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: 2 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 coronavirus outbreak has impacted some of the products lenders offer. In Better's case, that means the temporary suspension of loans backed by the Federal Housing Administration. FHA loans are important to helping many first-time homebuyers obtain a mortgage.

Meanwhile, Better 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 application 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 online convenience

The process begins online by clicking the "Get Started" button on the Better home page and selecting "I'm buying a home" or "I'm refinancing my 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 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.

Here’s how the Better mortgage process goes, step-by-step:

1. First, you’ll provide property information.

2. Then, Better will ask for some basic financial information and the system conducts a soft credit inquiry, which doesn’t affect your credit score.

3. You’ll then be presented with mortgage options based on the information entered so far.

4. As the process continues, you’ll be connected with a dedicated loan consultant for additional support.

5. Once you’ve completed a list of tasks, you’ll receive an official Loan Estimate and can lock in your interest rate. The rest of the mortgage process can be completed fully online.

Better says it usually closes on a mortgage loan in 21 days.

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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