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CNBC
31-07-2025
- Business
- CNBC
Online mortgages: Lenders, pros and cons
Homebuyers are increasingly choosing online mortgage lenders: Between 2013 and 2023, online lenders and other non-bank institutions more than doubled their share of the mortgage market, from 24% to 55%, surpassing traditional banks. E-lenders often have lower rates, faster closing times and a broader range of mortgage products than traditional banks. Online giant Rocket Mortgage is the largest direct home loan provider in the U.S., and consistently ranks near the top of J.D. Power's surveys on customer satisfaction with the mortgage process. That doesn't mean there aren't hiccups, though. Online lenders Ally Bank and Discover both wound down their home loan businesses in 2025. Is an online mortgage right for you? The answer isn't always cut and dry. Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.10–30 years620Conventional, FHA, VA, jumbo, HomeReady and Home Possible, Rocket ONE+ mortgage, refinancing, home equity loans6200% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo10, 15 or 30 years for fixed-term conventional loans, 30-year VA and FHA loans. Custom mortgages with fixed-rate terms from 8 to 29 years. While most banks have robust digital offerings, an online lender has no physical locations and doesn't offer a full range of financial products, according to FICO, like checking and savings accounts. An online mortgage lender specializes in mortgage and home equity products. Other online lenders might focus on student loans or debt consolidation. There's really no "right" answer between a bank and an online mortgage lender. The choice depends on your needs. Because they face fewer regulatory restrictions and are zeroed in on home loans, online lenders typically offer a broader range of mortgage products. That includes non-qualified mortgages like bank statement, interest-only and profit-and-loss loans. They're also more willing to take a risk on unconventional borrowers, like self-employed workers, foreign nationals, real estate investors and people who've experienced a bankruptcy or foreclosure. Home equity products are relationship-heavy (and need deposits to fund them), so traditional banks are generally better for HELOCs and home equity loans. Online lenders work to ensure their application processes are intuitive and that users can file online or over the phone. They're also more likely to let visitors check rates with a soft credit inquiry, which won't hurt their credit score. Because they don't need a full banking license, online lenders tend to have more flexible credit requirements. That can be a big plus if you have a non-traditional income stream or filed for bankruptcy. If you're in a hurry, online lenders tend to close faster than brick-and-mortar banks. Twenty percent faster, according to the Federal Mortgage has an average closing time of 22 days, nearly half the industry standard. And hybrid lender Rate has a "Same Day Mortgage" program that allows qualified borrowers can get approval within one business day and close in as few as 10 days. Apply online for personalized rates; fixed-rate and adjustable-rate mortgages are available. Conventional loans, FHA loans, VA loans, Jumbo loans, low-down-payment mortgages 10-, 15- and 30-year fixed-term conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years. 620 for conventional loans 0% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards. Read our review of Rocket Mortgage Apply online for rates. Conventional, FHA loan, VA loan, jumbo loan, physician loan, refinancing, HELOC, reverse mortgage 15-year and 30-year terms for fixed-rate mortgages; adjustable-rate mortgages have 5-year, 7-year or 10-year introductory periods 620 for conventional, 580 for FHA loans 3.5% with FHA loan Because they don't need overhead to maintain physical branches, online lenders have a reputation for lower rates. Depending on your credit score, though, that's not always the case. It's more common to see online lenders like SoFi and Better waive origination fees for existing customers or as a promotion. But many brick-and-mortar credit unions have fee waivers or discounts for existing customers and others, as well. Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included VA loan, FHA loan, conventional loan, fixed-rate loan, adjustable-rate loan, jumbo loan, HELOCS & Closed End Second Mortgages 10 – 30 years 600 3% Terms apply. Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included Conventional loan, FHA loan, Jumbo loan and adjustable-rate mortgage (ARM) 10–30 years 620 3.5% if moving forward with an FHA loan Terms apply. Regardless, always comparison shop with several digital and traditional lenders to find the best deal. Your mortgage is a huge financial undertaking, likely the biggest in your life. Only a traditional bank or credit union can walk you through the process face-to-face. And brick-and-mortar lenders have put a lot of resources into personalized service, whether that's a relationship discount or a coffee house in their two online lenders, Rocket Mortgage and AmeriSave, scored above average on J.D. Power's 2024 mortgage origination survey. That doesn't mean you can't get good customer care with a digital lender. Many have online chat features and agents available by phone evenings and weekends, when most banks are closed. But if you want a familiar face and all your affairs handled in one place, a bank or credit union comes out on top. Not all online mortgage lenders are created equal. Here are things to look for when considering an online mortgage. Reputation: Look at the lender's Better Business Bureau grade and see how it lands on J.D. Power's customer satisfaction surveys for mortgage origination and servicing. You may want to see how long it's been in business and what percentage of the mortgage market it has. Loan types: You can get a conventional mortgage from any lender, but if you want an FHA loan or a non-qualifying mortgage, you'll have to narrow your search. The same is true of bridge loans, construction loans and home equity loans. Rates and fees: While online lenders have a reputation for lower rates, it depends on the applicant. Look for one that posts its rates online and waives or discounts lender fees. If you prefer going through the homebuying process quickly and in the comfort of your living room, an online lender will usually offer more convenience and options than a brick-and-mortar institution. Sometimes (but not always) with lower rates, as well. But if you're more comfortable with physical branches and decades (if not centuries) of experience, a traditional bank, like Chase or Bank of America, is the better option. Most offer excellent online service, too, so you'll enjoy the best of both worlds. Online lenders will have more mortgage choices, but a traditional lender has a broader array of financial products, letting you keep your credit card, checking and savings accounts and investments all in one place. Online mortgage lenders are as reputable as other types of licensed lenders. However, if you prefer an in-person experience, you may want to work with a local lender that operates a physical branch. Always do your due diligence on any lender you choose to work with. Online borrowers have lower overhead costs, which might translate into lower rates, but this's not always the case. Apply with multiple lenders, both online and physical, to determine who has the best rate for you. Because they don't offer all the financial services of traditional banks, online lenders don't have to adhere to as many federal regulations as banks. So they can have more flexible credit requirements for approval. However, you might be quoted a higher interest rate or less favorable terms. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties and we pride ourselves on our journalistic standards and ethics.
CNBC
30-07-2025
- Business
- CNBC
When will mortgage rates drop below 6%?
Mortgage rates need to get below 6% to reinvigorate the frosty housing market, according to the National Association of Realtors (NAR). A 30-year fixed-rate mortgage at 6% would make the median-priced home affordable for about 5.5 million more households, NAR economists shared at the July 16 Real Estate Forecast Summit. "If rates were to hit that magic number, it's likely that about 10%, or 550,000, of those additional households would buy a home over the next 12 or 18 months," the organization said in a release. But NAR's experts don't see rates hitting that threshold until next year. And Fannie Mae has predicted they'll stay at 6% or higher at least until 2027. While home shoppers may be hoping interest rate cuts later this fall will do the trick, national housing expert Jonathan Miller doesn't think it would move the needle. "Even with various Wall Street firms forecasting one to three rate cuts in the back half of 2025, it seems unlikely that cuts will be able to drive mortgage rates lower, Miller, founder and CEO of appraisal firm Miller Samuel, told CNBC Select. "There's just a lot of concern and uncertainty about the economy and the impact of tariffs." Banks are hesitant to cut mortgage rates in times of economic uncertainty, Miller said, when funding loans carries more risk for them. Just because rates will likely remain elevated doesn't mean you should wait two years to take out a mortgage, says NAR deputy chief economist Jessica Lautz. It may even be cheaper now, she added. "It's actually a really good moment for homebuyers when rates are flat," Lautz said, "as opposed to seeing a surge in demand when rates drop and having to compete, and maybe even bid up an offer, for that listed home." The current rate environment is an important consideration when mortgage shopping, Lautz said, but "there are so many factors that go into what someone is paying every month for their mortgage." Some are more under your control, including your credit score, debt-to-income ratio and the size of your down payment. If you're waiting for a rate drop, take the next six months to pay down debt and build your savings. You'll not only improve your credit score, but you'll have more to contribute upfront. Lautz added that, while rates have been historically high, they've also remained relatively flat, which can be very helpful. "They've been in the mid-6% range, 6.7% or 6.8%, since January, she said. "It allows a buyer to plan out the homebuying process, to look at homes with a realtor and to lock in a rate and feel okay about it. Not like they're going to miss out." Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.10–30 years620Conventional, FHA, VA, jumbo, HomeReady and Home Possible, Rocket ONE+ mortgage, refinancing, home equity loans6200% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo10, 15 or 30 years for fixed-term conventional loans, 30-year VA and FHA loans. Custom mortgages with fixed-rate terms from 8 to 29 years. Housing experts don't expect a significant decline this year, or possibly even next. Freddie Mac has forecasted that mortgage rates will hit 6.4% at the close of 2025 and 6.0% at the end of 2026 Rates have been flat since January 2025, hovering below 7%. NAR economist Jessica Lautz says rate stability makes for a great environment for homebuying. There are fewer shoppers on the market, home prices don't rise dramatically and buyers won't feel like. they're missing out by not holding off another month or two. While mortgage rates could go down in 2026, the ongoing housing shortage means average home prices won't show any signs of decreasing. Whether you'd pay more for a specific property in 2025 versus 2026 depends on a host of variables, not just the mortgage rate landscape. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every tax article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of the tax system and products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Miami Herald
14-07-2025
- Business
- Miami Herald
How immigration issues can affect Florida real estate. ‘I can't live here.'
Some buyers have the upper hand in Florida, with rising inventory and developers offering sales incentives. But immigration issues also are affecting the real estate market, with uncertainty leading some property owners to sell their homes quickly to capitalize on rising prices. 'There are people leaving, calling me ... to put their house up for sale. 'I'm going back, I can't live here,' ' Gisela Rojas, a broker with Caissa Realty Investment, told el Nuevo Herald. Rojas, based in Orlando but also active in the Miami area said that many of the new listings she is handling are 'people who are returning to Colombia, Mexico, Venezuela and are looking for other places like Spain to start a new life.' 'I'm seeing it up close; most of them are facing immigration uncertainty,' said Rojas, who has a prominent social media presence and appears on Telemundo and Univision. 'They had already achieved the American dream without being residents, with a lot of effort.' Many immigrants bought homes by taking advantage of federal FHA loans, which allow for low down payments of around 3.5%, and other assistance for first-time buyers. They also became homeowners when mortgage interest rates were lower than the current just-under 7%. In most of Florida, a single person needs to earn around $80,000 to own a home, and in more expensive cities like Miami, Doral, Pembroke Pines and Weston, it's closer to $140,000. In addition to the high prices in Miami-Dade, especially compared to wages, buyers in the Miami metropolitan area, which includes Fort Lauderdale and West Palm Beach, are paying mortgage rates above the national average. Mortgages in a buyer-friendly market Those with undefined immigration status who bought property a few years ago now have significant equity in their homes and are selling quickly to take advantage of that, Rojas said. Rojas points out that at a time when properties are staying on the market for 90 to 120 days, buyers can get a lot of benefits from sellers and also from developers, who are trying to drive sales of new construction. 'Builders are offering incentives. Yesterday I was able to put a contract on a new home for $600,000, and they gave the buyer $38,000 for closing costs,' Rojas said. Property appraisals are also coming in below the asking price, sometimes $30,000 less, giving buyers more leeway to persuade sellers to lower the price, he said. With the market in their favor, buyers should look for alternatives to finance. Those who can't qualify for an FHA loan can try for a conventional loan. Other programs require a buyer to have low or limited income, such as HomeReady Mortgage and Home Possible. Offers and incentives for renting in Florida The rental market is trending downward, especially in Central Florida around Orlando, Rojas said. But she hasn't noticed price declines in Miami and other high-demand cities, although there is increasing inventory. 'There are a lot of new condos for rent, and they offer incentives, like three months of free rent and no deposit required,' Rojas said. The real estate agent also sees opportunities for investors, who can buy properties at a discount in areas that will later appreciate in value, while also earning a return on the monthly rent. 'We're talking about two realities because foreign investors are arriving,' Rojas said, 'looking for people desperate to get out of their properties.'
Yahoo
22-02-2025
- Business
- Yahoo
Conventional loan: What it is and how to get one in 2025
Conventional loans are the main engine driving the home mortgage machine and are the go-to loan product for most borrowers. In fact, over 77% of all mortgages originated in 2023 were conventional loans, according to government data. Conventional mortgages are not insured by the government and have their own specific requirements, which often vary by lender. Are you preparing to apply for a mortgage loan? Here's what you need to know about conventional mortgages in 2025. Read more: The different types of mortgage loans In this article: What is a conventional loan? Who should get a conventional loan? How a conventional loan works Types of conventional loans Conventional loans vs. Government-backed loans How to qualify Pros and cons FAQs A conventional loan is not insured or guaranteed by a government agency, and it can be either conforming or non-conforming. Conforming loans, which make up the bulk of conventional mortgages, are loans that adhere to the standards set out by Fannie Mae and Freddie Mac — two government-sponsored enterprises (GSEs) that purchase conventional mortgages, sell them to investors, and help keep the mortgage market liquid. Non-conforming loans don't have to adhere to Fannie or Freddie's rules, and lenders have more leeway in issuing these. They may allow for bigger loan amounts, non-traditional properties, or more flexible credit requirements. Dig deeper: How non-conforming mortgage loans work If you are looking to buy a home or refinance a mortgage and have a decent income, a good credit history, and average debt, a conventional loan is probably right for you. A conventional loan may also be a good idea if you need a particularly large loan amount, have a tricky financial situation, or need to buy a unique property (such as an agricultural farm with more than 10 acres). By contrast, other types of mortgages like FHA and USDA loans (more on those later) cater to those who may have lower credit scores, limited savings, or low-to-moderate income. Read more: 15-year vs. 30-year mortgage — Which should you choose? Buying or refinancing a home with a conventional loan allows you a great deal of flexibility. Home buyers with typical credit scores, income, and debt loads will likely qualify, and there are loan programs such as HomeReady and Home Possible that allow for down payments as low as 3%. There are also many lenders to choose from, and you can pick between both fixed- and adjustable-rate options, as well as a variety of terms. While 30-year terms have historically been the most common, you can also choose a 20-, 15- or 10-year loan term. Note: While your mortgage payment will be higher with a shorter mortgage term, these allow you to pay off the loan faster and significantly reduce the amount of interest you pay in the long run. You will also gain home equity faster. Dig deeper: How to get a mortgage with only 3% down Conforming loans are conventional loans that meet Fannie Mae and Freddie Mac's standards. They're limited to $806,500 for a single-family home in most counties but can go as high as $1,209,750 in higher-cost markets. And while the minimum down payment you'll need to make on these loans is 3%, putting down anything less than 20% will typically mean paying for private mortgage insurance (PMI). This costs about $30 to $70 per month for every $100,000 you borrow. Read more: What is a conforming loan, and how do you qualify? Jumbo loans exceed the conforming loan limit. They usually have higher costs than other loans and may require a higher credit score, significant cash reserves, and a 20% down payment or higher. Learn more: How to buy a higher-priced house with a jumbo loan Fixed-rate mortgages have a set interest rate for the entire loan term, meaning your rate on Day 1 will be the same on the day you pay off your loan. This helps keep your mortgage payment consistent and predictable. Keep learning: How does a fixed-rate mortgage work? Adjustable-rate mortgages have interest rates that change over time. You might get a lower interest rate than fixed-rate products offer at the start, but then the rate can go up or down after a few months or years have passed. The rate then adjusts annually or every six months after that. With an adjustable-rate mortgage, also called an ARM, your rate can increase or decrease. It all depends on what index rate your loan is based on and where that rate goes. There is a limit, though. Many mortgage lenders place a cap on how high your rate can go with each adjustment and over the life of your loan. Read more: What is an adjustable-rate mortgage (ARM)? Many lenders will originate a conventional loan and then re-sell it to Fannie Mae or Freddie Mac to gain liquidity (therefore enabling them to offer new loans to new borrowers). Sometimes, though, lenders will opt to keep certain loans on their own books instead. These are called portfolio loans. Since portfolio loans aren't beholden to Fannie and Freddie's requirements, lenders have more leeway in setting the terms and requirements. This can make portfolio loans a good choice for borrowers with unique financial situations that could make conforming loans out of reach. Dig deeper: How a portfolio loan can help you buy a home A subprime mortgage is a type of loan generally offered to borrowers with credit problems. They charge higher interest rates than other loans, as they're riskier for lenders to originate and keep on the books. They often come with adjustable interest rates that change over time. Most mortgages are what lenders call 'amortized' loans, which means the total amount of interest and principal is added up and then spread evenly across the months and years of your loan term. With an amortized loan, the bulk of your early payments will go toward interest. By the end, most of your payments will be paying off your principal balance. Conventional loans may make up the bulk of mortgage originations, but there are other loan options out there, too — namely, government-backed loans. These mortgages are guaranteed by various governmental agencies, meaning if a borrower defaults on their loan, the agency will pay the lender for its losses. The three types of government-backed mortgage loans include: FHA loans are loans insured by the Federal Housing Administration, and they're popular with first-time buyers. They require as little as a 500 credit score with a 10% down payment, or a 580 score with 3.5% down. Dig deeper: FHA loan vs. conventional loan — Which should you choose? A VA loan is a mortgage insured by the Department of Veterans Affairs. It is for military service members and veterans only, and borrowers must meet certain days-of-service requirements to qualify. VA loans require no down payment, charge relatively low interest rates, and have no hard credit score minimums. Read more: How to choose between a VA loan and a conventional loan USDA loans are insured by the U.S. Department of Agriculture and are available for eligible rural properties. They also come with income limits. You can see if a home you're considering is USDA-eligible using this map tool. Like VA loans, USDA mortgage loans require no down payment and have no credit score minimums set by the government. (Lenders, however, can set credit minimums as they wish.) Keep learning: USDA loan vs. conventional loan — How to know which is right for you Specific loan requirements vary by lender, but generally, conventional loans require: A debt-to-income ratio of 50% or less, though many lenders want a DTI ratio of 41% or less. A down payment of 3%. Some lenders even offer 1%-down payment programs for first-time buyers. You will be required to purchase private mortgage insurance if your down payment is under 20%. A FICO credit score of 620 or higher. Read more: The best mortgage lenders for first-time home buyers Down payment as low as 3% for first-time home buyers and just 3% equity for qualified loan refinancing. You can opt for an adjustable-rate mortgage. With a down payment of 20% or more, you can forgo private mortgage insurance. Higher loan limits than FHA loans. Available as jumbo loans if you want to purchase a higher-priced property. Flexible terms are available to first-time home buyers and Native Americans. Can also finance home renovations, energy-efficient improvements and the purchase of manufactured homes. Potentially higher credit score requirements than with FHA or USDA loans. You may have to pay PMI if your down payment is below 20% Can be harder to qualify for than other loan options. May have higher interest rates than government-backed options. Learn more: What is private mortgage insurance (PMI), and how much does it cost? Conventional loans can be good because many lenders let you put only 3% down. They also often have more term options than other types of home loans, such as a 20-year term. However, it still might be worth looking into FHA, USDA, or VA mortgages, particularly if you have a low credit score or little cash saved up. No, you don't have to put 20% down on a conventional loan, though it will likely mean paying for private mortgage insurance if you don't. This adds about $30 to $70 monthly to your mortgage payment for every $100,000 you borrow. Technically, conventional loans allow for down payments as small as 3%. If someone has a strong credit score and low debt-to-income ratio, they might want a conventional loan because they can get a relatively good rate, make a small down payment, and enjoy higher loan limits than other programs typically offer. With a conventional loan, you can put down as little as 3%, whereas even FHA loans require 3.5%. Conventional loans can be more challenging to qualify for than other mortgage programs because they lack the government's backing, which protects the lender in case you default on your loan. Depending on your mortgage lender, they may require higher credit scores and lower DTIs to qualify. That depends on your goals and finances. A conventional loan can be better if you have a great credit score, a low debt-to-income ratio, and plenty saved up for a down payment, as this would allow you to skip private mortgage insurance. An FHA loan may be better if you have less-than-stellar credit or low to moderate income. One of the main downsides of a conventional loan is that private mortgage insurance (PMI) is usually required if you make a down payment of less than 20%. This adds between $30 to $70 to your monthly payment for every $100,000 borrowed. Fortunately, you can request to cancel PMI once you have 20% equity in the house, and the lender must remove it when you reach 22% equity. VA and USDA loans don't require monthly mortgage insurance payments, but FHA loans do. Having a credit score under 620 will typically make you ineligible for most conventional loans, as will a DTI ratio of over 50% (sometimes 41%, depending on the lender). Not having enough for at least a 3% down payment can also disqualify you. This article was edited by Laura Grace Tarpley.
