South Dakota Mortgage Lender: Which Lender Offers The Best Mortgage Deal?

Settling down in South Dakota comes with plenty of benefits. After all, the state is famous for its low cost of living and strong economy. It's also famous for its beautiful landscapes and fresh, local produce.

But before you can buy a home in South Dakota, you need to find a licensed mortgage lender you can trust. To do this, you need to compare loan options, check each lender's rates and fees, and also research available loan programs.

Thankfully, we've done all the work for you. In this guide, we've handpicked some of the best mortgage lenders in South Dakota. This will help you see which lender is best suited to finance your new home.

How To Choose A Mortgage Lender

Before we name our top choices for the best South Dakota mortgage lenders, let's first talk about our methodology. We take the following aspects into valuable consideration:

Mortgage Options

The first step to taking out a mortgage loan is picking from a range of mortgage loan options. The minimum down payment amount, interest rate, and borrower qualifications will all vary depending on the loan type you choose. Since there's not one mortgage type that fits all, we selected lenders that can offer a wide range of home loan options.

Here are some of the most common mortgage types you can choose from:

• Conventional loans: Conventional loans include any type of home loan that's not insured by the United States federal government. They're available through banks, online lenders, credit unions, and mortgage companies.
• Conforming loans: Conforming loans are considered "conforming" because they adhere to the lending rules set by Fannie Mae and Freddie Mac. Such loans also fall within limits set by the Federal Housing and Finance Agency. In South Dakota, the one-unit limit is $548,250 for 2021, on par with the national average.
• Jumbo loans: Jumbo loans are those with loan amounts higher than conforming loan limits. You can use these mortgages to finance larger properties or houses in upscale neighborhoods.
• Fixed-rate loans: A fixed-rate mortgage comes with a consistent or unchanging interest rate. Usually, customers can pick from 5-, 10-, 15-, or 20-year fixed-rate loans. Most people prefer this type of mortgage because of its predictability. Because the interest rate remains constant, borrowers know how much they can expect to pay throughout the life of the loan.
• Adjustable-rate mortgages: This refers to loans with an initial fixed-rate period. Once that period ends, the mortgage lender will adjust the rate based on a market index.
• Government-backed loans: Government-backed mortgages are those that are secured by the United States federal government. They typically come with more flexible terms, lower mortgage rates, and more lenient credit requirements. Examples of government-backed loans include Federal Housing Administration (FHA), US Department of Veterans Affairs (VA), United States Department of Agriculture (USDA) loans.
• Mortgage refinancing: This refers to paying off an existing mortgage, then replacing it with a new one. Homeowners refinance to negotiate terms of their mortgage or to take advantage of lower mortgage rates.
• Home equity lines of credit (HELOC): HELOCs are consumer loans that allow property owners to use the equity they have on their homes as collateral. Compared to other types of consumer loans, HELOCs typically come with lower interest rates.

Affordability

Since interest rates change daily, it's difficult to gauge a mortgage lender's affordability based on this metric. Instead, we look at several factors that make it easy or affordable for people to secure a mortgage loan. These include the following:

• Minimum FICO score: Borrowers usually need a credit score of 620 or higher to qualify for a loan. Still, some mortgage companies offer mortgages to people with lower scores. Others consider alternative credit data, such as utility bill payment history, to determine whether a person can qualify for a mortgage.
• Minimum down payment: Most mortgage companies require a downpayment of 20%. However, buyers can find loans for as low as a 3% down payment, provided that they pay for private mortgage insurance (PMI).
• Closing costs: These include the charges related to processing an application, such as the attorney fee and origination fee. Typically, these fees can reach 3% to 5% of the loan amount. Some lenders waive closing costs to be more competitive.
• First-time homebuyer programs: The best mortgage lenders are those that work with the South Dakota government to offer first-time homebuyer programs. Loans that fall under these programs typically come with low down payments as well as competitive mortgage rates.

Application

Applying for a loan can be one of the most stressful parts of getting a home loan. Most borrowers need to go back and forth with a loan officer to get their application approved. However, the best companies make this process quick and hassle-free.

To determine if a lender has a good application process, we ask the following questions:

• Is it possible to complete the mortgage loan application online? These days, lenders should give borrowers the option to submit and complete a mortgage application online. Not only does this make the application process convenient for lenders, but it also makes it safer.
• Is the lender transparent about its mortgage rates? It's always easier for borrowers if lenders display their mortgage rates on their websites, so that borrowers can easily shop and compare rates. It's also good to choose a lender that has a mortgage calculator on its website. This makes it easy for prospective borrowers to compute future payments.
• How fast can the lender process new applications? The best companies are those that can review and close applications within 2-4 weeks.

Customer Service And Satisfaction

The top mortgage companies should be those that can maintain good relationships with their clients. To assess a company's customer service, we refer to studies from two agencies: JD Power and Better Business Bureau (BBB).

JD Power is a marketing research firm that conducts annual customer satisfaction studies on companies across various industries. Meanwhile, BBB is an organization that assigns a letter grade (F to A+) to companies based on numerous factors, including how well companies handle customer complaints.

Availability

When choosing a company, it's essential to choose one that has a South Dakota mortgage loan originator license. Aside from that, it's good to pick a company that has a brick-and-mortar location in the state. That way, you can easily meet with a loan officer in person to discuss the details of your home loan.

5 Best South Dakota Mortgage Lenders

Based on the criteria above, here are our top picks for the best South Dakota mortgage lenders:

	Guaranteed Rate	Carrington Mortgage Services	Veterans United Home Loans	New American Funding	Fairway Independent
Best for	Online convenience	Borrowers with bad credit	VA loans	Available loan options	Local service
Loans
Conventional loan	✓	✓	✓	✓	✓
FHA loan	✓	✓	✓	✓	✓
VA loan	✓	✓	✓	✓	✓
USDA loan	✓	✓	✓	✓	✓
Conforming mortgage loan	✓	✓	✓	✓	✓
Jumbo loan	✓	✓	✓	✓	✓
Fixed-rate loan	✓	✓	✓	✓	✓
Adjustable-rate mortgage	✓	✓	✓	✓	✓
Other criteria
Min. credit score (FICO)	FHA	600	500	640	640	600
VA	600	500	640	640	600
USDA	620	500	640	640	600
Conventional	620	620	640	620	620
Jumbo	700	620	640	640	660
Min. down payment	3%	3%	0%	3%	3%
BBB rating (A+ to F)	A-	A+	A+	A+	A+
JD Power rating (out of 1000)	832	741	873	N/A	N/A

1. Guaranteed Rate: Best For Online Convenience

If you're looking for a company that can process your application online, Guaranteed Rate should be one of your top choices. It's one of the first companies ever to fully digitize the mortgage process, allowing you to send documents and track applications from the comfort of your home.

Not only that, Guaranteed Rate offers individuals free access to its current rates. Whether you're hoping to purchase a new home or refinance your current one, just check the lender's website to see the rates and get a loan estimate.

Take into account that Guaranteed Rate is best for borrowers with good credit. The underwriting process is fully automated, so you're out of luck if you need a lender that considers alternative credit data.

Availability: Guaranteed Rate has a mortgage loan originator license in all 50 states and Washington, DC

2. Carrington Mortgage Services: Best For Bad Credit

Carrington Mortgage Services specializes in offering home loans to borrowers with poor credit. Not only that, it offers a number of low-down-payment programs. 

The lender's loan products can be used for purchase and refinancing. It has a full suite of government-backed mortgages, such as FHA, USDA, and VA loans.

Since the lender considers alternative credit data, don’t expect a fully online application process. You can upload and sign documents electronically, but you will need to work with a loan officer to track your application.

Availability: Carrington Mortgage Services is available nationwide, except Massachusetts and North Dakota

3. Veterans United Home Loans: Best For VA Loans

Veterans United Home Loans is a well-known lender that specializes in VA loans. But it also offers a wide range of mortgage products, including USDA and FHA loans.

Like most lenders, Veterans United has a website where prospective buyers can submit their applications digitally. It also employs advisors from each branch of the US army, so you can get help from someone who understands your specific circumstances.

Keep in mind that Veterans United may charge higher rates and fees compared to other lenders. It also has stricter credit score requirements for government-backed mortgages.

Availability: Veterans United is licensed to originate loans in 50 states and DC

4. New American Funding: Best For Available Loan Options

New American Funding offers a full suite of home loan products. No matter what type of mortgage you want, you can be assured that this lender offers it.

The company also has a fully online application process. You can check rate quotes, upload documents, and track the progress of your application on the lender's website.

Another reason to choose New American Funding is that it offers non-qualified mortgages for self-employed borrowers. The company also has Spanish-speaking agents.

Availability: New American Funding is licensed to originate loans in 49 states

5. Fairway Independent: Best For Local Service

If you prefer talking to a loan officer face-to-face, then Fairway Independent is the right lender for you. The company's South Dakota division has four physical branches.

Not only can you negotiate terms with a loan officer in person, but you can also submit your applications through the company’s app or website. However, you need to submit your contact information to check the company's rates.

Fairway Independent works with the state government to offer down payment and closing cost assistance. The company also offers a complete range of loan options.

Availability: Fairway Independent operates in all 50 states, with four physical locations in South Dakota

Closing Thoughts

Finding the best South Dakota mortgage lender doesn't have to be time-consuming. Just check our list to see which one is best for your next home purchase. The lenders we chose also offer multiple refinancing options.

For more information about getting a home loan, get in touch with Wesley Mortgage, LLC! Our mortgage professionals can help you with the following:

• Choosing the right lender
• Comparing South Dakota mortgage rates
• Submitting an application
• Understanding the terms of your home loan