The Yahoo view: Better mortgage combines several home-buying services, including rapid loan approval, insurance, real estate, settlement services, and more, into a consolidated digital experience. It’s a lender worth considering.
Better mortgage is a solid contender in the digital mortgage space. With a a focus on speedy loan commitments and closings, it may be best suited for borrowers who live in competitive real estate markets.
First-time home buyers with limited savings might seek a lender that focuses more on borrowers with low down payments. Better seems to be appealing to home buyers with some cash saved or home equity to put into the deal.
Better recently expanded its home loan offerings to include VA Interest Rate Reduction Refinance Loans (IRRRL), a key refi benefit for military-connected borrowers. IRRRLs have streamlined processing and reduced funding fees.
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Learn more: The best VA loan lenders
Key benefits
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“One Day Mortgage” promises a loan commitment within 24 hours of submitting paperwork and a rate lock.
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Claims to close loans “17 days faster than the industry average.”
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Offers loans, insurance, real estate, settlement services, and more into a consolidated digital experience.
Need to know
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Published interest rates are shown for borrowers with a 20% down payment, who pay closing costs with cash, have a debt-to-income ratio (DTI) below 35%, and have a credit score of 760 or higher.
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A pitch on the website says, “No unnecessary fees.” There is no disclaimer explaining what the “necessary” fees are. We find that kind of language to be meaningless and, frankly, a little irritating.
Visit Better’s website to get started.
Better mortgage offers the following types of home loans:
Better does not offer the following types of home loans:
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USDA loans
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Adjustable-rate home loans
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Interest-only mortgages
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Lot loans
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Construction loans
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Guest house loans
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Second home loans
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Nonqualified mortgages
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Energy efficient mortgages
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Renovation loans
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1% down payment mortgages
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Buydown loans
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Bridge loans
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Piggy-back loans
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ITIN mortgages
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Medical professional loans
Learn more: What is a manufactured home, and how do you finance it?
Compared to other lenders, Better is pretty low-key in appealing to first-time borrowers.
They don’t promote low-down-payment programs, however, our team found a subtle mention of a conventional 3% down mortgage. That’s a go-to solution for first-timers. Better does offer VA-backed loans, which are famous for requiring no down payment, but that product is simply listed among its other loan options.
Instead, Better focuses on its speed in issuing a loan commitment and a digital loan process.
Dig deeper: Yahooâs list of best lenders for first-time home buyers
For homeowners who aren’t ready to move but would like to access some of the equity in their home, Better offers three options:
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Cash-out refinance
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Home equity line of credit
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Home equity loans
In the current high-rate environment, anyone who’s financed a house in the last 24 years or so probably wouldn’t be looking to refinance a mortgage at a higher rate. (The last time mortgage rates were edging higher than 8% was 2000.) So, a cash-out refinance isn’t likely a great option.
But a HELOC is. You draw the money you need from a line of credit, so you’re only paying interest on the balance you owe. You donât have to replace your entire first mortgage with a new one as you would with a cash-out refi. And Better allows you to draw up to $500,000, or 90% of your home’s value.
Yahoo Finance tip: One downside of the Better HELOC is that you must draw at least 75% of your credit limit or a minimum of $50,000, whichever is greater. That greatly degrades the flexibility of only paying interest on the balance you owe. For example, what if you have $50,000 worth of credit but only want to draw $10,000 initially? With Better’s HELOC, you’re out of luck.
Better’s lump-sum equity option, the home equity loan, shows rates for terms ranging from 15 to 30 years. HELs often have shorter terms than that. You may want to ask a loan rep to confirm available options.
Better mortgage HELOC and home equity loan fees
In a drill-down disclaimer, Better mortgage provides a list of possible HELOC fees:
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Discount points: 0% to 5% of the loan amount
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Appraisal fee: $0 to $1,380 (if required)
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Credit report fee: $68.50 to $137
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Flood determination: $5
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Owner & encumbrance report: $0 to $115
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Settlement fee: $0 to $475
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Deed preparation: $55 to $110 (if required)
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Other title fees: $0 to $3,000 (only on first-lien HELOCs)
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Transfer taxes: 0% to 2% of the loan amount (only in certain states)
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Recording fee: $100 to $300
As for home equity loans, Better doesn’t provide specific fee information.
Dig deeper: HELOC vs. home equity loan â How to choose
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Sample home loan interest rates are easy to find for a purchase, refinance, or home equity product. Unfortunately, the fine print reveals that all sample rates are reduced with two discount points or more. Displayed rates are also for borrowers with a 760 or higher FICO score and a 20% down payment.
Tweaking those rates to be a little closer to your situation requires clicking the “See personalized rates” button and answering some questions. However, you’ll have to provide an email address and sign into an account to get your answer. We stopped there.
Read more: How to get the lowest mortgage rate possible
Yahoo Finance uses 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications to score mortgage lenders on issued mortgage rates and total loan costs. We score each lender on a scale of 1 (lowest) to 5 (highest).
For example, regarding mortgage rates, a lender with a lower score charged a higher-than-median mortgage interest rate for loans issued in 2023. A higher score would indicate that a lender granted lower-than-median home loan interest rates to borrowers in 2023.
With total home loan costs, a lower score would indicate that a lender charged higher-than-median total home loan costs in 2023. A high rating would mean that a mortgage lender offered lower-than-median all-in home loan costs in 2023.
What this means: Better mortgage offered a much-lower-than-median mortgage rate of 6.125% and a lower-than-median total loan cost of $4,963 to borrowers in 2023.
Better promotes a three-minute preapproval. You jump in with a button that says “Get started,” “Start my approval,” or something similar, depending which page youâre on. You may also see a call-to-action pop up on the bottom of your screen.
No doubt, you are encouraged to apply.
When you enter the home-buyer application workflow, you’ll be greeted with a “Hi, future homeowner!” Before you click through, you’re told the process won’t impact your credit score. You’ll also get details on the One Day Mortgage eligibility, how much home you can afford, and your loan officer’s contact information.
The Better web loan application experience is uncluttered, fast, and inviting.
Don’t be surprised if you stumble upon some AI in your application process. It’s Betsy. A “voice-based loan assistant” being deployed by Better. In a demonstration of how Betsy works, Betsy sounds pretty natural, though there is still a hint of those automated-response voices where you have to scream “representative!” to get to an actual human.
Better’s goal is to provide faster service. Betsy can access loan application information and respond to questions with “great detail,” the company said in a release.
Learn more: What documents do you need for mortgage loan preapproval?
Better mortgage is rich with resources. Some of their tools are noted at the bottom of the home page. Under “Resources,” you’ll find eight calculators and links to home-buying and home-selling articles.
On the hamburger menu (the three small horizontal lines) at the top right of the homepage, you’ll find a “Learning” link within the “Buy” and “Refinance” drop-downs. That takes you to the first of many pages of articles, all sorted into five categories. Some also include embedded videos.
Many of the articles have datelines back to 2021; however, they also show when they were last updated. It appears Better is on top of its content refresh schedule.
A glossary is also available, weirdly placed as a link under the “Contact Us” menu at the bottom of the screen.
Learn more: Use Yahoo Finance’s free mortgage calculator
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Better combines lower rates with fair loan costs, according to Yahoo Finance’s analysis of HMDA data. That’s an excellent combination that puts Better Mortgage in rare territory.
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When you need to decode a mortgage term or calculate loan scenarios, Better has the resources to help. We give them our highest 5-star rating in our Online Features category.
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Because Better improves its advertised interest rates with two or more discount points, it earns only 2 stars for Mortgage Rate Transparency. You can buy points if you want, but baking them into sample rates can fuel unwarranted expectations.
Better and Rocket were digital mortgage innovators. Now, both are firmly established in the home loan industry. Rocket Mortgage offers a 1% down payment mortgage program that includes a 2% grant. Better doesn’t really promote first-time home buyer programs.
Instead, Better promotes quick loan commitments and fast closings.
Rocket Mortgage offers HELOCs but not home equity loans. Better Mortgage offers both.
Shopping for lenders is a matter of matching your needs to a lender’s offerings.
Better Mortgage vs. loanDepot
Better and loanDepot like to bundle real estate services for an enhanced borrower experience. Better offers insurance, title and closing services, and a real estate attorney matching service. Meanwhile, loanDepot focuses on offering real estate agent connections with a cash-back incentive.
Both Better and loanDepot earn Yahoo Finance’s highest rating in our Interest Rates category for offering low mortgage rates. However, according to our analysis of HMDA data, Better has lower overall loan costs than loanDepot.
Better mortgage was founded by CEO Vishal Garg. He holds the majority of shares through the Better Home & Finance Holding Company, and the New York-based company is traded on Nasdaq ($BETR).
Better says that borrowers can generally expect to close a loan within three to six weeks after setting a rate lock. The time spread is due to variables that include how quickly you submit your paperwork and third-party providers’ response times.
Better is considered a nonbank mortgage provider, meaning it has no customer deposits to draw on for lending capital. That’s not very unusual these days. Over two-thirds of home loans are made by nonbank lenders.
Methodology:
Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.
Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.
Advertisers or sponsorships do not influence ratings.
Editorial disclosure for mortgages:
The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender’s website for the most current information. This site doesn’t include all currently available offers.
This article was edited by Laura Grace Tarpley.
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