SoFi Mortgage Review: Best Low-Requirement Jumbo Loans
If you’re looking for a more expensive home, a jumbo loan can be one of your best options. However, jumbo loans may have stricter qualification requirements compared to normal mortgages. One of SoFi’s greatest strengths is its easy-to-qualify jumbo loans. But what else does SoFi offer in addition to their jumbos?
In this SoFi mortgage review, we go in-depth on SoFi’s performance as a lender! We do this by providing several crucial criteria for judging a mortgage lender’s performance and measure how SoFi performs in all of them. Moreover, we also go over their strengths and weaknesses to help you make an informed choice on whether or not you choose SoFi as your lender.
Our Mortgage Lender Review Criteria
To better define the main review criteria discussed in this article, we break down all five of them in this section.
Mortgage Product Availability
One of the first considerations that customers think about when choosing a lender is their lineup of mortgage products. For a better understanding of the mortgage products offered by a lender, we explain them down one by one.
Conventional Fixed-Rate Mortgage
Among all conventional mortgage loans, this is the most common form. This loan offers a static interest rate that doesn’t fluctuate with market conditions. The static rate translates into identical monthly payment amounts, which makes these loans popular with people who plan their finances long-term. Its simplicity also makes it easily understood and a good choice for first-time homebuyers.
Conventional Adjustable-Rate Mortgage (ARM)
Contrasting their fixed-rate counterparts, adjustable-rate mortgages feature an interest rate that changes regularly – typically annually. The rate adjustments are based on a market index chosen by the lender, which influences whether your rates for the next year rise or fall. While this may cause your payments to change year by year, adjustable-rate mortgages offer you better rates during their initial period of fixed interest rates.
The initial fixed-interest period’s length is typically denoted in the loan’s name. For example, a 5/1 ARM has five years of fixed interest rate before your rates adjust annually.
All conforming mortgage amounts are limited by the Federal Housing Finance Agency (FHFA). However, lenders offer an option to buy more expensive property using jumbo mortgages. These are conventional loans that have higher limits compared to conforming conventional loans – usually featuring amounts of up to 2 or 3 million dollars.
Because these loans aren’t insured by guarantor companies Fannie Mae & Freddie Mac, lenders bear greater risk on a jumbo loan. To offset this risk, they usually impose higher rates and stricter qualification requirements on jumbo loans, like a higher minimum credit score, better debt-to-income ratio, and higher down payment requirement.
Several bodies in the United States federal government also provide home loans to eligible borrowers. This type of loan offers relaxed credit score and down payment requirements if the borrowers fulfill the main eligibility criteria.
These loans include:
FHA loan: Offered by the Federal Housing Administration, these loans are aimed at low-income homebuyers. They require lower credit scores and a 3% minimum down payment, making it more lenient compared to conventional mortgages.
VA loan: This Department of Veterans Affairs-provided loan offers military personnel low-credit score loans without down payment requirements.
USDA loan: Administered by the United States Department of Agriculture, these loans are specifically made to help people in rural areas buy homes.
Refinancing a mortgage is one of the most common alternatives to getting more affordable interest rates. Refinancing entails taking out another mortgage to pay off your current one. A refinance doesn’t just lower your mortgage rates – you can also use it to change your loan term or shorten your loan’s life.
Homeowners can also leverage their home’s value using a cash-out refinance. When you do a cash-out refinance, you convert part of your home equity into cash to use for other purposes.
Rate And Fee Transparency
Another major part of mortgage shopping is comparing offers from various lenders – this usually requires information on your mortgage rates and origination fees. Therefore, having easy access to accurate data of your mortgage rate and origination fees is essential.
Online Mortgage Experience
Many mortgage lenders now do business with their borrowers online on their site or with an app. While some complement their physical operations with an online presence, some others conduct their lending services entirely on their web page. This criterion reviews their online convenience and takes a look at any supplemental tools they may have on their site.
Physical Availability And Support Services
A mortgage lender’s physical service availability is still an important consideration to some borrowers. Their service coverage is also another integral part of our review because even the best mortgage lender won’t mean anything if they don’t serve your state. We also see whether they have any support services like a customer care hotline.
The last important factor in a mortgage lender’s performance is their customer service. Excellent customer service ensures that borrowers will at least consider working with the same lender for future mortgage needs. To measure this criterion, we examine reports from customer review reports from three research organizations: J.D. Power, the Better Business Bureau, and the Consumer Financial Protection Bureau.
SoFi Mortgage Review
Social Finance – more commonly known as SoFi (NMLS ID# 1484615) is a San Francisco-based finance service provider. Founded in 2011, SoFi began as a student loan finance company, before branching out to home loans and personal loans. SoFi also provides services for banking and trading – most recently, the company announced that it will also provide credit card services.
With their wide range of services offered on a fully-digital basis, SoFi aims to be a one-stop financial solution provider for its customers.
Mortgage Product Availability
SoFi Mortgage offers a range of loan products found in almost all mortgage lenders. These mortgage loan products include:
Conventional fixed-rate mortgage available in 10-, 15-, 20-, and 30-year terms
Adjustable-rate mortgage available in 5/1 and 7/1 terms
Jumbo mortgage loans up to $3 million
Rate & term and cash-out refinancing
Home equity loans
Among their lineup of loan products, SoFi Mortgage has a special policy for jumbo mortgages. Instead of the usual 20% down payment requirement, you only need to pay 10% on your down payment to avoid private mortgage insurance.
If you need a large mortgage loan but struggle to come up with a 20% down payment, this makes SoFi one of the strongest choices. This specialization in jumbo mortgage products is reflected by 2019 reports from the Home Mortgage Disclosure Act, stating that jumbo loans make up 22% of SoFi’s loan volume.
On almost all conforming mortgages, SoFi offers a minimum of 5% down payment. But to avoid mandatory mortgage insurance costs, you need to provide a minimum of 20% down.
Borrowers with lower credit scores may not qualify for SoFi mortgage products easily. Qualifying is somewhat tougher compared to other lenders because SoFi generally requires a minimum credit score of 660 on their loan products, instead of the more common credit score minimum of 620.
Notably, the company doesn’t offer any kind of government-backed loan products. If you’re looking for a low down payment option with more relaxed credit score needs, you may need to look up other lenders.
However, the company has more options to leverage your home equity compared to its peers. In addition to cash-out refinancing, you can also opt for a home equity loan. However, SoFi doesn’t offer home equity lines of credit.
One more home equity loan option the company offers that is rarely offered by other lenders is student loan refinancing. This allows you to pay off your remaining student loan by using your home equity.
Rate And Fee Transparency
SoFi Mortgage struggles in terms of rate transparency. Their mortgage page doesn’t list any sample mortgage rates or closing costs publicly – to see your interest rates and mortgage fees, you need to register on the website. Once you’ve signed up on the website, you have to provide your personal data so SoFi can do a soft credit check on your report to estimate mortgage rates and closing costs.
While a soft credit history check doesn’t damage your credit score like a hard inquiry, you’re still providing personal data like your email address and credit information to them.
However, SoFi does provide some benefits to its borrowers. If you have a previous loan or a minimum of $50,000 in SoFi’s investment account, you’re eligible for a $500 closing cost credit on your SoFi mortgage.
Online Mortgage Experience
SoFi provides a completely-online mortgage application process on their website that allows you to pre-qualify for a loan within two minutes. By having a preapproval letter, you can show the property seller that you are financially able to buy a home.
Once the pre-approval is done, SoFi will connect you with a loan officer that will guide you all the way through until your loan is closed. Compared to the industry average of 40-50 days until a borrower receives their funding, SoFi borrowers can receive their money in as little as 30 days.
Another strength of SoFi’s digital application process is that it uses special tools to pull your financial information – like your bank statements and tax returns – automatically. This means that parts of your application will be pre-filled and you don’t have to spend time to find the needed loan paperwork.
The company also provides educational content on its site in the form of videos to help new borrowers learn about mortgages.
Physical Availability And Support Services
Because it conducts business with customers entirely on its page and app, SoFi does not operate any physical branches in any state. If you prefer working in person with the mortgage officer, you can consider other options.
SoFi is also only licensed in 42 states and the District of Columbia. The eight states not served by SoFi are West Virginia, South Dakota, New York, New Mexico, New Hampshire, Missouri, Hawaii, and Alaska.
Currently, SoFi boasts good, although not perfect reviews for customer satisfaction. The Better Business Bureau gives SoFi a rating of A. This puts them behind their competitors Rocket Mortgage and Bank Of America. However, this rating places SoFi above Ally Bank, which was ranked B-.
The Consumer Financial Protection Bureau has very limited information on SoFi complaints. Out of an undisclosed amount of loans, SoFi received only 5 recorded complaints – all five are related to applying and closing mortgages.
While J.D. Power has not listed SoFi’s mortgage arm in their 2019 and 2020 satisfaction studies, SoFi received a score of 851 out of 1,000 in their consumer lending study. This puts them above major banks like Citi and Wells Fargo with a margin of 20 points.
Strengths Of SoFi Mortgage
SoFi is favored among customers due to the variety of its digital services. Here are other strengths that SoFi boasts over its peers.
Member Loyalty Bonuses
By being a SoFi member or credit cardholder, you can qualify for various bonuses and perks. One of the most useful bonuses is the $500 credit on closing costs. Because closing costs can set you back more than $1,000, this goes a long way if you’re looking to save money.
A SoFi banking membership also grants you member-exclusive content and services like free access to SoFi’s financial and career advisors to help achieve your professional goals. You also receive rate discounts on non-mortgage loans.
Lenient Jumbo Loan Requirements
Compared to other lenders who are stricter with jumbo loans, SoFi makes it much easier for you to qualify. Whereas other lenders like Bank Of America and Rocket Mortgage require a minimum 20% down payment on jumbos, SoFi offers a minimum of only 10%.
Weaknesses Of SoFi Mortgage
However, there are some caveats to lending with SoFi, which we detail in this section.
Low Rate Transparency
One of the most notable weaknesses of SoFi is that they have no publicly available sample rates. To see their rates, you need to create an account and start a mortgage application – which means giving your personal information to a company that may not end up as your mortgage lender.
Limited Service Area And Physical Availability
If you’re a traditional borrower who prefers engaging face-to-face with loan officers, then SoFi is not advised for you. In addition to their lack of physical offices, SoFi only serves part of the United States – eight states are excluded from their service availability.
The Bottom Line
If you’re looking for low-down-payment jumbo mortgages, SoFi may be the right choice for you. Their lenient requirements make it easier to qualify for a jumbo loan. If you’re a SoFi member, you can also enjoy closing cost credit and lower rates on other loan products. However, SoFi’s low rate transparency makes it tougher for rate-shoppers to compare offers.
Still, looking for information to make an informed decision? Wesley Mortgage, LLC is here to assist you! We’ve compiled numerous reviews from America’s top mortgage lenders to help you decide which one fits your needs best. We also provide a mortgage consultation if you need personalized advice. Contact us today for more information!