Going with a top mortgage lender is important because you not only want to get the lowest mortgage rate possible, you also want to have low financing fees and a 45-60 day close.
After analyzing over a 25 different lenders, I've come to the conclusion that Wells Fargo and Citibank are the two best large bank mortgage lenders in America.
However, I think everyone should check online for the best mortgage rates through a lending marketplace like Credible and/or LendingTree. Credible is based in San Francisco and has pre-qualified lenders who compete for your business. You can get multiple real mortgage rate quotes in under three minutes, for free.
20 years ago, LendingTree revolutionized the way consumers get a mortgage. In the past, consumers had to pitch banks to get a mortgage or refinance their loan. Today, thanks to LendingTree's innovation, banks now pitch you to win their business. After all, “when banks compete, you win.”
LendingTree (Ticker: TREE) is the top mortgage lender today with over a $4 billion market capitalization. They have the largest marketplace of lenders who aggressively competes for your business.
Top Mortgage Lender: LendingTree's Long Operating History
After graduating from Bucknell University, Doug Lebda went to work for PricewaterhouseCoopers in Pittsburgh as an auditor and consultant. When he decided to purchase his first home and obtain a mortgage, he found the process of visiting multiple banks and combing through mortgage offers frustrating, time consuming, and exhausting.
Lebda realized that if the process was that difficult for someone with his financial acumen, then there must be a massive market of others with the same desire for a better way. With this idea, Doug founded CreditSource USA in 1996 with Jamey Bennett, whom he knew from Bucknell and had previous experience founding BookWire.
The new company was later rebranded as LendingTree and by 1998, LendingTree launched nationally online with its headquarters based in Charlotte, NC. They also have a large office in Burlingame, just 30 minutes south of San Francisco.
I've met some senior management and am impressed with what they've built over the past 23+ years.
LendingTree Provides Free Quotes
The great thing about LendingTree is that you can apply for a no obligation loan online in minutes, and within the hour, you'll get competing banks e-mailing and calling you about their best rates.
You, the borrower doesn't pay LendingTree a penny. It's the banks who pay LendingTree to compete for your business. As a result, lenders are motivated to try and get you the best loan possible to win your business.
Be forewarned the celerity of the lenders can be quite surprising to those who are not used to such quick service. Their e-mails and phone calls will die down after several days once they realize you have gone with another lender, or are not interested in their offers.
I sometimes use LendingTree to get quotes in writing and then bring these quotes to my main bank to get them to match or beat the LendingTree rate. Using this strategy, I was able to get my bank to refinance my jumbo loan to a 2.375% interest rate from their initial 2.5% offer.
Why You Should Refinance Now
Mortgage rates are back down to historical lows thanks to turmoil in China, Iran, Brexit, sliding oil prices, the pandemic and a highly volatile stock market. The economy is slowing so the Fed telegraphed in 2019 that they would no longer be raising rates.
It behooves you to at least check what the latest rates are if you have not refinanced in the past six months. If you are a new homebuyer or want to refinance, it's important to get as many bids as possible to get the best mortgage rate and terms as possible.
A big part about growing your net worth is doing everything possible to minimize expenses. I believe everybody should at least own their primary residence to get neutral the ever rising property market. Once you own, it's all about lowering your property taxes and getting the best mortgage rate possible.
After that, you can smartly invest in real estate through real estate crowdfunding platforms like Fundrise. They allow investors to invest in commercial real estate projects all across the country that was once only available for ultra high net worth individuals or financial institutions.
My Take On Interest Rates
Mortgage rates have been going down for over 40+ years as you can tell by the chart. There is obviously a risk that interest rates will rise at some point in the future. But I'm in the camp that interest rates will stay low for years to come. You can use a top mortgage lender to take advantage of lower rates.
I see a scenario where interest rates only inch up by about 2% maximum over the next 20 years because there's still a lot of slack in the economy.
In a continued low interest rate environment, I prefer taking out a 5/1 ARM amortizing over 30 years. Why pay a higher rate when the average length of homeownership is 7 years and interest rates are in a structural decline?
You can certainly go for a 30-year fixed loan if you want absolute peace of mind and believe interest rates will be aggressively higher in the future. But if the 5/1 ARM mortgage rate is at least 1% cheaper, then I would strongly consider an ARM.
Take the monthly interest savings and save or invest it. There's a interest rate hike cap that's fixed for one year after the fixed adjustment of an ARM is done.
There's also a lifetime interest rate cap that's usually no more than 4% – 5% higher than the initial rate. You can always refinance your ARM before the fixed period is over like I've done many times before.
Related: The Anatomy Of An Adjustable Rate Mortgage
Take Advantage Of Lower Rates
The goal is to save money by locking in a new low rate now as rates hit ALL-TIME lows due to coronavirus fears. Use a top mortgage lender to get the lowest rates.
I've refinanced three different properties over the past 13 years multiple times, and my combined interest savings a month is roughly $4,000. That adds up to well over $1,000,000 in interest savings over the life of the loans!
If you can find a home that's a good deal, you can afford the payments, and plan to stay there for 10+ years, then I would take advantage of record low interest rates and buy property.
Check out LendingTree for a free, no obligation quote today. Alternatively, if you want more quotes, check out Credible. Another leading online lending marketplace to allow you to compare rates. Credible actually has even better competitive terms.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
About Financial Samurai: FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 organic million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.