LenderFi Review: One Of Today’s Best Online Lenders
Because of the coronavirus pandemic, mortgage rates hit new lows, opening a window of opportunity for budget-conscious house hunters. But buying property in the midst of a pandemic comes with its own unique challenges – maintaining social distancing not being the least of them.
Thankfully, there are mortgage lenders that offer online applications, making it easier for homebuyers to complete the process without ever leaving their own safety bubbles.
If you’re the type of person who prefers applying online, LenderFi makes for an excellent option. Since 2006, this direct lender has built up a reputation for its fast, no-frills, and 100 percent online application.
Read our review below to learn more about the business.
What To Look For In A Mortgage Lender
Before we continue on to our review, you need to know the major factors that we consider when evaluating a mortgage provider. If you ever feel lost in the home buying process, you can always go back to these five criteria:
Loan Types Offered
There are several types of mortgage products. Some of the most common ones include:
Conforming Vs Jumbo Mortgage
Conventional mortgages are mortgage loans that are not backed by the federal government. These mortgages can be lumped into two categories: conforming and non-conforming loans.
Conventional loans fall within the maximum borrowing limits set by the Federal Housing Finance Agency. On the other hand, jumbo loans exceed the borrowing limit of $548,250 in most states or $822,375 in Alaska, Hawaii, and other high-cost markets.
Because jumbo loans are bigger than conforming loans, they’re also harder to qualify for. In most cases, a lender will require a minimum credit score of 700 and a down payment of at least 10 percent of the principal amount.
Fixed-rate Vs Adjustable-rate Mortgage
The difference between fixed- and adjustable-rate mortgages (ARM) is simple. With a fixed-rate mortgage, your interest rate will remain the same until the end of your loan term. With an ARM, the rate is fixed for a few years, after which your mortgage rate is adjusted annually based on market conditions.
There are advantages and disadvantages to either type of loan.
Fixed-rate home loans are more predictable, but they often come with bigger monthly payments and much longer terms (usually, 15 to 30 year fixed terms).
Meanwhile, an adjustable-rate loan doesn’t offer the same kind of consistency. However, you do get the advantage of paying a considerably low mortgage rate and monthly payment in the first few years, allowing you to save early on in the game.
You have three options when it comes to government-issued loans:
FHA loan: These are loans issued by the Federal Housing Association. With a minimum credit score requirement of 580 and a minimum down payment of 3.5 percent, FHA loans are great for low-income and first-time buyers, and/or those with poor credit ratings.
VA loan: These are loans reserved for active duty and retired members of the US military, as well as their families. VA loans are characterized by low interest rate options, zero down payment requirements, and no private mortgage insurance.
USDA loan: The US Department of Agriculture issues zero-down payment loans to low-income buyers settling down in a USDA-eligible rural location. USDA loans are harder to come by than FHA and VA loans.
Refinancing is the process of taking a loan to pay out an existing loan. Usually, people take out a refinance loan if they want a lower rate or a shorter term. There are several different types of refinance loans, including rate-and-term refinance, cash-in refinance, and cash-out refinance loans.
Affordability is one of the main considerations most people have when they buy a home. But because mortgage rates are always in flux, we don’t focus too much on that aspect.
Instead, we look at some of the financial requirements and fees lenders ask of their customers. These include:
Minimum FICO credit score: Your credit score is affected by things like how long you take to pay your bills or how many lines of credit you have. Essentially, your score is a measure of your financial responsibility and creditworthiness – the better you are at staying on top of your debt, the better your score. Credit scores go from 300 to 850, but most lenders require a minimum score of 620.
Minimum debt-to-income ratio: Your debt-to-income ratio is a measure of how much money you owe relative to your monthly income. Like credit scores, debt-to-income ratios help lenders figure out whether you make for a reliable client. A balanced ratio would be around 40 percent, but some lenders are fine with 50.
Minimum down payment requirement: The old rule-of-thumb was that you had to pay at least 20 percent of your principal upfront. These days, lenders are not as stringent – you won’t be hard-pressed anymore to find a lender who can accept as little as 3 percent down, although private mortgage insurance is still required in most cases.
Closing costs & fees: Many first-time buyers make the mistake of thinking they only have to pay for their down, monthly payments, and interest. However, buying a home comes with a long list of closing costs, from lender’s fees and mortgage points to attorney expenses and origination fees. In general, closing costs can amount to three to five percent of the principal.
Applying for a mortgage can be long and complicated – but it doesn’t have to be. Be on the lookout for lenders that have streamlined their application process, whether by allowing applicants to view and compare mortgage rates through their website, submit documents online, or easily track their loan status.
We also put a premium on businesses that can assign a dedicated loan officer to provide information and guide you through the entire procedure.
Customer Service And Satisfaction
Mortgages can take years – decades, even – to pay off. As such, you’ll want to work with a lender you can trust. To assess customer service, we look at three things: places you can go for help, like hotlines, online portals, and emails; JD Power rankings; and Better Business Bureau ratings.
JD Power is a marketing research firm specializing in consumer insights and data analytics. In 2020, it released the results of a customer satisfaction study, which rates the top mortgage lenders in the US based on the business' “performance in the application and loan approval process; communication; loan closing; and loan offerings.”
The BBB, on the other hand, rates a business on a scale of A+ to F based on trustworthiness. To come up with its rating, it looks at things like complaint history, advertising issues, transparency in business practices, licensing, government actions, and the like. Sometimes, we consider customer reviews left on a business' BBB page as well.
Finally, don’t forget to factor in a lender’s availability. Not all lenders will originate loans where you’re hoping to buy, so double-check this to make sure you don’t run into problems in the future. This is especially important if your prospective lender doesn’t do online applications, or if they need you to meet with a loan processor to close.
Our Review Of LenderFi
LenderFi, Inc. is an online direct mortgage lender that has been around since 2006. With a core philosophy of “paperwork is the enemy”, it aims to eliminate the bureaucracy of conventional lending through a completely online application process. As a result, it’s able to provide a much faster application process (you can close in as little as 8 days!) and save you a considerable amount of money.
Loan Types Offered
While it offers loan products for a variety of dwelling types – from single-family homes to condominiums – LenderFi doesn’t have the most extensive selection of loan types. Here’s what you can get at LenderFi:
Fixed-rate Mortgages: LenderFi offers mortgages in 10-, 15-, 20-, 25-, and 30-year fixed-rate options.
Adjustable-rate Mortgages: The lender provides 5/1 and 7/1 adjustable-rate mortgage options. On the website, LenderFi states that the 5/1 option allows borrowers to “pay off your loan faster and save money on interest”, while the 7/1 option comes with low rates that may change over time.
FHA Loans: LenderFi’s sole government-issued option, these loans come at 30-year fixed-rate terms with the following requirements: 3.5 percent minimum down and a credit score of at least 580.
Fannie Mae HomeReady: Aimed at low-income and first-time buyers, this loan requires a minimum of 3 percent down and a credit score of 620 or greater. Discounts on private mortgage insurance may apply to certain applicants.
Refinance loan: LenderFi offers rate-and-term and cash-out refinance loans.
Due to the COVID-19 pandemic, LenderFi has temporarily stopped issuing jumbo loans, USDA loans, and VA loans. As of late, LenderFi also does not offer home equity loans, home equity lines of credit, and construction loans.
As mentioned, LenderFi is able to provide competitive interest rates because of its completely online application. It’s also one of the few mortgage lenders that require zero lender fees – resulting in a considerable discount on closing costs.
When it comes to financial requirements, LenderFi is a bit more forgiving than other lenders, with a 620 minimum credit score requirement for conventional loans and a 3 percent minimum down.
LenderFi applicants can view and compare interest rates online and send an application at their convenience. According to the website, you can apply at any time and get instant approval.
If borrowers verify their employment status, income, and assets online, they only have to wait a few hours to get pre-approved. LenderFi offers a rate lock sans fees, lasting up to 30 days. The company aims to close all loans within 30 days of a finalized application. Other sources say that you can close a deal in as little as eight days.
Aside from a speedy and fuss-free application, applicants also get to review the status of their loans, upload documents, and make payments online with their credit cards.
Customer Service And Satisfaction
LenderFi rates considerably average in the customer service department.
The business has a hotline open from 8 am to 6 pm, Mondays through Fridays, which you can call for help and information. If you're not into phone calls, you can also send questions and concerns to a dedicated email.
Plus, the company assigns a loan officer to guide every applicant through the entire process. Applicants can communicate with loan officers outside of the company’s regular hours.
Unfortunately, LenderFi doesn’t rank in the top 20 of JD Power’s most recent Customer Satisfaction Index. They do, however, have an A+ rating from the Better Business Bureau and a 4.75 rating out of 5 stars based on an average of 14 customer reviews.
LenderFi is available in most US states, with the exception of Hawaii, Missouri, Nevada, New York, and Utah.
LenderFi makes the loan application fast and easy with a 100 percent online experience.
LenderFi boasts “instant online approval” and the potential to close within just 30 days.
The company provides rates through its website. You don’t need to send personal information to view these rates – you just need to provide your zip code, credit rating, principal amount, and down payment.
On top of competitive rates, LenderFi offers a discounted closing cost by not charging applicants for lender fees.
Unfortunately, LenderFi doesn’t provide enough information on its loans online. Instead, it offers a customized list of loans you can get based on the information you can provide. The overall user experience can sometimes leave more questions than answers.
LenderFi doesn’t have such a diverse range of loans. The company doesn’t offer home equity loans or HELOCs, and it has temporarily stopped issuing jumbo and VA loans due to the COVID-19 pandemic.
LenderFi is only available in 45 states. If you live in Hawaii, Missouri, Nevada, New York, or Utah, you will have to find another option.
The Bottom Line
Applying for a home loan can feel intimidating. There is a lot of jargon to learn, numbers to crunch, and choices to make. But with relatively fast, mostly paperless, and 100 percent online applications, LenderFi, Inc. makes the experience a little less stressful. If you’re looking for a conventional home loan that falls within the maximum borrowing limits, LenderFi may be an excellent option for you.
Looking for more mortgage lender reviews? Or maybe you need tools and information on other financial topics, like life insurance or credit cards? Keep reading our blog for more questions and insights, or contact Wesley Mortgage, LLC directly for personalized financial advice!