The 3 Best Online Mortgage Lenders

The mortgage market share held by non-bank lenders has been on the rise in recent years. As of April 2016, non-bank lenders originated 48% of all mortgages, up by 400 basis points from their market share in 2015. By comparison, traditional banks originated 43% and credit unions originated 9%. Non-banks are attracting increasing numbers by using technology to streamline the mortgage process. Consumers can apply for loans using their smart devices. Online mortgage lenders typically use nonconventional underwriting practices that significantly reduce the time it takes to close on a house, which makes their services highly desirable from a consumer perspective. Faster processing times offered by online lenders can offer buyers a significant advantage, especially when competing for homes in hot real estate markets. Here are three of the top online mortgage lenders as of April 2016.

Quicken Loans Inc.

Quicken Loans was the largest online mortgage lender with over 2 million loans processed as of April 2016. The Detroit-based lender targets a range of consumers with a standard menu of traditional 30- and 15-year conventional mortgage options as well as FHA and VA loans. Quicken Loans' specialty products include the "YOURgage" loan, which allows borrowers to customize conventional loan products with flexible payoff terms. YOURgage customers can buy or refinance a primary home with a low down payment and choose payoff options between eight and 30 years, based on individual budget. Quicken offers the two loan application options that make it stand out from a consumer perspective: In 2016, Quicken Loans launched Rocket Mortgage, a digitized process that eliminates all loan paperwork. Rocket Mortgage customers can apply for loans on their smart devices and get an approval within minutes. Customers who prefer a more traditional approach to online borrowing, however, can work directly with a Quicken Loans expert over the phone to get a mortgage approved. Quicken uses the same rigorous underwriting process for its quick, and not so quick, loan approval process.

Amerisave Mortgage Corporation

Amerisave Mortgage Corporation offers a self-service mortgage loan process that hybridizes traditional and online lending procedures; self-service is a superior option for consumers with good credit who prefer to do their loan applications solo. As of April 2016, the Atlanta-based mortgage lender had funded over 250,000 loans and had a five-star rating on the ConsumerAffairs website. Customers working with the lender can choose from traditional or conventional, FHA, VA and USDA products and rates on the lender's website. They download application forms and mail completed forms to the lender. Amerisave arranges for loan closings at the borrower's home or at an attorney's office. Amerisave's high consumer satisfaction in 2016 indicates that its reputation has rebounded from misleading ad complaints that were the subject of legal action by the Consumer Financial Protection Bureau (CFPB). Customers alleged that Amerisave promised unavailable interest rates through bait-and-switch ads and required them to pay unauthorized fees for good-faith estimates. In August 2014, the CFPB ordered Amerisave to refund consumers $19.3 million.

Social Finance Inc.

Social Finance (SoFi) is an up-and-coming financial services company that aims to be the first-choice bank for high-earning millennial college graduates. Few lenders specifically target millennials, which makes this one stand out for homebuyers in this age bracket. SoFi requires overall good credit and high income but has no set minimum eligibility cutoffs. The company was founded in 2011 by Stanford alumni and initially offered student loan refinancing before expanding into mortgages and other loan products. As of April 2016, it processed $1 billion in loans every month. In addition to financial services, SoFi offers nontraditional services such as job placement, career and investment counseling and even promotes matchmaking through sponsored meet-ups. SoFi offers unconventional mortgage products and fast application responses through its mobile app. For example, borrowers can apply for mortgages of up to $3 million with flexible debt-to-income requirements. SoFi's flexible underwriting processes also allow for loan features such as low down payments and interest-only payment options. Borrowers aren't required to pay mortgage insurance or other lender fees, which makes it stand out for consumers wishing to avoid such fees. In March 2016, SoFi announced that it would launch a hedge fund to attract investors to its loan portfolio.