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Better

2022 review

Better Mortgage offers home purchase and refinance loans entirely online. Explore the advantages and possible drawbacks of this user-friendly, low-fee lender.

NMLS#330511
9.0 / 10
Editorial Score
Andrea Miller
Senior finance writer and editor
April 26, 2022

Overview

Better Mortgage claims to create a simple, fast online home loan experience with outstanding customer care, with transparent rates and fees that remove the confusion from the mortgage process. Home buyers can shop for personalized interest rates and receive preapproval with underwriter review within 24 hours.

Better Mortgage blends human and tech-based resources to streamline the mortgage loan process and provide 24/7 client support. The online-only approach of this lender appeals to new home buyers. According to Better, about 40% of borrowers fill out their loan applications online and 33% are seeking a mortgage for the first time.

This service also caters to buyers who have student loan debt, self-employment income, and other challenges that can complicate the mortgage approval process. Time magazine, who ranked Better Mortgage as one of the best online home loan companies, reports that the firm has funded about $31 billion in home loans over the past five years.

BEST CHOICE 2022
9.0 / 10
Editorial Score
Better
Quick view:
Editorial Score
9.0 / 10
Online Services
Applications, Quote management, etc.
10 / 10
Customer Service
8.0 / 10
Available in all states
9.0 / 10
Available loan types
8.0 / 10
Products
10 / 10

Products & Services

Better offers several types of mortgage loans for purchase and refinance of single-family homes, planned unit developments, condos, townhouses, and multi-family homes with four or fewer units. It does not finance mixed-use properties, co-op purchases, manufactured homes, or properties with five or more units. Second mortgages and home equity loans are not available from this lender.

When you apply for a loan, Better Mortgage searches for your personalized rates from more than 25 major funding sources, including government agencies like Fannie Mae as well as traditional banks and private investors. In addition to mortgages, Better provides real estate services, homeowner’s insurance, and title insurance.

Conventional Mortgage Loans

These mortgage loans are available for home purchases up to an established amount of about $550,000. Unlike many types of home loans, conventional mortgages do not carry a government guarantee. These standard mortgage loans require a down payment of at least 3% of the home’s purchase price as well as a minimum credit score of 620.

Conventional mortgage loans typically have a fixed interest rate that remains the same for the life of the loan. Borrowers must pay monthly private mortgage insurance (PMI) with a down payment below 20%.

Federal Housing Authority (FHA) Loans

FHA mortgages are guaranteed by the federal government to expand home ownership opportunities to those with credit or income challenges. An FHA loan may have either a fixed or adjustable mortgage rate. You must purchase the home in question as your primary residence and it must meet FHA appraisal requirements.

You can access this type of loan with a credit score of at least 580 and a 3.5% down payment, or a minimum of 500 with a 10% down payment. FHA loans also require proof of income and a debt to income ratio below 43%. Like conventional loans, FHA loans require monthly PMI without at least a 20% down payment.

Adjustable Rate Mortgage Loans

You can access adjustable rate mortgages (ARM) with 5/1, 7/1, or 10/1 loan terms from Better Mortgage. These loans have a fixed rate for five, seven, or 10 years before adjusting once or twice a year depending on stated terms and conditions. While an ARM allows you to pay less in interest than with a fixed-rate loan at first, the mortgage payment can dramatically change when the rate adjusts.

Jumbo Loans

Better Mortgage offers oversized “jumbo” mortgage loans with a minimum down payment of 10%. Jumbo loans are designed for homes that exceed the maximum available conventional mortgage amount. These products do not require mortgage insurance.

Better funds extra-large loans of up to $4 million, more than the maximum amount offered by most competitors. These mortgages require a minimum FICO credit score of 700.

Home Refinance Loans

As a Better Mortgage customer, you can access refinance options for lower interest rates, lower monthly payments, or shorter repayment terms. You can also take a cash-out refinance, which provides extra money for renovations, unexpected expenses, or other financial needs. In addition, this lender offers the Freddie Mac RefiPossible and Fannie Mae RefiNow refinance programs for low-income borrowers.

Rates and Terms

Better Mortgage publishes daily rates for mortgage purchase and refinance loans, based on 15-year, 20-year, and 30-year loan terms. You may choose to purchase points, or pay a premium at closing to access a lower interest rate. When you receive preapproval, you can lock the stated rate for a certain time period.

Unlike most mortgage lenders, Better Mortgage does not charge prepayment penalties, underwriting fees, processing and application fees, or loan origination fees, which lowers closing costs for most buyers. However, borrowers are responsible for an escrow deposit, title insurance and search fees, appraisal costs, and prepaid interest.

In addition to its low-fees policy, Better Mortgage earns points for its unique incentive programs. If you find a better loan offer elsewhere, Better will give you $100. You can also earn $2,000 if the lender fails to close your transaction as promised and $2,000 if you use a partner realtor or lender for your home purchase.

Application Process and Qualifications

When I tested Better Mortgage, I was immediately impressed by the user-friendly Q&A format for loan applications. First, the site or app will ask if you want to either buy or refinance a home. The available options on the screen update based on your response each time you answer a question.

You can choose from buttons for buying or refinancing a home, each of which brings up additional options to refine your needs each time you answer a question.

Keep in mind that you’ll need to submit an email address, which might be a concern for some casual browsers who do not want to give up their personal information.

As promised by Better, I received a decision within 3 minutes of finishing the dynamic application questionnaire. If you qualify based on the initial criteria, you’ll receive a preapproval letter indicating the estimated terms of your purchase or refinance. If you prefer to speak to a live person, you can apply for a mortgage or refinance over the phone, where a representative will walk you through the entire process.

When obtaining the initial preapproval, Better Mortgage relies on a soft credit check that does not impact your credit score, along with the income you report on your application. If you decide to move forward, the lender will verify your approval with a comprehensive financial review and official credit check, which could impact your credit score. This process usually takes about three to six weeks from initial application to loan closing.

Better.com offers mortgages throughout most of the United States. However, you can not obtain financing for properties in Nevada, New Hampshire, Massachusetts, or Hawaii.

To complete your loan application, you’ll need the following documents:

  • Pay stubs and other proof of income for the past 30 to 60 days
  • W-2 forms for the past two tax years
  • Income tax returns for the past three tax years
  • Bank statements
  • Proof of identification

As your loan goes through the underwriting and approval process, the loan officer may request additional documentation. For example, individuals who are self-employed usually have to show two to three years of steady income to qualify for a mortgage.

Approval Time

If you have concerns about delayed approval, consider applying for funding through Better. The company claims to offer a personalized quote in seconds, preapproval within 3 minutes, and loan closing within three to six weeks.

While slow closing times cause concerns across the mortgage industry, Better Mortgage improves buyer peace-of-mind with its closing guarantee. If you don’t receive funding in time for the scheduled settlement, the lender will pay you $2,000. The company claims they close all purchase and refinance loans about 10 days faster than the industry-wide average.

Customer Service

You can access customer service from Better.com 24 hours a day, seven days a week. Phone and email support are available. While the company also promises online chat support, I could not find a way to access this service from the Better.com website.

When I called Better Mortgage to ask about refinancing rates for my home, the automated system instructed me to press 1 for purchase or refinance questions. I waited on hold for just over 4 minutes before a friendly representative picked up my call. He was easy to understand and provided knowledgeable answers to my questions, without the long wait times customers often face when seeking phone assistance.

I also received a fast response to my email. The representative, Christie, provided a comprehensive answer in less than an hour, as you can see from my screenshot.

Customer Service

In addition to live customer support, Better Mortgage offers extensive online resources. Website visitors can explore FAQs, blog posts, and interactive calculators so you can find a loan that fits your budget.

Summary

Better Mortgage has largely succeeded in its mission to bring convenience, clarity, and honesty to the home loan process. With a robust customer service program that features fast, friendly service around the clock, this lender also addresses the common concerns associated with obtaining a mortgage from an online-only firm. Low rates, fast approvals, and generous financial incentives also prove attractive to first-time buyers and veteran homeowners alike.

The biggest caveat about Better is the lack of support for USDA and VA loans. These popular products provide one of the few existing sources of zero-down home loans, so buyers who don’t have or don’t want to make a down payment will have to go with a different lender. Outside this exception, however, the company offers a range of mortgages that appeals to most buyers.

The interactive application process is the cornerstone of the Better Mortgage experience, mentioned again and again by satisfied customers who used this lender for their home purchase or refinance. If you’re looking for a mortgage and have been conflicted about whether to go online or use a traditional lender, Better will likely provide the guidance and support you need to successfully enter the digital era of home buying.

Frequently Asked Questions

These are some of the most common questions prospective home buyers ask about Better Mortgage.

Is Better.com a reputable company?

Better.com has earned accreditation with an overall B rating from the Better Business Bureau, a testament to its status as a reputable mortgage lender. Customer reviews also reflect the legitimacy of Better Mortgage, which has earned an average of 4.6 out of 5 stars with nearly 3,000 Google ratings.

Is Better.com secure?

Better has established a privacy policy to prioritize the security of customer data. The company claims to use industry-approved physical, administrative, and technical security standards to shield sensitive customer information from unauthorized disclosure, access, or abuse.

Is Better.com a lender?

Yes, Better Mortgage acts as a direct lender. You will work directly with the company from the time you apply for a mortgage until they fund and close your home loan. After closing, you will make mortgage payments to The Money Source, Better’s administrative partner. Sometimes, they transfer the loan to a new servicing company and notify customers accordingly.

Why are Better.com rates so low?

Loan officers at Better Mortgage do not receive commission, which allows the company to keep its rates and fees low for customers. At most mortgage companies, the loan officer receives about 1% of the loan amount, or $3,000 on a $300,000 mortgage. Better also avoids the extensive overhead required to operate in-person locations, another source of savings.

Does Better Mortgage offer zero-down mortgage loans?

All the loan products from Better.com require at least a 3 percent down payment. This lender does not offer the two most popular zero-down mortgage programs: the VA loan, available to military service members and veterans and their families, and the USDA loan, which funds home purchases in designated rural areas.

Is Better Mortgage a public company?

Better Mortgage merged with Aurora Acquisition Corporation in early 2021 to become a publicly traded firm, which means that you can purchase shares of this company on the New York Stock Exchange and other public markets.

Andrea Miller
Written by

Andrea Miller has been a writer and editor for more than two decades. She has previously covered financial topics for Solvable, Kabbage, and Credit.com. Outside of work, she spends most of her time with her husband, daughter, and son and enjoys hiking, yoga, and reading.

Pros:
  • No origination fees, underwriting fees, or commissions
  • Diverse mortgage options including conventional, jumbo, FHA, and bridge loans
  • Preapproval in three minutes and closing within 21 days
Cons:
  • Lack of physical locations
  • No access to USDA and VA mortgages
  • FHA loans limited to 10 states
Bottom Line

Better Mortgage offers an innovative, affordable alternative to the traditional mortgage process without sacrificing customer service. Borrowers can access many common loan products with low rates and fees. I appreciated the intuitive user experience of the cool Q&A application format, not to mention the lightning-fast application decision. If you prefer to shop for everything online including financial products, Better might be the best bet for you. However, if you like to visit a brick and mortar location, you should seek a traditional mortgage lender instead. You should also look elsewhere for certain specialty products such as VA and USDA loans.