Founded in 2014, Better Mortgage provides consumers with an online platform that offers mortgage rates as well as access to homeowner’s insurance and leading real estate agents across the U.S. Borrowers can secure rate quotes, apply for loans, and sign required documents all online. Like the new breed of home loan providers, Better Mortgage doesn’t have a network of brick-and-mortar offices. The online process allows borrowers to be preapproved for a mortgage in a matter of minutes. The distinguishing feature of Better Mortgage is that it doesn’t charge commissions or fees for its various online services. Better Mortgage matches homebuyers with institutions buying the loan and the institution pays Better Mortgage for the service, not the consumer. So far, Better Mortgage says it has done $7.9 billion in home loans and $1 billion in insurance.
What Better Mortgage Offers
As of September 2020, Better Mortgage offers the following loans and services:
1. Mortgages that are processed completely online and promise no origination fees and pre-approval in as little as three minutes.
2. A refinance on an existing mortgage that is also fast and uncomplicated and can be accomplished in minutes. Consumers can also lock in an interest rate online whenever they want.
3. Access to a real estate agent in your local area who can assist with a home purchase. Better Mortgage promises to save clients $2,000 off their closing costs when they fund a mortgage or refinance with their company.
4. Title insurance that is a requirement for most mortgages and helps protect legal ownership of a property.
5. Homeowners insurance provided from a wide range of options and the ability to select and finalize the policy completely online.
Better Mortgage does provide conventional loans with a 3% down payment and 10% down payment on jumbo loans with no mortgage insurance. However, it’s important to note that Better Mortgage does not offer loans backed by the Federal Housing Administration (FHA), which are important to helping many first-time homebuyers obtain a mortgage. Better Mortgage also doesn’t offer home equity loans and lines of credit, veteran loans or home improvement loans. In this respect, the offerings from Better Mortgage are narrower than many competing home loan providers.
Better Mortgage does post mortgage rates to its website for both first time mortgages and refinance interest rates. However, current available interest rates are not readily accessible. To gain access to the posted rates, visitors to Better.com have to enter personal information and their email address. The interest rates are then e-mailed to customers. This differs from many other online mortgage companies that have the latest mortgage rates visible on their website for anyone to see. Better Mortgage offers mortgage products to homeowners with Airbnb earnings, as well as people who are self-employed or have outstanding student loan debt.
Fees and Terms
As mentioned, what distinguishes Better Mortgage is that they don’t charge fees or commissions. Many of the fees charged by other mortgage companies include origination fees, application fees, title searches and underwriting, which is when lenders charge clients to verify information on their loan application. With Better Mortgage, customers avoid all of these fees and charges, which can save a decent amount of money. Additionally, Better Mortgage promises to save its customers $2,000 on their mortgage or refinance closing costs. Taken together, people who get a new mortgage or refinance an existing mortgage with Better Mortgage save an average of $3,500, according to the company. That’s substantial and a big reason to choose the company.
How Better Mortgage Works
Like many private home loan providers, Better Mortgage operates exclusively online, and its application process involves six steps. These include:
1. Choosing whether you’re taking out a first-time mortgage or refinancing.
2. Providing basic information on yourself and the type of property you plan to buy.
3. Entering basic financial information and undergoing a “soft credit inquiry,” which has no impact on your credit score.
4. Choosing from several mortgage options provided based on the information entered.
5. Connecting with a dedicated online loan consultant who provides additional information and support with the loan application.
6. Receiving an official loan estimate that tells you how much money you qualify to borrow and the interest rate you can get on a mortgage or refinance.
While Better Mortgage can provide preapproval in as little as three minutes, it can take up to 21 days to close on a mortgage loan.
Basic information required to get a loan estimate includes:
- Name and contact information.
- Social Security number.
- Government-issued identification, such as a driver’s license.
- List of assets, such as bank statements and investment records.
- List of debts, such as credit card bills and student loans.
- Last two years W-2 statements.
- Recent paycheck stubs.
Borrower Requirements
Better Mortgage follows the conforming loan requirements for mortgages approved by government-sponsored enterprises Fannie Mae and Freddie Mac. For conventional loans, the requirements include good credit (typically a FICO score of 620 or higher) and a debt-to-income ratio of up to 55%. Depending on the loan, a minimum down payment of 3% is required. For larger jumbo mortgages, the minimum down payment is 10%.
Better Mortgage provides access to borrowers in 44 U.S. states. Consumers in every state except Nevada, Minnesota, Virginia, Vermont, New Hampshire and Massachusetts, as well as Washington D.C., can apply for a loan through Better.com.
Pros
- No fees or commissions charged.
- Rate quotes provided in seconds, preapproval in minutes and closing within 21 days.
- Promise to save customers up to $2,000 in closing costs.
Cons
- Does not offer loans backed by the FHA.
- Home equity loans and home equity lines of credit are not available.
- No brick-and-mortar locations.
What Others Are Saying
Better Mortgage has received positive reviews from a number of websites, including a perfect five-star rating from NerdWallet and a rating of 4.5 out of 5 from Bankrate. The Motley Fool has praised Better Mortgage as providing customers with a “seamless online experience.” There are also numerous online message boards and chat rooms where the mortgage loan provider is discussed by consumers who have used its services.
The Bottom Line
While Better Mortgage isn’t all things to all people, it’s lack of fees and commissions should appeal to people looking for a new mortgage or to refinance their existing mortgage. Saving as much as $3,500 on the mortgage application process is a considerable amount of money and should not be overlooked. While the company does not offer home equity loans or loans backed by the FHA that may eliminate some first-time homebuyers, the company does make the mortgage and refinance process affordable and efficient for a good number of consumers. For these reasons, Better Mortgage is worth considering.
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