Before the digital revolution, the mortgage process was a face to face business. Customers had to sit down with a loan officer and handwrite mortgage applications before entering an extensive consultation regarding yet even more paperwork.
In the last 20 years, however, more lenders have transitioned to an online mortgage loan process. The result?
Today’s mortgage experience is entirely online, including the loan application process. All loan types, including first-time homebuyers and refinancing–all see a loan officer only at closing.
Better.com Mortgage is one online lender that prides itself on customer’s online experience with the entire online process.
Who Owns Better.com Mortgage?
When looking at boutique mortgage companies, it’s essential to do some research to determine their financial viability.
Many of the best mortgage companies that previously did brisk business crumbled in the aftermath of the 2008 mortgage crisis. So, you would do well to find out who is writing the checks for your chosen mortgage company.
In this case, Better.com mortgage is listed as privately owned, which may concern some. That said, some highly prominent financial institutions, such as Goldman Sachs, back Better.com, and the company has done a fabulous job cornering the market on low rates and rapid closing with a personal touch.
They have been awarded the following NMLS ID#330511 (enabling you to verify their legal lending ability verification) and can be found at 120 Broadway, 5th Floor, New York, NY 10271.
Better.com mortgage operates almost entirely online, including the loan estimate and online application process.
This level of automation means customers gain honest rate quotes, apply, gain a pre-approval, and send verifying documents through an online portal, from which an underwriter will review it quickly.
ut Better.com also provides you with direct access to a loan officer as you go through the application process, delivering that personal touch in navigating your mortgage.
Interestingly, Better.com states that their loan officers don’t make a commission for closed sales. This unorthodox approach is quite different from most mortgage lenders who frequently roll loan officer origination fees into closing costs, which incentivize closing more than service.
Loan officers at Better.com are strictly there for support, meaning you’ll have someone dedicated more to helping customers than ensuring loan closure.
To get started, it is as easy as visiting the Better.com website and choosing which mortgage options suit your needs:
Loan options with Better.com Mortgage
Because of the streamlined and primarily digital submission system as a direct lender, Better.com offers a limited number of mortgage products including conventional loans.
There are no options for Home Equity Lines of Credit (HELOC). Because of COVID, Better.com has temporarily suspended FHA home loans, which may really impact first time home buyers.
Nor does the company provide the standard options for lower down-payment mortgages through government programs like the Veterans Administration (VA) or the U.S. Department of Agriculture (USDA).
Better.com does, however, offer lower down payment loans through its own fixed-rate program, and the company advertises that it works with borrowers who don’t have the standard 20 percent down payment.
Oftentimes they offer lower rates equalling lower monthly payments. According to its promotional materials, 72% of Better.com borrowers put less than 20 percent down on their home mortgages.
Better.com offers standard fixed-rate loans and refinance mortgages, with terms of 15, 20, or 30 years.
These mortgage options have a fixed interest rate for the life of the loan and conform to Fannie Mae and Freddie Mac standards.
What’s more, Better.com collects no lender fees at closing.
Better.com advertises that they guarantee to be at least $1,000 lower on closing costs than any other lender, or they will give you $1,000.
It’s a pretty bold statement considering most lenders make their money and commissions through closing costs and fees.
Adjustable-Rate Mortgage (ARM)
These mortgage products allow borrowers to access higher-value homes and qualify for bigger loans at a lower initial interest rate than conventional fixed-rate products.
ARMs fix the interest rate for an initial period, after which it can fluctuate with the prevailing rate.
Jumbo loans are more substantial than average conventional purchase or refinance loans and often have more stringent qualifications than standard fixed-rate mortgages.
Better.com is unique in that it offers Jumbo loan programs with 10 percent down payments, which ordinarily would incur a penalty of monthly mortgage insurance.
Better.com offers these products without mortgage insurance for qualified borrowers.
Another lower-down-payment product for which borrowers might qualify is an FHA loan, which is guaranteed by the Federal Housing Administration.
FHA loans are among the few federally backed programs that Better.com offers.
Further, the company actively advertises its willingness to work with customers using alternative income and lower down payments.
However, Better.com has temporarily suspended all FHA loans during the COVID pandemic.
Qualification Process with Better.com
Better.com qualifies its customers similarly to most mortgage companies, with a few significant differences that make them a little unique.
Rather than filling out an application, Better.com offers an online questionnaire that walks you step-by-step through the submission process.
The questionnaire is dynamic. It changes and refines itself based on the answers you provide, thus tailoring it to your specific situation.
SOFT CREDIT PULL
They will do a soft pull on your credit report, leaving your credit score intact, but giving them an idea of what type of borrower you may be.
Better.com requires a FICO credit score of at least 620 to qualify for any loan type.
PREQUALIFICATION LOAN OPTIONS
A few minutes after starting the process, you will have your first prequalification, with options for your loan. You can even lock in your rate without incurring an additional fee, which is unusual for a major mortgage lender.
CONNECT WITH A LOAN OFFICER
During the submission process, Better.com will connect you with a loan officer. This loan officer isn’t there to make a commission off of you.
Instead, the purpose is to give you a point of contact with your lender to help guide you through the verification process.
If you have alternative income from unusual payment methods, like gig jobs, the loan officer can take that into account during qualification.
Better.com also boasts that it can close a loan within 21 days, which is quite an achievement. Its sleek online approach, combined with the personal assistance of a loan officer, makes this claim very believable.
Pros and Cons
- No Commissions: Most lenders make their money off closing costs and commissions. Better.com offers you $1,000 if their closing costs aren’t $1,000 less than their competitors.
- Online but Personal:com provides an integrated approach that welds technological advancement with excellent customer service. There are no annoying, constant phone calls to worry about.
- 10-percent-down Jumbo Loans with No Mortgage Insurance: Most other lenders would require expensive monthly mortgage insurance.
- No Home Equity Line of Credit: HELOCs are excellent programs for home-renovation products. They’re flexible and useful for unexpected construction expenses.
Is Better.com Best for You?
Better.com has integrated human interaction with a highly technological process to supply its customers with versatility and personal customer service.
Unfortunately, however, Better.com doesn’t offer some of the mortgage loan products that customers have come to expect from a full-service boutique mortgage lender, including home equity loans, FHA, VA loans, or USDA loans.
So depending on your mortgage needs, Better.com may or may not be the best option for you.