Better Mortgage Review 2022

Better at a glance

If you appreciate online convenience, Better is highly rated for its technology and intuitive application process with mortgage rates that tend to be on the low side. While Better advertises that it charges no origination, application or underwriting fees, the most current federal data (from 2020) indicates the lender may charge some fees associated with starting the loan process.

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

• Variety of loan types: 4 of 5 stars

• Online convenience: 5 of 5 stars

• Rates and Fees: 4 of 5 stars

• Rate transparency: 5 of 5 stars

» MORE: Compare Better with other mortgage lenders

Better mortgage loan types

Better is a digital mortgage lender, a nonbank home loan provider 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.

Starting in 2020, the coronavirus pandemic has 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 the states where it offers mortgages. FHA loans can help 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. Better says it works with borrowers who have student loan debt, and that it will take into account some out-of-the-ordinary income, such as restricted stock units, Airbnb earnings and self-employment.

Better guarantees and cash offer program: 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. The guarantee is available in the states where Better originates loans, except for New York.

Launched in July 2021, 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 also offers a program that enables prospective home buyers to make cash offers. To take advantage of the program, a buyer needs to work with an in-house Better real estate agent and get approved for a mortgage with Better. After the mortgage is underwritten, a buyer works with the agent to make an all-cash offer on a home. When a seller accepts the offer, Better pays cash for the home, and the buyer can move in while the mortgage is being processed. Once the home loan is finalized, the buyer purchases the property back from Better at the original sale price. The cash offer program is available only in certain markets.

Better ease of application

The process begins online by selecting the "Get Started" button on the Better homepage 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 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, according to the most recently available Home Mortgage Disclosure Act data:

• Better earns 3 of 5 stars for average origination fee.

• Better earns 4 of 5 stars for offered mortgage rates compared with the best available rates on comparable loans.

Better says it doesn’t charge any lender fees, including application, underwriting and origination fees, though the latest HMDA data indicates that Better charges some fees to start the loan process.

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 mortgage rate transparency

When you are shopping for a mortgage rate, Better can provide a few options. Better posts today's generic national rates on its homepage. You can also get customized rates according to your location, credit score, purchase price, down payment, and type of loan and property by selecting "Personalize rate."

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