Better, founded in 2014, is a major player in the online direct mortgage lending scene. The startup’s mission is to disrupt the mortgage process by “using technology to make it faster and more efficient, and humans to help make it friendly and enjoyable.” This means a better and quicker online loan experience for borrowers.
Better doesn’t charge origination fees, though some of its mortgage professionals can earn commissions. The company also originates loans in all 50 states, plus Washington, D.C. Better offers fixed-rate and adjustable-rate conventional and jumbo loans, as well as FHA and VA loans. Customers interested in USDA loans won’t find this option offered at Better, though. As far as equity-based loans go, Better does provide options like home equity loans, HELOCs and cash-out refinances.
Today's Rates
| Product | Today | Last Week | Change |
|---|---|---|---|
| 30 year fixed | 7.36% | 7.31% | +0.05 |
| 15 year fixed | 6.58% | 6.53% | +0.05 |
| 5/1 ARM | 5.88% | 5.88% | 0.00 |
| 30 yr fixed mtg refi | 6.75% | 6.89% | -0.14 |
| 15 yr fixed mtg refi | 6.12% | 6.00% | +0.12 |
| 7/1 ARM refi | 7.74% | 6.06% | +1.68 |
| 15 yr jumbo fixed mtg refi | 3.06% | 3.10% | -0.04 |
National Mortgage Rates
Regions Served by Better
What Kind of Mortgage Can I Get With Better?
Better offers conventional and jumbo fixed-rate loans and adjustable-rate loans. Aside from FHA loans, you won’t find specialty loan types, like VA or USDA, at this online-based company.
Fixed-rate mortgage: Better offers 15-year, 20-year and 30-year fixed-rate mortgages. With this type of loan, your interest rate stays the same for the life of the loan. That means you can expect the same principal and interest payment each month. This option is usually what homebuyers choose if they plan to live in the home for the long haul. Better offers fixed-rate loans for single-family, condos, townhome, planned unit development (PUD) and manufactured homes.
Adjustable-rate mortgage: The interest rate on an adjustable-rate mortgage will change after an initial fixed period. Better offers 5/1, 7/1 and 10/1 ARMs. The first number indicates how many years your rate is fixed, and the 1 indicates how often your rate will increase or decrease, in this case once a year. Homebuyers who plan to flip a house or resell after a few years of occupying sometimes opt for an ARM because of the lower initial interest rates.
Jumbo loan: Conventional loans generally have a purchase limit that’s determined by the county the home is in. For most counties, this limit is $766,550, but in some others, it's significantly higher at $1,149,825. So if you’re planning on buying an expensive home above the aforementioned conforming limits, you’ll apply for what’s called a jumbo loan. Better offers jumbo fixed-rate and ARM loans.
FHA loan: Offered in conjunction with the Federal Housing Administration (FHA), FHA loans will allow you to escape the need for a large down payment. Besides its low 3% minimum down payment, even home buyers with a checkered credit past can get approved. You can pick between a 30- or 15-year fixed-rate term for this loan.
VA loan: VA loans are available to veterans, active-duty military and eligible surviving spouses of military members. They offer perks like 0% down payments, better interest rates, closing cost caps and more. Borrowers can choose between either 30-year of 15-year terms.
Refinance: Better offers refinances to homeowners looking to secure a new loan. You won’t have to pay origination fees on the loan but you will have to pay closing costs.
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What Can You Do Online With Better?
As a startup company, Better was built and optimized for online use. All its services are accomplished remotely through its digital platform. While you have the option to call a loan consultant, you won’t need to travel to an actual location to complete your mortgage paperwork.
To start, you can self-educate with Better's website to learn more about the home-buying process. You can learn more about how your credit score affects your mortgage, how to improve your debt-to-income ratio and a number of other mortgage topics. There’s a guide to what a loan estimate contains as well as more information if you’re interested in refinancing.
If you want to get started right away, the entire mortgage application process can be completed online. From pre-approval to loan application, your whole mortgage journey can be accomplished from behind your keyboard. You’ll need certain documents on hand, but if you have the required information, you won’t have to speak to a human being unless you want.
Once you apply, you’ll have an online account where you can track your application process every step of the way. You can access your account on mobile as well. The site is mobile-friendly and doesn’t require a separate app to access.
Would You Qualify for a Better Mortgage?
The first thing to check is your credit score. Better offers loans to customers with a 620 or above for conventional loans or a 580 and above for FHA loans. While these marks act as the baseline, you’ll receive better mortgage rates with a higher score. Most lenders recommend that you improve your credit score as much as possible before applying ffor a mortgage. That way, you can lock in better rates and save money over the life of your loan.
| Source: Experian | |
| FICO Credit Score Ranges | |
| Score Range | Category |
| 300 - 579 | Very Poor |
| 580 - 669 | Fair |
| 670 - 739 | Good |
| 740 - 799 | Very Good |
| 800 - 850 | Exceptional |
After credit score, lenders usually consider your employment history and income. Bonuses, commissions and overtime can complicate what Better considers your verified income. Self-employment can complicate things as well. Your financial status will be scrutinized because the lender needs to verify that you can support mortgage payments for the entire length of the loan (which is usually 15 to 30 years).
Your savings are another factor lenders take into account. This is mainly for your down payment, which is usually 20% of the home price. Better doesn’t give credit for funds that come from ineligible sources, such as cash deposits or credit card advances. If you plan to use assets from a business account, Better considers it on a case-by-case basis.
Another consideration is your debt-to-income ratio. This is how much monthly debt you pay (from student loans, car payments, credit card debt and more) compared to your monthly income. Most lenders prefer 30% or below.
What’s the Process for Getting a Mortgage With Better?
You start by choosing one of four options: refinance, basic pre-approval, verified pre-approval or mortgage application. The estimated time it takes to complete the application for each option is displayed, which is an element of transparency helpful for borrowers.
If you’re pursuing a mortgage pre-approval, you begin the application by answering questions about how far along in the home buying process you are. After that, you create an account, provide your address and Social Security number and continue with a soft credit check. Better advertises that it takes three minutes for basic approval. You receive a basic approval letter that helps you get a general sense of what you can afford. This is enough for some realtors who want to see how much home you can afford, but if you’re in a competitive market and need something more concrete, you can apply for a verified pre-approval letter.
This takes longer and requires more work on your part. You need to upload financial documents such as tax returns, bank statements, W-2s and paystubs for Better to review. It generally takes Better 24 hours or less to review and generate a pre-approval letter. These services are free, and you’re not obligated to get a loan from Better after applying. Once you make it through the first steps, you’ll be assigned a loan consultant who you can contact by phone, email or chat weekdays from 9 a.m. to 9 p.m. ET.
During the process, you’ll select your preferred loan type and rate. If you want to lock your rate, you have to complete the remainder of the application within the time frame assigned to you by Better, and then your interest rate is guaranteed. One thing to keep in mind is that Better may offer you a lower rate in the case that rates drop from when you locked yours in. This is called a float-down option.
Better states that, on average, it closes on loans three to six weeks after you lock the rate. When you reach your closing date, you’ll pay a number of fees and charges depend on the location of the property as well as sign a variety of documents finalizing the contract. Some states charge mortgage tax or county fees, so it will depend on your situation. You also have to consider title insurance and homeowners insurance as additional costs to factor in. Your loan consultant at Better should be able to answer any questions you have about the closing process. It’s the final step before you get the keys to your new home.
How Better Stacks Up
As it stands, there are very few limitations to choosing Better as your lender. For instance, Better originates loans in all 50 states, plus D.C. It also offers all major loan types, aside from USDA loans. Additionally, its online experience is quite strong and features everything you'd expect as a modern day, web-based customer, all while providing no loan origination fees.
On the flip side, while the company is optimized for an online experience, those seeking an in-person one may not be as happy about its offerings. You do have the option to speak to a loan consultant via phone, but that’s not always an equal substitute for those seeking a more human experience. Note that some of Better's loan officers can receive commissions as well.
If you're looking for a USDA loan, Better also won't be an option. This means if you’re an individual buying rural property, you may be better off seeking a lender elsewhere. The same issue applies if you have a credit score below 620 and are applying for a conventional loan or have a credit score below 580 and are applying for an FHA loan.
Lastly, if you enjoy Better's service, it won’t last the life of your loan. After about 30 days, Better transfers your loan to a permanent servicer. You’ll have to set up automatic payments with whatever company your loan is transferred to. Better processes your application, underwrites and funds your loans and then passes you on to a different company. This practice is common among brokers and lenders but may be a drawback if you chose Better because of its online experience. You’ll only work with the company until after closing.
Tips for Applying for a Mortgage
- Your credit score is a major determining factor in what kind of interest rate and loan offers you'll receive when you're on the search for a mortgage. Therefore it's extremely important that you take a look at your credit report prior to applying so you don't get surprised.
- A financial advisor can help you choose a mortgage that fits into your financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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