There are a number of 21st-century mortgage lenders. But few have made as much of a stir as Better Mortgage (a.k.a Better.com or simply “Better”).
Better.com was founded in 2014 and began operations in 2016. Yet it has already set up mortgages worth $3 billion and helped many thousands of borrowers.
The company’s main draw is its all-online mortgage application and processing. The company claims its innovative lending technology could cut your closing time in half or less, and says borrowers save more than $3,000 per loan on average.
However, there are cons to follow all those pros. Better Mortgage is missing some key mortgage products (namely, USDA loans and VA loans), and it’s not available in all states. And rates won’t be competitive for every borrower.
If you’re interested in an all-digital mortgage lender, and if Better has the type of loan you need, it’s definitely worth a look. Just remember to compare rates with a few other lenders to make sure you’re getting the best mortgage deal possible.
There are relatively few lenders that consistently offer lower rates or closing costs than their competitors. But Better.com may be one of them.
Better’s rates tend to be near or below its major competitors’. And it’s fees are likely to be substantially lower. You won’t have to pay “loan officer commissions, lender origination fees, application fees, or underwriting fees,” according to the company’s website.
Better Mortgage also has a “Better Price Guarantee” that says it will either match the competition’s closing costs or give you $1,000 in cash. However, there’s some fine print around that promise (more information below).
30-year fixed-rate mortgage estimates at major banks
We compared Better.com side-by-side with the biggest banks and lenders in the U.S., and found that its rates and monthly payments are average to low, depending on the loan. However, average rates can differ based on the types of clients and programs a lender specializes in.
Rates shown here are current as of 11/11/2019. Monthly principal and interest payments are based on a home price of $350,000 and down payment of 20% for a home in Washington.
These numbers are a snapshot meant for general comparison only. Your own mortgage costs will vary depending on your loan, your finances, the economy and other factors.
When asked to contribute to this Better.com mortgage review, a company spokesperson said:
“Our mission is to change the way Americans buy and refinance their home by delivering lower rates, faster closing times and a radically transparent, technology-driven process.
“We prioritize the consumer experience through an online process, with instant loan estimates, honest rate quotes and 24-hour verified pre-approvals, all complemented by support from non-commissioned loan officer.”
And they deliver on that promise for many people. If you’re the kind of tech-first shopper who dreads going into a bank branch to fill out paperwork, Better’s business model might be perfect for you.
Better’s online mortgage application is simple and streamlined. Image: Better.com
But there are some downsides. Better does business almost exclusively online — you can speak to loan officers over the phone, but there are no branches for face-to-face communication.
And, because Better.com was founded so recently, the company is still building out its mortgage offerings. It’s not yet licensed in all states and is missing some major loan types, like VA and USDA loans.
In addition, Better does not offer mortgages for manufactured homes, buildings with more than five units, co-ops, or mixed-use properties So it won’t be the best for everyone.
Working with Better Mortgage
If you hate technology and prefer doing business the traditional way, Better.com probably won’t be for you. Otherwise, it’s worth a closer look.
With Better.com, the whole idea is an end-to-end online experience. So you can use your phone, computer, or another device to:
- Prequalify for a mortgage
- Apply for a mortgage
- Upload documents securely
- Close on your home loan
- Manage your account
- Sign documents using e-signature
If you get stuck at any of these steps, you can still contact a loan officer by phone. Or you can use Better’s website to schedule a time for them to call you.
But in general, Better tries to keep everything online. This method saves the company time and money — and those savings are largely passed on to borrowers.
Better.com claims you could close on your home loan in as little as 14 days. By comparison, the average mortgage or refinance closes in about 30-70 days.
Better also says that, on average, its customers saved $3,557 apiece on loan costs in 2018. Savings will vary by customer of course. But it’s worth checking rates and costs to see whether Better is competitive for you.
Better Mortgage strongly promotes its “Better Price Guarantee,” which states:
“If you think another lender has a more competitive price, send us their loan estimate within 3 business days from the date on the loan. If we can’t beat it by at least $1000, we’ll give you $1000 in cash. This isn’t a marketing ploy or a flash sale. It’s simply our promise to you.”
That seems like a pretty good deal at face value. But of course, there’s some fine print too.
So, how does it work? For example, if Better and Wells Fargo offered you the same rate, but Wells had lower closing costs, Better would either have to lower its costs or cut you a $1,000 check.
That sounds simple enough, but collecting your $1,000 is no easy task. You must close your mortgage using the same company and the exact same loan offer that you used to challenge Better’s pricing. And you have to show Better proof of your funded loan within 30 days of closing.
So if your loan amount or sales price changes, or you change loan programs, or you lock in a different rate any time during your loan process, Better’s deal becomes null and void.
All in all, there are a lot of stipulations around Better’s $1,000 offer. But the real point here is that Better Mortgage is extremely confident about its pricing. And a company that’s willing to cut you a $1,000 check based on that confidence is at least worth a look.
Customer service and mortgage servicing
It’s hard to compare Better’s customer service head-to-head with other lenders. That’s because it’s too small to be rated by major agencies like J.D. Power.
However, Better does have a profile with the Consumer Financial Protection Bureau (CFPB), which records complaints filed against mortgage lenders. And in 2018, only 3 Better customers filed official complaints.
Mortgage-related complaints at major lenders
Complaints per 1,000 mortgages6
2018 JD Power Rating
*2018 origination data for Better.com provided by the company
User reviews also suggest Better is doing pretty well for customer service.
For example, Better is an accredited business with the Better Business Bureau. It has an A+ rating, and four out of five stars according to 238 customer reviews.
In addition, Better.com has 205 ratings on Zillow, where mortgage customers again give it four out of five stars. That’s a respectable score — although it’s worth noting that bigger lenders like loanDepot, Wells Fargo, and Chase have ratings above 4.9 stars on the same platform.
Mortgage loan products at Better.com
Types of mortgages offered by Better.com
Home loan options from Better.com include:
- Fixed-rate mortgages: A fixed-rate mortgage locks in your interest rate for the entire loan period. Better offers 15, 20, or 30-year fixed-rate loans
- Adjustable-rate mortgages: ARMs have an interest rate that’s locked for the first 5, 7, or 10 years. After that, your mortgage rate floats with the market
- FHA loans: FHA mortgages are backed by the Federal Housing Administration, and let you buy with a down payment as low as 3.5%. They also tend to have easier credit requirements
- Jumbo loans: Jumbo mortgages are for people who need a bigger loan than the conforming loan limit, which is currently $484,350
Better.com also offers Fannie Mae’s “HomeReady” loan program, which is meant to help borrowers with lower income and limited cash for a down payment.
It’s also worth noting that Better.com might be able to help you if you have above-average levels of debt.
This lender says it will sometimes lend to borrowers with debt-to-income (DTI) ratios as high as 55 percent — depending on their particular circumstances. That’s pretty generous. With most conventional loans, DTI is capped at 43 percent.
Types of mortgages Better.com does not offer
Similarly, Better does not offer loans for:
- Manufactured or modular homes
- Multi-family homes containing five or more units
- Co-op units
- Mixed-use properties
- Construction projects
- Homes in foreclosure or owned by a bank
Better.com does, however, offer home loans for investment properties. And it has low-down-payment options for owner-occupied transactions that let qualified borrowers buy with as little as 3 percent of the purchase price down.
Where can you get a mortgage with Better.com?
Better Mortgage NMLS ID: 330511
At the time of writing — there may be more by the time you read this — Better.com is licensed to lend in the following states (highlighted in green below):
Better.com is very much an online-only lender. There are no branches and the whole idea is that the systems available to you online are intuitive and easy to use.
Of course, you can get plenty of assistance and support from loan officers over the phone. And these may be more helpful than those employed by many other lenders. That’s because they don’t operate on commission. So they’re closer to neutral advisors than salespeople.
So what should you take away from this Better.com mortgage lender review? Well, that Better Price Guarantee may be enough to get you to apply all on its own. Who wouldn’t want the chance to save or make $1,000?
And applying might be a good idea anyway. You may well end up with a better deal than you could find elsewhere.
But there are exceptions. You won’t get far if you want a VA or USDA loan, or if you live in a state where Better isn’t licensed. And you won’t be happy if you hate technology.
The bottom line: As with all lenders, compare the service you’d receive from Better.com as well as the company’s rates and fees. That’s the best way to find out if a mortgage lender is right for you. Get started using the link below.