Better Mortgage Review 2021

Better at a glance

If you appreciate online convenience, Better is highly rated for its technology, intuitive application process and lack of origination fees.

Here's a breakdown of Better's overall score:

• Variety of loan types: 4 of 5 stars

• Variety of loan products: 3 of 5 stars

• Online convenience: 5 of 5 stars

• Rates and Fees: 5 of 5 stars

• Rate transparency: 5 of 5 stars

» MORE: Compare Better with other mortgage lenders

Better's loan types and products

Better is a digital mortgage lender, the new breed of home loan providers without a network of brick-and-mortar offices. The company, founded in 2014, says it focuses on 24/7 service through technology and on-demand human assistance.

The 2020 coronavirus outbreak impacted some of the products lenders offer. In Better's case, that meant  the temporary suspension of loans backed by the Federal Housing Administration. Although you may not see them advertised on its website, Better says it has resumed offering FHA loans in these 10 states: Arizona, Florida, Illinois, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Texas and Virginia. FHA loans are important to helping many first-time homebuyers obtain a mortgage.

Better also handles purchase and refinance loans, with a variety of products available, including conventional loans with 3% down payments and 10% down jumbo loans with no mortgage insurance. Better doesn't offer home equity loans and lines of credit, VA loans or home improvement loans.

The company says about 1 in 3 Better borrowers are first-time home buyers, and 72% of all Better home buyers put less than 20% down. Also, 4 in 10 borrowers completed their applications from a mobile device in 2019, the lender says.

Better says it offers mortgage products to borrowers with out-of-the-ordinary situations: restricted stock income, Airbnb earnings, those who are self-employed or have student loan debt.

Better’s guarantees

The lender also offers a guarantee that your purchase loan will close on time; if it doesn’t, in most cases, Better will pay you $2,000.

Launched earlier this year, Better’s appraisal guarantee promises to honor terms of an approved loan even if the appraisal comes in lower than anticipated. This can help borrowers compete against cash buyers who don’t need lender approval to increase their bid, especially in tight markets where homes sell above asking price. To qualify for the guarantee, you need to work with a Better real estate agent or partner agent and lock your mortgage rate before the appraisal is completed.

Better's online convenience

The process begins online by clicking the "Get Started" button on the Better home page and indicating whether you’re interested in buying or refinancing a home Choosing the "buying" option brings up a page with various scenarios, such as "I’m just researching" and "I'm making offers."

For refinancing, you'll indicate your refinance goal, enter some brief information about the property, then hit a minor roadblock by having to submit your email address before continuing.

As you continue with what Better says is about a three-minute process, you can get a basic preapproval, which tells you how much you can borrow or how much you might save with a refinance.

Completing the full loan application is a "dynamic Q&A" process that adjusts with the information you provide, prompting you for additional information relevant to your situation.

Better's mortgage rates and fees

One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. In order to provide consumers with a general sense of what a lender might charge, NerdWallet scores lenders on two factors regarding fees and mortgage rates:

• A lender's average origination fee compared with the median of all lenders reporting under the Home Mortgage Disclosure Act. Better earns 5 of 5 stars on this factor.

• A lender's offered mortgage rates compared to the best available on comparable loans. Better also earns 5 of 5 stars on this factor.

Better says it doesn’t charge any lender fees, including application, underwriting and origination fees. Current HMDA data supports this claim.

Borrowers should consider the balance between lender fees and mortgage rates. While it's not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.

You can decide to buy discount points — a fee paid with your closing costs — to reduce your mortgage rate.

Deciding whether you want to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.

Better says it will give conforming loan borrowers a $2,000 closing cost credit if they choose to work with a Better-referred real estate agent. The offer doesn't apply to refinances.

» MORE: 'Should I buy points?' calculator

Better's mortgage rate transparency

When you are shopping for a mortgage rate, Better can provide a few options. You can complete the initial application process and get a customized rate in a matter of minutes or take a look at its generic national rates by selecting "View Rates" on the homepage.

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