Ratings Methodology for Mortgage Lenders
NerdWallet’s overall ratings for mortgage lenders are evaluated against four major categories. A score is produced for each of the following:
• Rates and fees
• Customer experience
• Rate transparency
• Variety of loan types
We then apply a standard adjustment to the final score to account for factors we consider table stakes offerings. If the financial advisor doesn’t offer these, they do not get an adjustment. For the online financial advisor’s overall score, this standardized adjustment applies if they earn four stars for advisor access and relationship, which requires offering each client a dedicated advisor with no extra fee or additional asset minimum requirement.
Data collection and review process
NerdWallet currently reviews more than 40 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with at least a 1% market share); lenders with significant online search volume; and those that specialize in serving various audiences across the country. Some of these lenders are NerdWallet partners, but this does not influence the review process.
We collect information from lenders and verify it through our independent research. We also use the federal Home Mortgage Disclosure Act, or HMDA, data set for information on origination fees, average interest rates, loan volume and market share.
Then, we rate the lenders on a scale of 1 to 5 based on the following criteria: rates and fees, rate transparency to consumers, variety of loan types and customer experience. Each category constitutes a portion of the lender’s overall score. Lenders’ raw scores may receive bonuses for programs or policies that expand homeownership opportunities. Their raw scores may be penalized in cases of recent regulatory action for violations that harmed mortgage consumers. These scores generate ratings from 1 star (poor) to 5 stars (excellent).
We collect information from lenders and verify it through our independent research. We also use the federal Home Mortgage Disclosure Act, or HMDA, data set for information on origination fees, average interest rates, loan volume and market share.
Then, we rate the lenders on a scale of 1 to 5 based on the following criteria: rates and fees, rate transparency to consumers, variety of loan types and customer experience. Each category constitutes a portion of the lender’s overall score. Lenders’ raw scores may receive bonuses for programs or policies that expand homeownership opportunities. Their raw scores may be penalized in cases of recent regulatory action for violations that harmed mortgage consumers. These scores generate ratings from 1 star (poor) to 5 stars (excellent).
Information updates
NerdWallet maintains contact with lenders throughout the year, collecting information on a recurring basis. Lender offerings and details are updated as needed.
The review team
NerdWallet’s review team consists of editors and writers who cover all aspects of the homeownership journey — from deciding to buy a home to shopping for one; finding the right mortgage and mortgage lender; owning a home; selling a home and more. Aside from NerdWallet, the review team’s work has been published by outlets including MarketWatch, MSN Money, Newsweek, USA Today, The Washington Post, Yahoo and The Associated Press. Each editor and writer adheres to NerdWallet’s stringent editorial integrity guidelines.
Rates and fees
Rates and fees are the two factors that affect a loan's total cost. NerdWallet reviews the latest available federal data and synthesizes a combined score for average interest rate and origination fee. A high average interest rate score indicates rates that approach the best in the market. A high origination fee score indicates some of the lowest recorded fees.
Variety of loan types
This category analyzes the following:
• Purchase and refinance
• Fixed and adjustable
• FHA, VA and/or USDA
• Home equity loan (HEL) and/or home equity line of credit (HELOC)
• Construction-to-permanent and/or renovation mortgages
The more loan types a lender offers, the better the score, as it indicates more options for consumers.
• Purchase and refinance
• Fixed and adjustable
• FHA, VA and/or USDA
• Home equity loan (HEL) and/or home equity line of credit (HELOC)
• Construction-to-permanent and/or renovation mortgages
The more loan types a lender offers, the better the score, as it indicates more options for consumers.
Customer experience
We judge customer experience by examining multiple factors, such as the online application and mobile app experience and options for phone or chat support. The more intuitive, convenient and helpful the customer experience, the better a lender will score.
Rate transparency
NerdWallet looks at mortgage rate transparency in terms of how visible and detailed this information is to consumers on a lender’s website. Is it readily available, or do consumers have to contact the lender for customized rates? Scores in this category are low for lenders that do not publish sample mortgage rates. They are higher for lenders that post sample rates on their sites, making it easier for home buyers to comparison shop, and highest for sites with self-serve tools that allow shoppers to see what rates might be like for their particular loan.
Bonuses and penalties
A raw score bonus may be awarded to lenders with programs or policies that expand homeownership opportunities, such as first-time home buyer assistance or options for borrowers with credit challenges. A raw score penalty may be applied if a recent regulatory action described harm to mortgage borrowers and fines totaled $1 million or more.
Do you want to provide feedback? Contact us at [email protected].
Do you want to provide feedback? Contact us at [email protected].
