinancing in order to cut their interest repayment burden.
Mortgage refinancing gives homeowners flexibility as their financial circumstances and needs change.
When you refinance your mortgage, you may be able to lock in a lower interest rate and get rid of private mortgage insurance, which can lead to significant savings over the life of the loan. It also allows you to switch from an adjustable-rate mortgage to a fixed-rate mortgage (and vice versa) or go from a government-backed loan to a conventional loan.
You can even shorten your loan terms by refinancing your mortgage, so you can pay off your loan even faster. Or, you can use refinancing to tap into the equity in your home to pay off debt, pay for a huge renovation or purchase another property.
CNBC Select evaluated home loan lenders based on the types of loans offered, customer support and minimum down payment amount, among others (see our methodology below).
The best mortgage refinance lenders
Best for cashing out full equity
Rocket Mortgage Refinance
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA Interest Rate Reduction Refinance Loan (IRRRL) and jumbo loans
Fixed-rate Terms
8 – 29 years
Adjustable-rate Terms
Not disclosed
Credit needed
580 if opting for FHA loan refinance or VA IRRRL; 620 for a conventional loan refinance
Pros
Can use the loan to refinance a single-family home, second home or investment property, or condo
Can get pre-qualified in minutes
Rocket Mortgage app for easy access to your account
Allows borrowers to cash out 100% of their home’s equity
Cons
Doesn’t offer USDA loans, HELOCs, construction loans, or mortgages for mobile homes
Rocket Mortgage is a great option to consider if you’re looking to maximize the equity you can cash out of your home.
One of the advantages of refinancing is being able to tap into your home’s equity to pay for large expenses, like home improvements or a second property, or to consolidate debt. This is called a cash-out refinance. The total amount you’re able to borrow will depend on your home’s value and equity.
Most lenders only allow homeowners to cash out 80–90% of their home’s equity. But according to its website, Rocket Mortgage allows borrowers who are refinancing to cash out 100% of their equity, as long as they have a minimum FICO score of 620. This means you’ll have access to more cash when you refinance. Rocket Mortgage also offers a fast, online pre-approval process.
Best for no lender fees
Ally Home
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Fixed-rate, adjustable-rate and jumbo loans available
Fixed-rate Terms
15 – 30 years
Adjustable-rate Terms
5/6 ARM, 7/6 ARM, 10/6 ARM
Credit needed
Not disclosed
Pros
Doesn’t charge lender fees (no application, origination, processing, or underwriting fees)
Provides custom quotes in just a few minutes with no impact to your credit score
Online support available
Existing Ally customers can receive a discount that gets applied to closing costs
Cash-out refinancing available
Cons
Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs, however, Ally allows borrowers to refinance from an FHA, USDA, or VA loan to a conventional loan
Mortgage loans are not available in Hawaii, Nevada, New Hampshire, or New York
As with its home purchase loans, Ally Bank’s mortgage refinances don’t come with lender fees. In other words, borrowers won’t pay application, origination, processing, or underwriting fees. Keep in mind, however, that you’ll still have to pay other charges like title checks and appraisal fees. Still, cutting lender fees out of the equation still gives borrowers a chance to save some money on an already-expensive process.
Ally offers both fixed-rate and adjustable-rate loans in addition to jumbo loans for refinancing. While this lender doesn’t offer any FHA, VA, or USDA loans, borrowers who currently have these loan types and wish to refinance to a conventional loan may do so through Ally Bank.
Best for a no-frills lender
Better.com Mortgage Refinance
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loan, FHA loan and jumbo loan
Fixed-rate Terms
15–30 years
Adjustable-rate Terms
Not disclosed
Credit needed
Not disclosed
Pros
No origination fee
No prepayment penalties for refinance
Receive a loan estimate in as little as 3 days
The Better Buying Guarantee provides up to $3,500 in lender paid credits to offset “covered fees,” which include: Lender’s Title Insurance Policy Fees; Owner’s Title Insurance Policy Fees; Appraisal Fees (includes second appraisal fee, appraisal re-inspection fee and appraisal recertification fee, if applicable); Flood Certification Fees; Credit Report Fees; and Other Settlement Fees (discount points are excluded)
Cons
Doesn’t offer VA loans or USDA loans
The Better Buying Guarantee is not available in Washington state
Better.com offers a straightforward refinance service with a few ways for borrowers to save money. This lender doesn’t charge any origination fees on the loan, and individuals who are refinancing their mortgage won’t be charged prepayment penalties for paying off the new loan early. Its pre-approval process can be completed in as little as three minutes and won’t impact your credit score.
This lender also offers a Better Buying Guarantee, which provides borrowers with up to $3,500 in lender-paid credits to offset “covered fees.” Those fees include: Lender’s Title Insurance Policy Fees; Owner’s Title Insurance Policy Fees; Appraisal Fees (includes second appraisal fee, appraisal re-inspection fee and appraisal recertification fee, if applicable); Flood Certification Fees; Credit Report Fees; and Other Settlement Fees (discount points are excluded). See their Terms and Conditions for rules around eligibility.
Better.com offers mortgage refinance terms that range from 15 to 30 years, and boasts the ability to provide potential borrowers with a loan estimate in as little as three days.
Best for saving money
SoFi Mortgage Refinance
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans and jumbo loans
Fixed-rate Terms
10 – 30 years
Adjustable-rate Terms
Not disclosed
Credit needed
Pros
Provides access to Mortgage Loan Officers for guidance
Access to account via the mobile app
Members save $500 on processing fees for a cash-out refinance
Cons
Doesn’t offer FHA, VA or USDA loans
Available in all states except Hawaii
SoFi is known for offering a plethora of savings opportunities to members who use their financial products and services. When it comes to mortgage refinancing, this lender gives members the opportunity to save $500 on the loan processing fee as long as they also have a SoFi Personal Loan, SoFi Student Loan or have a minimum balance of $50,000 in their SoFi Invest accounts at the time of their application submission.
Mortgage refinance terms range from 10 years to 30 years, and SoFi offers an app to help customers have easy access to managing their account details.
Best for availability
PNC Bank Mortgage Refinance
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Fixed-rate, adjustable-rate, FHA loans, VA loans and jumbo loans
Fixed-rate Terms
10 – 30 years
Adjustable-rate Terms
Available in periods of 7 and 10 years for a fixed rate, followed by an adjustment period when the interest rate may increase or decrease on an annual or semi-annual basis
Credit needed
Not disclosed
Pros
Refinance available for primary and secondary homes, and investment properties
Offers a wide variety of loans to suit an array of customer needs
Offers refinancing for VA and FHA loans
Available in all 50 states
Online and in-person service available
Cons
Doesn’t offer home renovation loans
PNC Bank is one of the most accessible lenders on this list since it provides services and mortgage products in all 50 states — both in-person and online. This lender offers fixed-rate loan terms that range from 10 years to 30 years. For jumbo loans, though, the loan terms go from 15 years to 30 years. Adjustable-rate terms are also available.
To make sure you’re fully prepared to begin the application process, PNC Bank has an application checklist on their website that lists all of the documents you’ll need if you want to refinance your mortgage.
Best for a credit union
PenFed Credit Union Mortgage Refinance
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Rate-and-term refinance (for conventional, FHA and VA refinances), VA Interest Rate Reduction Loan (IRRRL), cash-out refinance, home equity line of credit (HELOC)
Fixed-rate Terms
Not disclosed
Adjustable-rate Terms
Credit needed
Not disclosed
Pros
Covers cost of VA funding fees, title fees, recording fees, transfer taxes, appraisal fee, credit report and flood certification where applicable
Offers jumbo loan refinance up to $3 million
Online support available
Available in all 50 states
Cons
Doesn’t offer USDA loans
Doesn’t offer adjustable-rate terms
PenFed cuts out some major closing costs for homeowners looking to refinance their mortgage. It will cover the cost of VA funding fees, title fees, recording fees, transfer taxes, appraisal fee, credit report and flood certification wherever applicable. This could save borrowers anywhere from hundreds to thousands of dollars in closing costs.
Of course, you’ll want to make sure you have a PenFed membership in order to apply for this lender’s mortgage products. Membership is open to everyone but you’ll need to open a savings account and make an initial deposit of at least $5.
FAQs
What do you need to refinance your mortgage?
As with any other line of credit, mortgage refinancing requires a decent credit score. Lenders typically like to see a minimum credit score of 620 or higher. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate. Borrowers should also have at least 20% equity in their home in order to refinance. You’ll also need to provide documents, such as bank statements, pay stubs, W-2s, 1099s, tax returns, employment verification and proof of homeowner’s insurance.
How do you refinance your mortgage?
To refinance your mortgage, you’ll want to make sure you have all the required financial documents and meet your desired lender’s qualifications. You’ll use this information to submit an application (either online or in-person, depending on the lender you’d like to go with). Lenders typically also offer the help of mortgage refinance experts who can walk you through the process, answer any questions you have and make sure you submit a complete application.
How often can you refinance your mortgage?
There is no limit on the number of times you can refinance a home loan. Refinancing can be valuable when your circumstances change. For instance, if you were to change careers and take a pay cut, refinancing into a mortgage with a longer loan term would allow you to receive lower monthly payments.
Just be aware that refinancing is not free and every time you refinance, you’ll have to pay a slew of closing costs and other fees, and your credit score could take a hit every time the lender runs a hard inquiry.
What are the different types of mortgage refinances?
A rate-and-term refinance is one of the most common types of mortgage refinancing since it involves simply changing the loan term (how long you have to repay the balance) or the interest rate.
Borrowers can also do a cash-out refinance where the borrower takes out a loan that’s larger than what they currently owe and can use the difference between the two loans to receive cash. Borrowers can then use that cash for a large expense, a down payment on another property, debt consolidation and more.
As the name suggests, FHA Streamline Refinance is meant for borrowers who are looking to refinance their FHA loan. A VA Streamline Refinance is similar except it’s meant for VA loan borrowers.
Does refinancing hurt your credit?
As with any other form of credit you apply for, applying for a mortgage refinance means the lender will run a hard inquiry on your credit. Hard pulls do temporarily lower your credit score by a few points. However, making on-time monthly payments and avoiding applying for too many new lines of credit all at once can help your credit score recover.
Reasons not to refinance your mortgage
Refinancing isn’t for everyone. If you already have a low, fixed interest rate with affordable monthly payments, refinancing your mortgage might not save you money. In fact, due to closing costs, refinancing can actually wind up costing you more than you anticipated.
You should also avoid refinancing if you have bad or fair credit since you could end up with a higher interest rate, which will make the loan even more expensive.
It’s also not a good idea to refinance if you’re already several years into a mortgage. Refinancing essentially replaces your loan with a new one and you’ll have to start all over with payments. So if you’re already, say, 15 years into a 30-year mortgage, refinancing to another 30-year mortgage means you’ll still be on the hook with the mortgage for another 30 years.
Bottom line
Refinancing can be instrumental for those who want to have lower monthly payments or a lower interest rate, or want to tap into some of the cash in their home. Just make sure you run the numbers so you can be sure they make sense for your situation, since there are some instances when refinancing may not be a good idea.
Our methodology
To determine which mortgage lenders are the best, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best mortgages, we focused on the following features:
Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you’ll lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. Lenders may also offer USDA loans and jumbo loans. Having more options available means the lender can to cater to a wider range of applicants. We’ve also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances where a lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.
After reviewing the above features, we sorted our recommendations by best for overall financing needs, quick closing timeline, lower interest rates and flexible terms.
Note that the rates and fee structures advertised for mortgage refinances are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee your interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Even if you think you have a strong handle on your money, there are tricky financial mistakes lurking everywhere. And sometimes, you don’t even know you’re falling for them. It’s a classic case of, “you don’t know what you don’t know.”
I’ll uncover some of the costliest financial tricks you might be falling for, plus show you exactly how to fix them.
What’s Ahead:
Assuming your checking account balance is growing
Interest rates have been low for quite some time. While that’s good news when you need to borrow money, those rock-bottom rates aren’t helping your money in the bank. Don’t just deposit cash into your regular checking account and assume you’re going to earn significant yields.
Instead, keep just enough cash in there to cover around two months of living expenses. The rest should go into a high-yield savings account so that your balance actually grows on its own.
Paying for more insurance than you actually need
Overpaying for insurance is an easy financial trick to fall for. After all, the more your house or car is protected, the better — right? This isn’t always the case; in fact, it’s entirely possible to overpay. To make sure your coverage is the right amount, shop around (at least every six months) to compare insurance rates. Consider using an online comparison platform like Policygenius to get multiple insurance offers with just one application form.
Also look for easy discounts, like bundling home and auto policies. You can also lower your premiums by opting for a higher deductible, especially if you don’t expect to make frequent claims on your policy.
Waiting until you make “real money” to invest
Don’t get trapped into thinking that investing is only for high earners. In fact, the earlier you start investing with any amount of money, the longer you’ll be able to take advantage of long-term compounded growth.
In fact, there are a couple of benefits you’ll enjoy if you start investing now, rather than waiting to earn “real money.” First, even your small investments will grow exponentially and could eventually earn more than you actually contribute. Another advantage is that you set up the habit of investing and have your accounts ready to go to increase your amount as you earn more.
Finally, you’ll gain a better understanding of market cycles. Investing with smaller amounts at first gives you more experience on how you like to invest without risking as much. Plus, you’ll start to see how the market can drop and rebound, giving you a better long-term outlook on your portfolio.
Only making minimum credit card payments
It may seem like you’re staying on top of your finances when you make your minimum credit card payment each month, but in reality, it can take years to pay off your balance if you only pay the minimum. Plus, the total cost of interest could amount to hundreds or even thousands of dollars. That’s not even counting any additional charges you add to your card as time goes by.
Look at your total credit card debt and devote as much money as you can to making extra payments each month. Then you can start diverting money to better financial goals rather than seeing that balance continue to grow as new interest is charged each month.
Missing payments for bill due dates
Forgetting to pay your bills on time may just seem like a bad habit, but it actually carries several potential financial consequences that can eat away at your ability to save. First, you could quickly accrue a late fee each time you forget to pay a bill on its due date. Some companies may have grace periods, while others may charge the fee as soon as the next day.
Another negative impact of missing your payments is the damage it can do to your credit score. This typically applies to loan and credit card payments. Creditors don’t report payments on your report until they are 30 days past due. But after that, you’ll keep accruing negative entries for each 30-day period the bill goes unpaid. All of those entries cause greater damage to your credit score.
Overspending on “buy now, pay later” purchases
Online point of sale loans can be attractive, especially when you go to checkout your cart and discover you can spread out payments over the next several weeks. And while this feature may be good for some people when used strategically, it can also lead to trouble if you don’t pay attention to how much short-term debt you’re accumulating.
Avoid splurging on things that you can’t afford in full. Also carefully track multiple balances you owe, or commit to only making one “pay later” purchase at a time.
Dipping into your emergency fund for non-emergencies
Having an emergency fund squirreled away is a great achievement, but it can be extremely tempting to dip into the extra cash for non-emergencies, like going on a shopping spree or holding yourself over until your next paycheck.
Move that money to an account at a different bank than your normal checking so that it’s more difficult to access. That will help you be more disciplined in reserving those funds for true times of hardship, like an unexpected emergency room visit or car repair. Also, remember to replenish your emergency fund anytime you use that cash so you’re prepared for the next unexpected event.
Underestimating the cost of homeownership
Buying a house can be a great financial move, especially since property values tend to appreciate over the long-term. But switching from renting to homeownership isn’t always a smooth transition. There are a lot of extra costs you’ll encounter, like closing costs at the time of purchase, plus ongoing expenses like maintenance and repairs, taxes, and homeowners insurance.
When getting mortgage quotes from a lender, look at the total monthly payment amount, not just the principal and interest. Also, expect to put away at least 1% of the value of the home each year to go towards home maintenance projects.
Letting your health insurance benefits go to waste
Hopefully, you have health insurance. If you do, you may be missing out on some common benefits. Annual wellness visits are usually included in your coverage so definitely take advantage of this yearly perk. Also, look for holistic treatments that may be covered by your plan. Many policies cover things like acupuncture, chiropractic care, and massage therapy. Check to see what’s included in your plan and how many visits are covered each year.
Keeping the same interest rate for your loans
Taking out a loan and never thinking about interest rates again can cause you to pay a lot more than you need to. Interest rates are constantly changing and you can refinance your loans, including your mortgage, auto loan, private student loans, or personal loans, to potentially get a lower rate.
Keep a list of your current rates on all of your balances, then track interest rate news every month or two. Refinancing a loan does often come with some type of cost, so it’s not something you actually do every month. But if you notice a big rate drop compared to what you’re currently paying, that’s a trigger to do some more digging into whether a refinance could save you money.
Living in financial limbo
A final financial pitfall to avoid is only thinking about your most short-term money issues, like paying your bills this month or making that minimum credit card payment. Instead, think about your mid-term and long-term goals and identify steps to help you achieve them.
Maybe it’s reworking your budget to pay off your debt more aggressively. Or maybe it’s finally enrolling in your company 401(k) so you can kickstart your retirement savings. Make a step-by-step financial plan, then start checking off those action items one at a time.
Summary
Managing your finances is no joke, which is why it’s important to always look for ways to maximize your money. Stop falling for these tricks and instead set yourself up for a rosy outlook across all of your accounts.
After several consecutive weeks of drops, mortgage applications jumped 16% for the week ending July 9, 2021, according to the latest report from the Mortgage Bankers Association.
The prior week‘s report showed a 1.8% drop in applications to the lowest level since January 2020.
The sudden increase in applications was driven “heavily” by increased refinancing as mortgage rates dipped again, said Joel Kan, MBA associate vice president of economic and industry forecasting.
“Treasury yields have trended lower over the past month as investors remained concerned about the COVID-19 variant and slowing economic growth,” Kan said. “There also may have been a delayed spillover of applications from the previous week, when rates also decreased but there was not much of response in terms of refinance applications.”
Those lower rates may be helping some homebuyers close on their purchases, especially first-time homebuyers, Kan said.
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“We continue to see ebbs and flows as housing demand remains strong, but for-sale inventory remains low,” he said. “The year-over-year comparisons were down significantly for both purchase and refinance applications.”
The sheer amount of bidding wars decreased from May to June, per a study released this week from Redfin, as more homes for sale have slowly hit the market in the past month. Overall inventory is still low, of course, but a cooling of the market could lead to more would-be buyers and an increase in mortgage applications soon, experts said.
The refinance share of activity of total mortgage applications increased to 64.1% from 61.6% the previous week. On an unadjusted basis, the market composite index decreased 13% compared with the previous week. However, the seasonally adjusted purchase index increased 8% from one week earlier.
The FHA share of total mortgage applications decreased to 9.5% from 9.8% the week prior, and the VA share of total mortgage applications decreased to 10.3% from 10.8%.
Here is a more detailed breakdown of this week’s mortgage applications data:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.09% from 3.15%
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.16% from 3.20%
The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.15% from 3.17%
The average contract interest rate for 15-year fixed-rate mortgages also decreased to 2.48% from 2.52%
The average contract interest rate for 5/1 ARMs increased to 3.02% from 2.94%, with points decreasing to 0.32 (including the origination fee) for 80% LTV loans
Enjoy complimentary access to top ideas and insights — selected by our editors.
As we look forward to the start of Q2 2023 earnings, financials of all descriptions are facing rising levels of liquidity risk. Banks are fighting to keep deposits on the books, while independent mortgage banks (IMBs) worry about low volumes and access to wholesale warehouse credit. But these short-term considerations may be missing the big picture staring us all in the face.
Over the past several decades, increasing volatility in interest rates caused by the manic policy swings of the Federal Open Market Committee, caused a structural change in the mortgage market. Refinance opportunities became more frequent and larger in terms of volumes, allowing the industry to carry more overhead per dollar of volume. Veteran mortgage executive Bill Dallas provided some insight into that question in an interview by Maria Volkova in National Mortgage News:
“What’s interesting is almost none [of my clients] have a lot of perspective about the mortgage business. A lot of them have never been in an environment that is predominantly purchase. I was raised in that environment. I spent my first 20 years in an environment where we didn’t have refinances really. Everything was a purchase. I think they’re struggling with that. And then the second shoe that hit them all is margin compression, and product compression, which they weren’t expecting. Almost everybody’s business model that I saw underestimated the amount of compression on the gross revenue side of their business.”
Remember the glib characters who were talking about an end to Fed rate hikes and 5% mortgage loans earlier this year? Now, with home prices again rising and the U.S. consumer essentially ignoring the FOMC, the question comes as to how much higher do interest rates need to go in order to cool off the housing sector? Moreover, there is a growing sense among economists that low single-digit interest rates maintained by the Fed during 2020-2021 may have caused more damage than benefit.
For mortgage lenders, the prospect of interest rates staying at or above current levels suggests a return to a business model that is predominantly focused on purchase mortgages. Since the cost of closing a purchase loan is three to four times the cost of a refinance loan, the expense structure of the industry must change to accommodate. For many lenders accustomed to reaping profits from refinance transactions, a return to purchase lending likely means the end of the road.
Adding to the already substantial challenge facing lenders in the shift to a purchase loan market is the continuing distortion of the money markets caused by the Fed. Because the FOMC so far refuses to sell its $3 trillion portfolio of mortgage-backed securities, the shape of the yield curve is inverted, with the yields for securities around 10-12 years in maturity far lower than short-term rates. The $3 trillion in MBS owned by the Fed is a dead weight holding down long-term bond yields.
What this means in layman’s terms is that lenders are losing money on loan sales into the secondary market. Since the price for Fannie Mae 6s in July is above current prices, lenders are losing money on every loan they carry from close to secondary market sale – the opposite of a normal market. This inverted or “contango” market is usually seen in physical commodities when prices rise suddenly, but by “going big” in 2020, the Fed has managed to disrupt the term structure of interest rates to an alarming degree.
When lenders do actually sell the mortgage loan into the secondary markets, the execution is likely to be less than a point premium. Indeed, many lenders are forced to sell the servicing with the loan in order to enhance the overall sale proceeds. Given the toppy valuations for mortgage servicing rights, selling is not the worst thing in the world, but the list of IMBs monetizing MSRs is growing as operating cash flows fall.
For example, United Wholesale Mortgage completed two bulk MSR sales as well as two excess servicing strip sales in the first quarter of 2023, based on servicing assets with a total UPB of approximately $98 billion. Net cash proceeds approximated $650 million from MSR and excess sales in Q1 2023 or 66 bp on the total UPB.
UWMC reported an operating loss of $138 million in Q1 2023 and a negative mark on the firm’s MSR over $330 million – due to falling interest rates! The machinations of the FOMC have actually increased market volatility so much that firms like UWMC are taking negative marks on MSRs when interest rates are supposed to be rising. What’s wrong with this picture?
The mortgage industry faces several threats. In the near term, rising rates are hurting volumes and pricing refinance transactions out of existence. Secondary market execution is poor and likely to get worse, especially as lenders see carry on closed loans forced deeper into the red. How much money will mortgage firms lose before they simply shut their doors?
“The Federal Reserve’s Dot Plots indicate that up to two more hikes could be on the table for 2023,” writes Erica Adelberg of Bloomberg. “If this occurs, mortgage carry could be even further challenged relative to funds, which could push forward mortgage prices even higher relative to current months.”
But perhaps the bigger existential question is whether the post-COVID world will be one with less interest rate volatility from the FOMC and an effective floor under interest rates that is well above the past decade. How will the industry look a year from now if mortgage rates stay at or above 7% for an extended period of time? Will the growth in market share of IMBs be reversed over the next decade as they slowly sell servicing assets to survive?
With interest rates rising slowly and inflation measured by home prices remaining stubbornly elevated, the world of mortgage lending in 2024 and beyond may look more like several decades ago than the past five years. If the FOMC takes the proper lesson from the errors of the COVID period, then the future movement of interest rates is likely to be muted.
As opportunities for refinancing existing residential loans shrinks relative to the overall business of mortgage lending, the structure of the industry and the flow of mortgages into the capital markets will change. Expenses per loan will rise, headcount in the industry will fall and prepayments on existing loans will fall dramatically. And once again, the mortgage finance industry will be forced to remake itself to fit this new reality.
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.
There are lots of different ways to get a mortgage these days – you can walk into a physical bank branch, call a mortgage broker, or even start a loan application on your smartphone.
While the mortgage broker model isn’t new by any means, a company called “Credible” is shaking things up on that front, promising real-time mortgage rates from multiple mortgage lenders without the “annoying calls or emails.”
They also let you compare rates and close your loan all in one place. Let’s learn why this company is different and if they make sense for your mortgage needs.
Credible Launched Back in 2012
Company founded by former investment banker in 2012
Initially focused on student loan refinancing
Has since delved into personal loans, credit cards, and mortgages
Lets you compare personalized loan offers from multiple lender partners anonymously
Acquired by Fox Corp. in late 2019
The company is relatively new, having been founded less than a decade ago in San Francisco.
But that didn’t stop it from being acquired by none other than Fox Corp., better known for TV shows like The Simpsons rather than finances.
Originally a student loan marketplace, the company has since expanded to personal loans, mortgages, and credit cards.
Our focus will be the mortgage piece of the pie, this being a mortgage blog and all.
In late 2018, Credible announced a “first-of-its-kind mortgage marketplace” that offers actual rates to consumers in just two or three minutes, all without affecting the applicant’s credit score.
But that’s not all – you also get a streamlined origination platform that allows you to complete much of the loan process without leaving Credible’s website, similar to Rocket Mortgage.
Their digital process utilizes “smart logic” to cut down on the number of questions asked to borrowers, as well as documentation requests, by making sure they are pertinent to your unique situation.
Additionally, the Credible platform automates the collection of things like pay stubs, bank statements, and tax documents, making the application process both faster and easier to complete.
Many of these items can be gathered electronically by simply granting access to your financial institution, without having to exit the Credible website.
However, they also have licensed loan officers available to those who would like additional support along the way. And they don’t work on commission, so they should have your best interests in mind.
How Credible Works to Get a Mortgage
First, you tell them a little about yourself and your property, just like most other mortgage companies.
This includes your property address, whether it’s a primary, second, or investment home, property type, estimated value, and mortgage balance.
Next, they ask if you have a second mortgage or if you’re looking to take cash out in addition to refinancing your existing loan balance.
One neat feature is they provide estimates of your property taxes and homeowners insurance for you, but you can adjust those numbers if needed.
They then ask for a source of income and average annual income, along with how much you have in assets.
If it’s a home purchase loan, they’ll ask you how far along you are in the process (just looking or found a home, etc.), and what your down payment will be.
You can generate a pre-approval letter instantly and see how much you can afford based on your inputs.
Lastly, you enter your name, date of birth, and phone number, agree to their terms and conditions, and get your loan options.
They note that they take privacy seriously, and that they’ll NEVER sell your information to external companies, nor will you receive phone calls from lenders.
A Soft Credit Check Provides Accurate Rates
Once you click “See My Rates,” a soft credit check (doesn’t affect your credit score) is conducted to look up your credit history and credit scores to ensure your pre-qualified rates are accurate.
If any of their partner lenders have home loan options that fit your profile, you’ll see a notification on your Credible Dashboard within minutes.
Credible will also reach out via email, phone, or text, but only once they have received responses from all potential lenders.
Note that these are just pre-qualified rates, and you’ll still need to qualify, like you would any other mortgage.
Once you select a loan option, you will be asked to provide additional information, and a hard credit pull will take place (these do affect your credit).
If your credit and application pass muster, the mortgage lender partner will provide you with an offer that you can review.
Then you’ll begin the loan process by signing disclosures, providing financial and personal documentation, and so on.
What Types of Home Loans Does Credible Mortgage Offer?
They offer home purchase and refinance loans
Including conventional conforming and jumbo loan amounts
FHA, VA, and USDA loans don’t seem to be available at the moment
Credible has two main mortgage options available – Home Loans, which is designated for purchase transactions, and Mortgage Refinancing, which as the name implies is for refinancing an existing home loan.
This means both prospective home buyers and current homeowners can take out a mortgage using Credible.
In terms of loan types available, I’ve been told that they only offer conventional loans, aka non-government. That means no FHA, VA, or USDA. It’s unclear if that will change soon, but I assume it will.
They also offer jumbo loans, those that exceed the conforming loan limit.
So if your loan scenario fits those criteria, there’s a good chance their lender partners will provide you with pre-qualified rates.
Which Mortgage Lenders Does Credible Work With? And How Do They Get Paid?
The first two lenders to join Credible were Quicken Loans and UWM
There are now several others including loanDepot and Stearns
Credible acts as a mortgage broker and only gets paid if the loan funds
They receive a percentage of the loan amount from the lender who closes your loan
While they don’t list all the mortgage lenders they work with, they do displays the logos of Caliber Home Loans, JMAC Lending, loanDepot, Quicken Loans, Stearns Lending, and UWM.
Originally, they started with just Quicken Loans and UWM, so it’s possible there are even more lender partners today.
As noted, you don’t need to work with those companies directly, or talk to anyone at those companies.
Instead, you can continue to complete your loan application on the Credible website, or ask for assistance from a Credible loan officer.
This is similar to how a mortgage broker works – they handle everything and you never actually deal with the wholesale lender providing the financing.
In terms of how Credible gets paid, it’s also like how a mortgage broker gets paid. If and only if the loan funds, they receive compensation from the corresponding lender.
That means they don’t charge you any fees directly, but rather take a cut, which is a flat percentage of your loan amount, such as say 1% or 2%.
For example, on a $500,000 loan they might make $5,000 to $10,000, depending on the terms they have with their lender partner.
Should I Use Credible to Find a Mortgage?
If you like the idea of a mortgage broker in terms of shopping around
But don’t actually want to deal with a human being
Credible could be a good option for your home loan needs
Just note that they may not offer all loan types at this time
However they do come highly rated by both Trustpilot and the BBB
If you live in one of the states where Credible offers mortgages, you might be wondering if they’re a good choice.
They refer to themselves as “Your trusted online mortgage broker,” which highlights the fact that they aren’t a direct-to-consumer lender. Nor are they a mortgage lender at all.
Rather, they connect you to trusted lender partners and earn a commission if your home loan funds.
As noted, they don’t charge any fees directly, nor do they hit your credit report with a hard inquiry. Despite this, you get to compare real, pre-qualified rates from a variety of lenders in minutes.
So if you aren’t the type to shop around, but still want the benefit of shopping around, you could give them a whirl.
And you can take advantage of their digital platform, which should make the loan process easier, smoother, and quicker.
However, you’re still at the mercy of one of the lenders they match you up with, so customer experiences will certainly vary based on your unique loan scenario and the lender you’re paired with.
Another potential negative is they don’t seem to offer all types of mortgages – those looking for an FHA, VA, or USDA loan may want to search elsewhere until they add those loans to their stable of offerings.
In terms of customer satisfaction, they have an excellent rating on Trustpilot and an A+ rating with the Better Business Bureau.
They could be a good alternative to LendingTree, which provides a similar shopping experience without the ability to complete the loan process on their own website.
Credible vs. LendingTree
Credible
LendingTree
Type of business
Online mortgage broker
Mortgage lead provider
Compare mortgage rates from multiple lenders
Yes
Yes, but after providing contact info
Get pre-approved
Yes
No
Credit check
Soft pull
Soft pull
Do they sell your information?
Keep your data private
Share with lenders you are matched with
How they get paid
When your loan funds
After you fill out lead form
How to apply for a mortgage
Digital process via their own website
Depends on lender you match with
If you’ve checked out Credible, you might be wondering how it compares to LendingTree.
While the pair sound similar, they’re actually pretty different. Credible is an online mortgage broker that matches you up with wholesale mortgage lenders.
And LendingTree is merely a lead generation service that matches you with retail mortgage lenders.
The key difference is that Credible will be your loan guide throughout, and only gets paid once your loan funds.
LendingTree will simply share your information with multiple lenders, at which point you’ll need to pick one to work with. After that, LT is out of the picture.
Credible’s pitch is that you can shop anonymously, whereas LendingTree will provide your contact to multiple lenders upfront.
Additionally, Credible allows you to complete the entire loan process online with the latest digital tools, and even generate pre-approval letters instantly.
However, both services may match you with the same lender. For example, if you use either you could wind up getting your home loan from Rocket Mortgage.
If you’re like me, you’ve received lots of mailers from a bank called “Third Federal Savings & Loan,” promising a low rate mortgage with very few fees.
After maybe the 10th piece of mail from them came through my mailbox, I decided it was finally time to write a review. So here we go.
Third Federal Has Been Around Since 1938
Began during Great Depression in Cleveland, Ohio
Initially served immigrants from Poland and other Eastern European countries
Now operates in 25 states and DC, with branches in Florida and Ohio
They are a direct mortgage lender that offers purchase loans, refinances, and home equity products
First off, let’s talk a little history. Third Federal isn’t a newcomer like Better Mortgage or Rocket Mortgage.
They’ve been around since 1938, which if you’re counting, is nearly a century. That gives them some credibility, and if you ask, they’ll tell you that staying power can be attributed to conservative lending.
In other words, avoiding fads and questionable product choices like subprime or Alt-A in exchange for lasting relationships and more stability.
The company was started by Ben S. and Gerome Stefanski in Cleveland, Ohio during the Great Depression, using $50,000 in capital provided by members of the Slavic Village neighborhood.
It began by serving struggling immigrant families from Poland and other Eastern Europe nations who had settled in the area.
Over time, the business grew and thrived, and today they do business in 25 states, and run a branch network in the states of Florida and Ohio.
Where Third Federal Mortgage Operates
As noted, they do business in 25 states and the District of Columbia, but not all products are offered in all states. So pay close attention.
You can get a purchase loan or refinance in the following states: OH, FL, KY, NC, VA, MD, NJ, PA, IN, IL, GA, MO, TN.
And you can get just a refinance in these states: CO, NH, CA, NY, OR, MA, CT, DC, WA.
Additionally, home equity loans are available in: OH, FL, KY, CA, PA, NJ, VA and NC.
Lastly, bridge loans are available in all purchase markets mentioned above if you need to buy before you sell your existing home.
What Home Loan Programs Does Third Federal Offer?
You can view real rates and apply for a mortgage online
Or generate a free, true pre-approval that can even be locked in
They offer lots of interesting conventional loan products like Smart Rate ARMs and jumbo loans
But do not offer government loans or finance second homes or investment properties
While they don’t sound like a disruptor in the mortgage space, they do offer a similar digital experience along with interesting loan products.
If you want to apply for a home loan or equity line of credit, you can start the process online in minutes.
You can generate a pre-approval letter and even lock in your rate before you find a property via their prelock option.
The company specializes in conventional loans, meaning non-government stuff backed by Fannie Mae and Freddie Mac, along with jumbo loans on owner-occupied properties.
You won’t find FHA loans, VA loans, or USDA loans here, or mortgages for second homes and investment properties, but they do everything else, including home equity lines of credit.
They offer both fixed-rate mortgages and adjustable-rate mortgages, including lesser-known options like the 3/1 ARM and 10-year fixed mortgage.
Interestingly, their ARMs are tied to the Prime Rate, as opposed to say the LIBOR or some other index. Once the fixed period ends, they reset to Prime minus 1%.
They have two caps, including a periodic cap of 2%, meaning your rate could increase (or decrease) by up to two percentage points at the first adjustment.
And a lifetime cap of 6%, meaning the most the rate could increase during the life of the loan is six percentage points.
Their ARMs come in three different terms, including a standard 30-year term, 15-year term, and 10-year loan term. That’s pretty unique.
Additionally, they offer a discount on jumbo loans as opposed to charging more for them, which is typically the norm.
If you’re happy with your first mortgage, they also offer home equity lines of credit with no teaser or introductory rate.
They say it’s “always Prime minus 1.01%,” a rate they believe is 20% lower than most other lenders.
It comes with no closing costs and no prepayment penalty, and costs just $65 per year after being free the first year.
They also offer construction-to-perm loans and an end-loan mortgage product.
Third Federal Mortgage Rates
They openly advertise all their mortgage rates online
Rates offered with or without most closing costs (Low Cost option)
Their Smart Rate feature allows you to relock your rate whenever you want
Appear to be competitive with other lenders but always shop around
One thing I like about this bank is its transparency. They let you know about everything. And it’s no different when it comes to their mortgage rates.
They are advertised right on their website for all to see, without the need to apply or create an account.
You can see current rates for the 30-year fixed, 15-year fixed, 10-year fixed, 5/1 ARM, and 3/1 ARM.
Low Cost Mortgage Option – Pay Just $295 in Closing Costs!
Additionally, they show the “Low Cost” version of many of their loan programs, which requires just $295 in closing costs ($595 in NY).
They pay for everything other than pre-paid items like interest, taxes, and insurance, along with transfer taxes if applicable.
You aren’t on the hook for an application fee, underwriting fee, processing fee, appraisal, credit report, title insurance, recording, notary, and so on.
Nor do you need to pay a loan origination fee or mortgage points, unless you wish to pay discount points to obtain a lower-than-market rate.
These “Low Cost” options come with slightly higher interest rates to offset the lack of closing costs, and could be a good choice for someone who doesn’t plan to keep their mortgage long.
Their rates appear to be pretty competitive, and with low fees and no commissions paid to their loan officers, the APRs are similarly low.
One nice benefit is that they don’t charge extra for cash out refinances, so if you want to tap some equity, your interest rate won’t be higher as a result.
As always, compare their rates to other banks, credit unions, mortgage brokers, and so on to ensure you’re getting the best deal for your particular loan scenario.
Third Federal Smart Rate ARMs Feature Rate Relock Feature
Their ARMs feature a free Rate Relock option that allows you to fix your rate at any time
If your 3/1 ARM or 5/1 ARM is about to reset higher, you can relock for just $295
Fixed rate is then extended for three or five years, respectively
You can take advantage of this option as many times as you’d like during the loan term
They also offer a “Rate Relock” feature that allow you to relock your rate at any time if you take out one of their so-called “Smart Rate” adjustable-rate mortgages.
The process is apparently super simple and quick, and does not require an application or appraisal. However, I do believe they check your credit.
You just request the Rate Relock, pay a low $295 fee ($595 in NY), and your new interest rate will be relocked at current rates.
In the month following your request, the new interest rate will go into effect.
That way you don’t have to worry about your ARM exploding higher after the initial fixed period comes to an end.
It could be super beneficial if rates remain low or go down, as you could lower the interest rate on your mortgage without refinancing.
The company says with Rate Relock, “you’ll never have to refinance again!”
While true or not, it’s a neat little feature, just make sure the convenience isn’t built into a higher mortgage rate versus the competition.
Why Use Third Federal to Get a Mortgage?
They offer unique home loan programs you can’t find elsewhere
Purchase loans come with Lowest Rate Guarantee and On-Time Closing Guarantee
Standard rate lock period is 60 days as opposed to just 30
They service all the loans they close instead of selling them off to other companies
Assuming you live in a state where they do business and your property qualifies, Third Federal offers some really interesting loan options like ARMs with various loan terms.
Additionally, their mortgage rates appear to be pretty competitive, especially with the lack of most closing costs on their Low Cost option.
If you have a jumbo loan, your rate could be even lower, and all mortgages come with a standard 60-day rate lock as opposed to just 30 days.
Those purchasing a home with a Third Federal mortgage can take advantage of both their Lowest Rate Guarantee and On-Time Closing Guarantee.
And you can take out a mortgage up to 85% LTV without paying private mortgage insurance.
Also, they service 100% of the loans they originate, as opposed to selling them off to some unknown loan servicer you might not like.
Ultimately, they are probably a good choice for someone interested in taking out an ARM vs. a fixed mortgage.
You get added flexibility on the ARM with the Rate Relock feature, which could be really beneficial if mortgage rates continue to stay flat and/or low.
However, as mentioned, they do have some limitations when it comes to borrowing on all property types, and their fixed mortgages might not be as competitive as other banks.
Mortgage Passport Review
Recently, Third Federal launched a new online lending division known as “Mortgage Passport.”
They refer to the company as the coming together of high tech and human touch. In other words, same great service you’d get from a bank, but with the latest technology.
They pride themselves on their low rates, easy-to-use digital loan application, and their “smart” non-commissioned loan officers.
Mortgage Passport appears to offer refinances in the following states: CA, CO, CT, DC, GA, IL, IN, KY, MA, MD, MO, NC, NH, NJ, NY, OR, PA, TN, VA, and WA.
The Mortgage Passport division seems to be focused on refinances, and specifically cash out refinances that allow you to tap equity.
And they aren’t shy about showing off their mortgage rates, with daily rates prominently displayed on their website.
You can easily compare standard closing cost mortgages, no lender fee mortgages, and no closing cost mortgages side-by-side without having to log in or provide personal information.
From what I saw, their mortgage rates were very competitive, even the no-fee options. Note that no cost loans are not available in NY.
To get started, simply head to their website, click on “Apply Online” and you’ll be off to the races.
From there, a loan officer will reach out to review your application and collect a deposit (likely an appraisal fee) so your loan can be processed and underwritten.
While there aren’t a ton of Mortgage Passport reviews just yet, they do have a 4.9-star rating out of 5 on Bankrate from 8 reviews, with a 100% recommend rating.
And on their own website, a 4.8-rating and 100% recommend rating from five reviews. So it appears the feedback thus far is very positive.
If you’re looking for a digital mortgage process and a low mortgage rate on a refinance (with a variety of different closing cost options), Mortgage Passport could be a good choice
The average 30-year fixed-rate mortgage increased slightly to 2.80% for the week ending on July 29, halting a streak of weekly declines, according to mortgage rates data released Thursday by Freddie Mac‘s PMMS.
According to Sam Khater, chief economist at Freddie Mac, while there is some uncertainty about the Covid-19 Delta variant, the housing market is still enjoying record low rates.
“As the economy works to get back to its pre-pandemic self, and the fight against Covid-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time,” said Khater.
The 15-year fixed-rate mortgage decreased two basis points from last week, averaging 2.10% for the week ending on July 29.
Mortgage rates have rarely exceeded 3% this year, despite predictions that 2021 would bring a return to higher levels. Economists and investors are closely monitoring any indication from the Federal Reserve that it may begin tapering of mortgage backed securities and bond purchases.
How fine-tuning MSR valuations can help lenders improve decision-making
As rates change and the market shifts to a more purchase-driven origination environment, lenders need to carefully monitor margins and profitability. If we’ve learned anything in the past year, it’s that operational flexibility and accurate servicing valuation are key to lending profitability.
Presented by: Black Knight
So far, the Federal Reserve has not indicated it will change its accommodative stance until substantial further progress is made in the labor market.
At a press conference following the Federal Open Market Committee meeting this week, Federal Reserve Chairman Jerome Powell said there was some “ground to cover” in the labor market before tapering its $120 billion in monthly asset purchases.
Since March 2020, the Fed’s asset purchases have been split between $80 billion of U.S. Treasury bonds and $40 billion of mortgage backed securities each month, which keeps the cost of long-term borrowing low. A year ago at this time, the 30-year fixed-rate mortgage averaged 2.99%.
Despite the low cost of borrowing, the housing market is showing signs of sluggishness.
Ten-year Treasury yields decreased sharply last week, according to a report from the Mortgage Bankers Association. Investors are increasingly concerned about the rise in Delta variant cases, and what its economic impact will be, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
That led to the 30-year fixed mortgage rate declining to its lowest level since February, the trade association reported. 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.01% from 3.11% for the week ending in July 23.
The 15-year mortgage rate also fell to a record low last seen in 1990, declining 10 basis points to 2.36. Those ultra-low rates naturally resulted in a sharp uptick in refinancing activity.
“With over 95% of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan,” Kan said Wednesday.
But the low rates made little difference in the purchase market, which is still grappling with record home prices. The purchase index decreased to for the second week in a row to its lowest level since May 2020, continuing its third month of year-over-year declines.
The purchase index was down 1% from the week prior, and down 18% compared with last year.
The Federal Housing Finance Agency also reported that May home prices were 18% higher than a year ago. The Mountain Region, which includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming saw the sharpest yearly increases. Home prices in those states grew 23.2%, per the FHFA report.
“That continues a seven-month trend of unprecedented home-price growth,” Kan said. “Potential buyers continue to be put off by extremely high home prices and increased competition.”