Best Online Mortgage Lenders 2023
There are more online lenders today than ever before. As more people get comfortable doing business digitally (that’s a fancy way of saying from your couch), they want the convenience and quickness of online mortgage lenders.
This emphasis on consumer-friendly technology has opened the doors to a growing number of fintech startups that are investing their capital in digital platforms rather than brick-and-mortar locations. The result is more lenders competing for your business, which helps drive down the cost of lending while optimizing performance. Because borrowers have different needs, financial profiles and loan goals, Forbes Advisor compiled a list of online lenders that excel in various areas, so there’s something for everyone here.
The Best Online Mortgage Lenders 2023
We reviewed 12 mortgage lenders that do business both online and in person throughout the United States. The lenders we reviewed represent some of the largest mortgage lenders by volume, which include banks, credit unions and online lenders.
Our scoring methodology included capturing 10 data points, which covered interest rates, lender fees, loan types, discounts, accessibility and borrower requirements.
The best lenders received a score of four stars or better and represented outstanding performance or services in one or more areas.
The following is the weighting assigned to each category:
- Loan costs: 30%
- Speed: 20%
- Credit requirements: 20%
- Loan types offered: 20%
- Access and availability: 10%
Specific characteristics taken into consideration within each category include annual percentage rate (APR), average interest rate, origination fees, minimum credit score requirements, discounts and customer service availability.
We also offered bonus points up to 5% of the score when a lender considers alternative credit data.
What Is An Online Mortgage?
Lenders who operate solely online, and those that focus primarily on mortgages, offer a different experience for borrowers than traditional lenders, like banks, do. Online lenders typically don’t offer services like checking or savings accounts, but because they specialize in loans, they often have speedier approval times and application processes. Because they don’t have branches, they may be able to pass some of that savings on overhead costs on to customers.
That can be a drawback for some customers who may prefer an in-person experience. And in some cases, traditional banks offer discounts for things like mortgages to customers who already have accounts.
How To Choose An Online Mortgage Lender
You should choose an online mortgage lender the same way you’d pick a traditional lender: by shopping around. Studies have shown that borrowers who explore different options before deciding to work with a particular lender get better rates.
You can start with our list of recommendations, above. Be sure to take into account not just the interest rate or APR offered by each lender, but also closing costs and other fees. Make sure that you’re comfortable with the online approach: if you have questions during the application process, does the lender have reliable customer service?
How To Apply For A Mortgage Online
Follow these steps to apply for a mortgage:
- Check your credit. Before you even start to research lenders, you should take some time to check your credit score. Be sure everything is accurate, and take the time you need to make your profile as strong as it can be: pay down any debt you can, avoid accessing new forms of credit and so on.
- Estimate how much house you can afford. You might want to use a calculator like the one here. You may also want to research the different types of mortgages.
- Gather all the paperwork you need. You’ll likely need your tax returns, recent pay stubs or other types of income verification, lists of assets and liabilities, bank statements and any other documents that describe your financial situation.
- Apply for the mortgage. Now it’s time to submit your mortgage application.
Pros And Cons Of Online Mortgage Lenders
There are some big advantages to working with online mortgage lenders, which are also sometimes known as “non-bank” lenders. These lenders tend to specialize in one type of lending—either mortgages or personal loans, for example. Because online-only lenders don’t have physical locations, they can often pass the overhead cost savings on to customers.
But there are also some disadvantages to working with an online lender. Notably, because they only operate online, you won’t be able to visit a branch to get help with the application. Also, because of their focus on home loans, online mortgage lenders generally won’t be able to provide relationship discounts like traditional banks and lenders could.