Carrington Mortgage Services Review: One Of The Most Affordable Mortgage Lenders
When hunting for a house, you’ll often hear about the importance of good credit. The better your credit score, the higher your chances are of getting approved, being offered higher loans, and bagging lower interest rates. You also get more bargaining power.
But maintaining a good credit score isn’t always easy – late credit card bills, loan defaults, foreclosures, and even credit inquiries can all put a dent in your score.
Thankfully, there are mortgage lenders, like Carrington Mortgage Services, that offer an array of home loan options for people with low income and poor credit. In this review, we take a deeper look at everything Carrington Mortgage Services has to offer and whether they’re the best solution for people dealing with recent credit events.
What To Look For In A Mortgage Lender
Before we begin our reviews, we always discuss the five factors we think everyone should consider when shopping for a mortgage lender. Consider this section one of those helpful tools to get you through the oftentimes confusing and complicated experience of shopping for a mortgage.
Home Loan Types Offered
These are some of the most common types of mortgage products:
Conventional mortgages are home loans that aren’t issued by the federal government. There are two kinds of conventional loans: conforming and non-conforming.
Conforming loans fall within the maximum borrowing limit set by the FHFA, which is set at $548,250 for most states and $822,375 in Alaska, Hawaii, and other high-cost markets. Non-conforming loans, or jumbo loans, are mortgages that exceed that amount.
Aside from size, conforming and jumbo loans differ in terms of requirements. Since jumbo loans are bigger, lenders often require applicants to have higher credit scores (usually around 700) and be able to pay at least 10 percent of the principal as a downpayment.
A fixed-rate loan is a mortgage where the interest rate never changes. Fixed-rate loans usually come in 15 or 30-year terms – longer than the usual terms given for adjustable-rate loans.
While the obvious advantage of this is predictability, it does come with a few downsides. The biggest disadvantage is that fixed-rate mortgages often come with bigger monthly payments and higher interest.
Unlike fixed-rate home loans, ARMs have an interest rate that is fixed only for a set number of years. After that initial period, the interest may fluctuate once a year depending on market conditions.
The most common terms for ARMs are 5/1, 7/1, and 10/1 – the first number corresponds to the number of years the interest is fixed, while the second number corresponds to the number of times the rate can change per year.
ARMs come with the benefit of lower interest – and thus lower monthly payments – during the initial fixed period. However, once that period is over, you will have to deal with the unpredictability of an interest rate that could either go up or down each year.
There are three government-backed mortgage options: the FHA loan, VA loan, and USDA loan.
FHA loans are home loans given out by the Federal Housing Association. These are great for low-income and first-time buyers with middling credit ratings. The FHA only requires a 580 credit score and as low as a 3.5 percent down.
VA loans, on the other hand, are issued by the US Department of Veterans Affairs. They are only available to active duty and veteran members of the US military as well as their families. A VA loan usually comes with low interest and zero down payment requirements and requires no private mortgage insurance.
Finally, USDA loans are zero down payment mortgages issued by the U.S. Department of Agriculture to buyers settling in rural, USDA-eligible areas.
Home Equity Loan
This is a type of loan where you can borrow against the equity of your loan. These types of loan products usually come at a fixed rate.
When we talk about affordability, we don’t just mean interest rates. We also look at the following mortgage requirements:
Minimum FICO credit score: Your FICO credit score is a number reflecting your credit worthiness and, in a sense, your ability to stay on top of debts and payments. Lenders assess borrowers on their credit scores, imposing higher score requirements for bigger and riskier loans. While credit scores can range from 300 to 850, most lenders will require a FICO credit score of at least 620.
Minimum debt-to-income ratio: This is a measure of how much you owe in debts relative to how much money you earn month to month. Just like your credit score, your DTI shows lenders how trustworthy you are in financial matters. A good ratio would be around 40 percent, but you can find lenders that are willing to accept up to 50 percent.
Minimum down payment: Home loans require at least 20 percent down. However, it’s not unusual to find a mortgage lender willing to accept 10 or even as low as 3 percent down. A down payment under 20 percent, however, will often require you to cover private mortgage insurance, which protects your lender in case you cease making payments.
Closing costs: A mortgage is so much more than just the down payments, principal amount, and interest. Closing costs – which can include attorney fees, lender’s fees, mortgage points, courier fees, credit report fees, rate lock fees, underwriting fees, and origination fees – can amount to three to five percent of your principal.
When we assess lenders’ application processes, we put a premium on those that can provide a fast, convenient, and mostly – if not completely – online experience. This is especially important at a time when social distancing is encouraged.
Aside from this, we also prefer lenders that post their mortgage rates online. This makes it easier for borrowers to compare rates across different lenders and make a more informed decision.
Customer Service And Satisfaction
Because a mortgage takes so long to pay off, you’ll want to work with a lender that has a solid customer service record. To assess this aspect, we look at the following: lines of communication, like hotlines and emails; JD Power rankings; and Better Business Bureau ratings.
JD Power, a marketing research firm that specializes in data analytics and consumer insights, releases a customer satisfaction study each year. This study rates the top mortgage lenders in the US based on their “performance in the application/approval process; communications; loan closing; and loan offerings.”
Meanwhile, the BBB is a third-party agency that rates companies from A+ to F, depending on their “trustworthiness”. To come up with their ratings, the BBB looks at information like a company’s complaint history, advertising issues, transparency in business practices, licensing, government actions, and the like.
Lastly, always consider a lender’s availability. Some mortgage lenders, especially the smaller ones, are only available in a handful of states. Make sure your lender originates mortgages and has branches in your locale, so you have somewhere to go in case of any issues.
Now that you know what kind of information to watch out for, let's proceed to our review of Carrington Mortgage Services.
Carrington Mortgage Services Review
Carrington Mortgage Services, LLC is a non-bank mortgage lender that was founded in 2007 under Carrington Holding Company, LLC. Headquartered in Anaheim, California, Carrington originates mortgages from all over the US, save for two states – Massachusetts and North Dakota.
Carrington is known for having a variety of loan options with low down payment and low credit score requirements. As such, Carrington Mortgage Services is considered one of the best mortgage lenders for first-time buyers, folks with recent credit events, and those on a tight budget.
Home Loan Types Offered
Carrington Mortgage Services offers the following loan types:
At Carrington Mortgage Services, you can pick between 15- or 30-year fixed-rate terms for your mortgage.
Borrowers have three choices when it comes to adjustable-rate mortgages: 5/1, 7/1, or 10/1 term options.
Carrington Flexible Advantage Mortgage
Carrington Mortgage Services offers an array of affordable loan options and down payment assistance programs, starting with the Flexible Advantage Loan. This loan is available as a conforming or jumbo loan up to $1.5 million and is applicable to single-family homes, condos, and townhouses.
According to their website, this type of loan is an “ideal solution” for homebuyers with low credit or high DTI ratios, as well as those who need help with their income documentation or, have had a recent credit event (e.g. bankruptcy, foreclosure, missed payments on credit cards).
For this type of mortgage, borrowers need only a minimum credit score of 550. And even if you pay lower than 20 percent down, you don’t have to cover private mortgage insurance.
Carrington Flexible Advantage Plus
This upgraded version of the Flexible Advantage mortgage comes with an even higher maximum borrowing limit of $2 million. However, you will have to have a slightly better credit score of 620. As with the Flexible Advantage loan, the Plus version requires no PMI.
Carrington Prime Advantage
If you have a high credit score but still find it difficult to qualify for the usual conventional, jumbo, or government loans, the Prime Advantage mortgage may be right for you. This is an especially great choice for people who have had a recent credit event or cannot produce the usual income documentation requirements (e.g. the self-employed). In this instance, Carrington Mortgage Services will let you apply with bank statements.
Freddie Mac Home Possible And Home Possible Advantage
First-time buyers could benefit from Freddie Mac’s Home Possible and Home Possible Advantage loans. These come with low down payment requirements and discounted rates on PMI. You can also use gifts or grants to fund down payments and/or closing costs.
For these loans, you need a down payment of at least 5 percent of your principal, a minimum credit score of 620, and a 45 percent DTI.
Finally, Carrington Mortgage Services also offers the following government-issued loans:
FHA loans: These mortgages require as low as 3.5 percent down payment, a 50 percent DTI, and a minimum credit score of 500. You can also get competitive rates and lower monthly fees.
VA loans: At Carrington Mortgage Services, you get to choose between a 15-year or 30-year fixed-rate VA loan. All you need is a minimum credit score of 500. You may also be eligible for no or low down payments, up to 100 percent financing.
USDA loans: Homebuyers can use U.S. Department of Agriculture mortgages to build, repair, renovate, or relocate a home in a USDA-eligible area – no down payment or cash reserve required. The minimum credit rating requirement is 550.
Aside from the aforementioned products, the company also offers refinancing options. Unfortunately, the lender does not offer home equity loans or home equity lines of credit.
As covered in the previous section, Carrington Mortgage Services offers a wide selection of affordable loan options. Their minimum credit score requirement is 500 for government-issued loans and 620 for conventional loans. And if you can’t save up in time for a 20 percent down, you can opt to pay as low as 3 percent of your principal amount on most loans.
You can get quotes online too, and you don't even need to submit personal and contact information. Simply state your desired purchase price, zip code, down payment, annual household income, and credit score. From there, the Carrington team will provide rates and deals that best suit your situation.
Other lender reviews online point out a notable downside in terms of affordability, however. The company unfortunately does not state any information on its lender fees and other closing costs online. This makes it difficult for buyers to compute their options before making an informed decision.
Applying for a loan at Carrington is a fairly pleasant experience. Borrowers can gather information, start their loan process, submit and sign documents, and make mortgage payments online.
However, you cannot get pre-approved or complete your application online. For that, you’ll have to seek the advice of a loan officer over the phone or at a local office. You also can’t track the progress of your applications or view mortgage rates on their site.
On the upside, borrowers with “thin credit files” can send in what the company calls “nontraditional credit data”, such as rent payment logs or bank statements.
Customer Service And Satisfaction
When it comes to customer service, Carrington Mortgage Services is so-so. It has several lines of communication open for both existing and future customers, including a hotline and email. Unfortunately, the lender doesn't rank on JD Power’s customer satisfaction study.
On the Better Business Bureau website, Carrington has a slate of bad customer reviews and a poor 1.57/5 star rating. However, despite these reviews, the company does boast an A+ rating from the Better Business Bureau itself.
Carrington Mortgage Services originates loans in most of the US, except for two states: Massachusetts and North Dakota. However, it only has six brick-and-mortar locations in Arizona, California, Connecticut, Florida, Indiana, Maryland.
Carrington is one of the few mortgage lenders that has multiple loan programs with low credit score and low down payment options.
Carrington makes it easy for self-employed individuals to apply by accepting alternative forms of income documentation. The application experience is pretty straightforward too, save for the last part where you have to talk to a loan officer to finalize your application.
The company usually accepts borrowers with recent credit events such as bankruptcy, foreclosure, and missed credit card payments.
Unfortunately, Carrington is not available everywhere. It originates mortgages in only 48 states, with six brick-and-mortar locations.
While you can start applying online, you must still speak to or meet with a loan officer for advice on how to complete your application.
Carrington does not disclose lending fees and mortgage rates on its site, making it difficult to compare how much you’ll spend with other companies.
Carrington has middling reviews on the Better Business Bureau's page, with a 1.57/5 star rating from user reviews and complaints.
Carrington does not offer home equity loans or home equity lines of credit (HELOC).
The Bottom Line
When it comes down to it, Carrington Mortgage Services is an excellent company for those with credit issues and minimal funds for down payments. However, with a poor Better Business Bureau rating and a spate of less-than-savory complaints and reviews, the company has us questioning its ability to deliver on its promises. Plus, if you're looking for a business that'll let you complete your application online, this one really isn't the business for you.
If you're on the lookout for more lender reviews, personal finance advice, mortgage calculator tools, or information on the latest business news, browse through the rest of our blog! You can also contact Wesley Mortgage, LLC directly for a one-on-one consultation.