Going with a top mortgage lender is important because you not only want to get the lowest mortgage rate possible, you also want to have low financing fees and a 45-60 day close.
After analyzing over a 25 different lenders, I've come to the conclusion that Wells Fargo and Citibank are the two best large bank mortgage lenders in America.
However, I think everyone should check online for the best mortgage rates through a lending marketplace such as LendingTree. It's great for consumers when pre-qualified lenders compete for your business. You can get multiple real mortgage rate quotes in under three minutes, for free.
20 years ago, LendingTree revolutionized the way consumers get a mortgage. In the past, consumers had to pitch banks to get a mortgage or refinance their loan. Today, thanks to LendingTree's innovation, banks now pitch you to win their business. After all, “when banks compete, you win.”
LendingTree (Ticker: TREE) is the top mortgage lender today with a ~$700 million market capitalization. They have the largest marketplace of lenders who aggressively competes for your business.
Top Mortgage Lender: LendingTree's Long Operating History
After graduating from Bucknell University, Doug Lebda went to work for PricewaterhouseCoopers in Pittsburgh as an auditor and consultant. When he decided to purchase his first home and obtain a mortgage, he found the process of visiting multiple banks and combing through mortgage offers frustrating, time consuming, and exhausting.
Lebda realized that if the process was that difficult for someone with his financial acumen, then there must be a massive market of others with the same desire for a better way. With this idea, Doug founded CreditSource USA in 1996 with Jamey Bennett, whom he knew from Bucknell and had previous experience founding BookWire.
The new company was later rebranded as LendingTree and by 1998, LendingTree launched nationally online with its headquarters based in Charlotte, NC. They also have a large office in Burlingame, just 30 minutes south of San Francisco.
I've met some senior management and am impressed with what they've built over the past 23+ years.
LendingTree Provides Free Quotes
The great thing about LendingTree is that you can apply for a no obligation loan online in minutes, and within the hour, you'll get competing banks e-mailing and calling you about their best rates.
You, the borrower doesn't pay LendingTree a penny. It's the banks who pay LendingTree to compete for your business. As a result, lenders are motivated to try and get you the best loan possible to win your business.
Be forewarned the celerity of the lenders can be quite surprising to those who are not used to such quick service. Their e-mails and phone calls will die down after several days once they realize you have gone with another lender, or are not interested in their offers.
I like to use written quotes from online lending marketplaces to negotiate term at my primary bank. Using this strategy, I was able to get my bank to refinance my jumbo loan to a 2.375% interest rate from their initial 2.5% offer.
Why You Should Refinance Now
A big part about growing your net worth is doing everything possible to minimize expenses. I believe everybody should at least own their primary residence to get neutral the ever rising property market. Once you own, it's all about lowering your property taxes and getting the best mortgage rate possible.
If you are a new homebuyer or want to refinance, it's important to compare rates across multiple lenders. Aim to get as many bids as you can to get the best mortgage rate and terms as possible.
After that, you can smartly invest in real estate through real estate crowdfunding platforms like Fundrise. They allow investors to gain investment exposure to real estate for as little as $10. This is a great entry point if you're new to investing and are looking to diversify.
My Take On Interest Rates
Mortgage rates were going down for over 40+ years, hitting lows before rising between 2021-2023 post-pandemic. In 2024, rates are finally on the way back down again. And I'm in the camp that interest rates should stay low for years to come. You can use a top mortgage lender to take advantage of lower rates.
In a continued low interest rate environment, I prefer taking out a 5/1 ARM amortizing over 30 years. Why pay a higher rate when the average length of homeownership is 7 years and interest rates are in a structural decline?
You can certainly go for a 30-year fixed loan if you want absolute peace of mind and believe interest rates will be aggressively higher in the future. But if the 5/1 ARM mortgage rate is at least 1% cheaper, then I would strongly consider an ARM.
Take the monthly interest savings and save or invest it. There's a interest rate hike cap that's fixed for one year after the fixed adjustment of an ARM is done.
There's also a lifetime interest rate cap that's usually no more than 4% – 5% higher than the initial rate. You can always refinance your ARM before the fixed period is over like I've done many times before.
Related: The Anatomy Of An Adjustable Rate Mortgage
Take Advantage Of Lower Rates
When it comes to refinancing, shop around and use a top mortgage lender to get the lowest rates.
I've refinanced three different properties over the past 13 years multiple times, and my combined interest savings a month is roughly $4,000. That adds up to well over $1,000,000 in interest savings over the life of the loans!
If you can find a home that's a good deal, you can afford the payments, and plan to stay there for 10+ years, then I would take advantage of record low interest rates and buy property.
How To Invest In Real Estate
As mortgage rates decline, demand for real estate will heat up again. As a result, I think it's a good idea to search for deals now. Dollar-cost average into funds that invest primarily in rental properties in low-cost areas of the country.
You can do so easily by investing in my favorite real estate investing platform is Fundrise. With over $3.5 billion in assets under management and over 500,000 investors, Fundrise is the leading, vertically-integrated real estate platform. What's great is you can get started with as little as $10.
Fundrise primarily focuses on single-family, multi-family, and build-to-rent properties in the Sunbelt region. With lower valuations, higher yields, and strong demographic shifts, Fundrise investments are in the sweet spot of a positive long-term trend.
Another private real estate platform to consider is CrowdStreet. Crowdstreet is a marketplace that mainly sources individual commercial real estate deals from various sponsors around the country. This way, you have more customization to build your own select private real estate portfolio.
Importantly, you must diversify your portfolio and do your due diligence on all the sponsors. Research their track record, management, performance history. Although CrowdStreet screens their deal offerings, you need to do your due diligence as well.
I've personally invested $954,000 in private real estate funds that invest in the heartland of America. It's been a great way to diversify my San Francisco real estate holdings and earn more passive income.
Both platforms are Financial Samurai sponsors and Financial Samurai is a six-figure investor in Fundrise. I put my money where my mouth is.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
About Financial Samurai: FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 organic million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.