Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

Best Mortgage Lenders of 2021

To find the best mortgage lenders in the U.S., we interviewed more than a dozen experts in the mortgage industry and weighed over 16,000 data points, including the number of originations by state, types of loans offered, customer satisfaction ratings, and average credit rating and mortgage balance by state and region.

Money.com Research Team: Gabriella Cruz-Martínez Heidi Rivera Joan Pabón Colin Grubb Last Updated: August 16, 2020
See Analysis

Money's Top Picks

  • Quicken Loans

    Best Mortgage Company
    Overall

    View Rates

    The reason we chose Quicken as our best overall mortgage lender is simple: their nationwide reach combined with excellent customer service. In 2019, the Mortgage Bankers Association and the Veterans Administration reported that the company originated the highest percentage of loans in almost every category, from conventional to VA loans.

    That being said, we all know size doesn't necessarily equal quality. Quicken, though, has significant strength in customer service and a surprisingly low level of complaints for an institution of its size. Quicken is rated "Among the Best" according to JD Power's Primary Mortgage Origination Satisfaction Study, which takes into account each company's application and approval process, communication, loan closing, and loan offerings. In fact, Quicken has consistently ranked highest in customer satisfaction for loan originations with JD Power for 10 consecutive years.

    Quicken's ​YOURgage​ program is another thing that sets it apart from the pack. YOURgage allows borrowers to choose the term of their fixed-rate mortgage and get a loan of up to $510,400. First-time homebuyers can pay as little as 3% down. This is especially helpful for first-time homebuyers who may not have 20% saved for a down payment.

    Finally, as Quicken has completed 96% of all electronic mortgage closings in the country, the company has a wealth of experience completing the process online, which is highly convenient for most applicants these days.

    Size, reach, and options are important, but only if the company has the customer service chops to back it up. We chose Quicken as the "best overall" mortgage lender because it is most likely to be available to you and offers solid service at the same time. However, if you're looking for something more focused on your area or needs, read on.

    3rd Party Ratings
    #1 MBA Ranking
    JD Power Rating Among the Best
    Company Credit Check
    Minimum Credit Score
    Applies to conventional loans as outlined by Fannie Mae and Freddie Mac. May vary for government-backed loans.
    620
    Do they consider alternative
    credit data?
    No. They consider credit scores and DTI Ratios.
    Latest News
    Quicken and Covid-19

    For clients who have been impacted by COVID-19, Quicken Loans is offering an initial forbearance, which temporarily stops mortgage payments. Clients can fill out an application for assistance by visiting RocketMortgage.com. Once the crisis is over, Quicken Loans will work with clients to determine the best course of action when they are ready to resume payments. Clients won't experience an impact to their credit as a result of the forbearance.

    As for closings and appraisals, Quicken is taking precautionary measures to ensure that their signing agents and appraisers do not have COVID-19. According to their statement, in some cases, they are not required to enter your home for the time being.

  • Guild Mortgage

    Best Mortgage Company for
    First-time Home Buyers

    We know how daunting it can be to purchase your first home, particularly if things like student loans and other financial burdens are affecting your credit score and budget. That's why Guild's range of credit options made it our top pick as the best mortgage lender for first-time homebuyers.

    Guild also offers government-backed FHA, VA, and USDA loans, as well as programs that specialize in down-payment assistance. In fact, according to the MBA, Guild is among the nation's top five FHA lenders, making it a great option for qualifying borrowers with a credit score of 600.

    For first-time homebuyers who think their credit scores or down payment amounts aren't enough to get a mortgage, Guild offers the best 3-2-1 Home program, which is a mortgage specifically designed for borrowers who meet low-income requirements or live in low-income areas; it features a nifty incentive which accepts a minimum 3% down payment, awards borrowers a $2,000 Home Depot gift card and a $1,500 grant that can be used for the loan's down payment or closing costs. The 3-2-1 program will be available until May 1, 2020.

    3rd Party Ratings
    #12 MBA Ranking
    JD Power Rating Better Than Most
    Company Credit Check
    Minimum Credit Score
    Applies to conventional loans as outlined by Fannie Mae and Freddie Mac. May vary for government-backed loans.
    620 is the standard, with minor exceptions
    Do they consider alternative
    credit data?
    Yes, ​such as utility bills and rental payment histories.
    Latest News
    Guild Mortgage and Covid-19

    The Federal Housing Finance Agency (FHFA) has extended a moratorium on foreclosures and evictions on enterprise-backed (Freddie Mac and Fannie Mae), single-family mortgages through June 30, 2020. Guild Mortgage is actively monitoring the COVID-19 situation and will not adversely report customer loans to credit bureaus through March, April, and May as well as waiving late charges for all borrowers for the months of April and May. If you expect COVID-19 to impact you for a while, Guild Mortgage, in partnership with investors, is offering an initial forbearance option and hardship assistance.

  • Veterans United

    Best Mortgage Company for
    Military Members - Online

    View Rates

    Veterans United Home Loans (VU) is the country's top VA loan originator, surpassing even industry giant Quicken Loans. Borrowers looking for excellent customer service will be happy with VU as well, as it's classified as "Among the Best" in J.D Power's Primary Mortgage Origination Satisfaction Study, although the lender doesn't formally qualify to be ranked in the survey.

    While the fact that it specializes in loans backed by the U.S. Department Veterans Affairs makes it a great option for those looking into this type of mortgage, it doesn't offer home equity loans or HELOCs, and services only some of its loans. Although Veterans United has branches in only 18 states, its My Veterans United online application portal allows veterans and members of the military to apply for a VA loan from anywhere in the U.S. or overseas.

    In fact, VU's online tools make it easy to get a quote in a matter of minutes and get pre-qualified without having to set foot in a branch office, which is a plus for anyone observing lockdown orders associated with COVID-19 or who simply prefers or needs to handle the mortgage process online. Veterans United will assign a team of loan specialists to work with each customer to help streamline the application process. Once a home is under contract, the online portal will let the borrower know what the next steps are, issue reminders about what documents need to be uploaded, and help keep track of the application.

    Veterans United also offers a free online credit counseling program for veterans and service members with low credit scores called the Lighthouse Program. A credit specialist is assigned to each customer and will help fix errors on credit reports, map out a plan for improving a score, and keep advising the borrower until they reach their credit score goal, regardless of how long that may take.

    Because of the strength of its online tools and resources, we picked Veterans United as our top online VA lender.

    3rd Party Ratings
    JD Power Rating Among the Best
    Company Credit Check
    Minimum Credit Score
    Applies to conventional loans as outlined by Fannie Mae and Freddie Mac. May vary for government-backed loans.
    660
    Do they consider alternative
    credit data?
    Lenders can count VA disability income as well as certain military allowances such as flight and hazard pay, among others, as effective income.
    Latest News
    Veterans United and COVID-19

    For customers who are experiencing financial hardship due to the COVID-19 pandemic, Veterans United is offering up to an initial 180 days of forbearance, which temporarily suspends mortgage payments. If necessary, borrowers have the option of being able to extend that period for an additional 180 days.

    While the loan is in a forbearance program, VU will not assess any late payment fees or accrue any additional interest on the loan, and entering into a forbearance plan will not affect a borrower’s credit score.

    Once the forbearance period ends, Veterans United will work with individual borrowers to establish either a repayment plan or a loan modification, whichever option works best for their needs. More information about forbearance can be found on Veterans United’s COVID-19 Mortgage Relief Resource Center.

  • Navy Federal

    Best Mortgage Company for
    Military Members - In Person

    As the world's largest credit union, the fourth-ranking VA loan originator in the country, and one of the best mortgage lenders by customer satisfaction according to J.D. Power, Navy Federal Credit Union (NFCU) is our top pick for military service members.

    While it doesn't take the lead on VA loan originations, NFCU does offer more in terms of accessibility and convenience than similar competitors. Unlike other VA lenders, it has 343 branches around the world for those wanting in-person assistance and, as a credit union, NFCU is a member-owned non-profit entity, so its main interest is serving its customers as opposed to the business' bottom line.

    NFCU also services all of its mortgages in-house for the life of the loans, which can be important for customers looking to do business solely with the lender they have researched and chosen. In fact, according to J.D. Power, having their loans involuntarily transferred to a new servicer can be a pain point for many consumers.

    While VA loans are government-backed, they don't feature the same interest rate across lenders. However, borrowers looking into mortgage products through NFCU can take advantage of its rate match. If you find a better rate elsewhere, NFCU will match it or give you a deduction of $1,000 off your closing costs.

    Membership is open to active-duty military members as well as reservists, veterans, retirees, and annuitants.

    3rd Party Ratings
    #13 MBA Ranking
    JD Power Rating Among the Best
    Company Credit Check
    Minimum Credit Score
    Applies to conventional loans as outlined by Fannie Mae and Freddie Mac. May vary for government-backed loans.
    620 is the standard, but they accept less than perfect credit scores for certain loan products
    Do they consider alternative
    credit data?
    Yes, it considers data such as utility bills and evaluates a member's tenure or loyalty to the company.
    Latest News
    Navy Federal and COVID-19

    Navy Federal is offering eligible members a forbearance plan, which temporarily suspends mortgage payment requirements. Members will also be provided with options to make payments missed during forbearance.

    "We understand that some Navy Federal members are going through an unprecedented experience right now. Our commitment has been and will continue to be to support our members the best we can," said Janelle Allison, Vice President of the Mortgage and Equity Resolutions Branch at Navy Federal. The latest details on NFCU's forbearance for mortgage borrowers can be found on NavyFederal.org's website by clicking on the COVID-19 Response button near the top of the main page.

    Additionally, closing a mortgage loan may take longer than usual, but Navy Federal is honoring initial locked rates in light of COVID-19. For more information regarding other personal loans, checks or transfers, visit their COVID-19 response blog​.

Best Lenders for Online Application Process

After the original analysis and publication of the research data, we looked at the tools and interfaces that some mortgage houses offer potential clients interested in a totally web-based transaction.

In addition to our original methodology, we included an analysis of mortgage companies’ websites and apps. Specifically, we looked at ease of navigation, information-sharing, the amount of steps in the loan application, and approval process that can be taken care of online.

  • Rocket Mortgage

    Quick and clean online process

    View Rates

    Rocket has spent a lot of time and effort creating one of the most hassle-free and intuitive web portals for those looking for a home mortgage or refinance option, and it shows. It does not feel as if parent company Quicken Loans put the site together as an afterthought for users following up on an application originally submitted in person. On the contrary, it is clear that the idea behind Rocket Mortgage's website was to offer a totally web-based application option for potential clients.

    The straightforward, fill-in-the-blank type interface will be appealing to those who are web-savvy and comfortable managing their financing online and those who do not have easy access to a physical mortgage branch office. The site also includes a circular graphic that continually informs the user of the percentage of the application process that has been completed. This can be a useful tool in those times that loan submission sessions can extend seemingly endlessly.

    Another of the website’s strong points is the ease with which a user can go back in the application process to correct or update information and then continue forward with the task.

  • Better Mortgage

    Great tool for those unfamiliar with the mortgage process

    View Rates

    Better Mortgage opted for the Q&A approach when designing its' user interface. It features easy to understand options which guide visitors through the loan information and application process.

    The original data compiled by the user’s answers to the site’s questions help Better Mortgage personalize the experience of each user, another plus for the less knowledgeable on the subject or those beginning their search for residential financing.

    The site also features a sign-in option, which allows applicants to fill the loan application partially, save their work and continue at a later date.

    However, it could also be a turn off for users researching mortgage options and who might be wary of divulging personal information on the web or with potential lenders.

  • Paramount Bank

    Information-heavy option, with some glitches

    View Rates

    A "learn as you go" philosophy seems to be behind Paramount Bank's digital loan application site, which is part of their digital banking webpage. Brightly colored and user-option heavy, their Home Loan Learning Center combines its mortgage loans site with a "frequently asked questions" and financing education hub full of detailed information regarding home loans and refinancing.

    The site's design has a familiar feel to it, mainly due to the fact that it is part of Paramount Bank's digital banking site. This means that a potential customer used to managing his accounts via the web will feel comfortable navigating Paramount's Home Loan Learning Center.

    A potential drawback of this type of design is that it may be easier to accidentally exit the mortgage area of the site and stumble into its digital banking area. One incorrect click is all it takes. During recent visits to the webpage several of the mortgage sections were not accessible due to them "undergoing maintenance," according to the site.

Best Mortgage Companies

Top Mortgage Lenders by Region

Avg. Credit Score & Mortgage Amount

Total Loans Originated per Company

Visit Quicken Loans
Source: ​Experian​, Full 2019 ​Report

Methodology

When we got started in January, the fact that there weren't more borrowers taking advantage of the historic plunge in mortgage rates gave us food for thought. This led us to look into market trends and interview economists, real estate professionals, loan officers, and mortgage brokers, to better understand the elements at play in the current mortgage market.

It also led us to look at the qualification requirements of some of the largest mortgage lenders in the industry in an attempt to identify which banks offered the best deals to ordinary borrowers.

With this in mind, our research process began with gathering data from the ​Mortgage Bankers Association and ​JD Power​ to identify the nation's top mortgage lenders based on originations as well as overall consumer satisfaction. This narrowed down our preliminary list of 100 national mortgage lenders to 24.

Using the same data, we calculated the median number of purchase originations, including those for government-backed loans, and eliminated any lenders that fell well below average. This further narrowed down our best list to 11 mortgage companies, including brick-and-mortar banks, credit unions, and online lenders.

We then vetted these companies based on the 16 most important attributes of a lender according to a survey of our interviewees. Additionally, we ran a short consumer poll on Money's social media platforms for seven days, in which almost 100 participants told us which type of lender they preferred. That left us with just three mortgage lenders we identified as the best in the business.

More Details

Our research into the best mortgage lenders in the country led us to the Mortgage Bankers Association, from which we obtained a detailed mortgage origination report. This document sheds light on factors such as the total number of originations (or number of loans issued) by volume per state and per lender, the percentage of each type of loan originated, and the average loan size issued in each state.

We then combed through the 67 factors and over 10,200 data points outlined in the report and eliminated companies that originated less than $20,000 in loans in 2018. This left us with a list of 47 lenders, still a broad sample by any standard.

To narrow down our list even further, we cross-referenced our top 50 picks with J.D. Power's 2019 U.S. Primary Mortgage Origination Satisfaction Study. This study measures customer satisfaction with each lender's application, approval, and closing process as well as their loan offerings and communication. The rankings, in turn, are based on the responses of 4,602 customers who originated or refinanced a mortgage in the period between July and August of 2019.

J.D. Power states that while these findings don't pretend to determine the experience of every borrower with a given lender, they do indicate average customer perceptions of the lenders and loan products included in the study.

After cross-referencing our top mortgage lenders with J.D. Power's customer satisfaction ranking and bumping up the companies that had a larger share of origination as well as an "above average" rating from J.D. Power, we tallied the average percentage of purchase originations per lender and eliminated those that fell below the mark.

It should be noted that the MBA's total number of originations per lender includes data on originations for conventional, jumbo, and refinance and, FHA loans. For VA loans, we based our top picks on the Veterans Administration's 2019 list of lenders by loan volume.

To determine which companies were the best for each region, we gathered data from ​Experian's 2019 Consumer Credit Review​, which contains average credit scores, household income, and mortgage balance on a state-by-state basis. We then cross-referenced this information using the U.S. Census Bureau's 2019 Annual Social and Economic Supplement, determined an average for each of the above factors, and created profiles to represent the average regional borrower.

Using these profiles as guides, we reached out to our top mortgage lenders to find out which of them had the most to offer to accommodate the average borrower's needs. As a final step, we identified where our top lenders had the highest originations per region with the Mortgage Bankers Association's Top 100 Lenders by State excerpt from the 2018 Residential Originations Databook​.

We also took into account the number of mortgage complaints per lender according to the Consumer Financial Protection Bureau (CFPB) as well as the number of regulatory actions taken against a company according to the Nationwide Mortgage Licensing System (NMLS). Companies that had more than 5 regulatory actions with the NMLS and over 20,000 complaints with the CFPB were eliminated from our rankings.

Rankings were derived from more than 60 types of data in the following categories:

Types of Loans Offered

We favored companies that offered a variety of loan options, such as fixed- and adjustable-rate mortgages, term-lengths ranging between 10 and 30 years, and loans backed by government agencies like the Federal Housing Administration (FHA), the US Department of Veteran Affairs (VA), and the United States Department of Agriculture (USDA).

Customer Experience

We consider customer experience to be one of our most important factors for choosing the best mortgage lender. To us, this includes:

  • Assessments of consumer credit and whether they consider alternative credit data such as employment longevity to determine loan approval or interest rates
  • A streamlined application process
  • Customer support available in at least two forms: this could be in-branch, online, through email, or over the phone
  • Tools and resources, such as related literature and calculators to help borrowers make informed decisions

Reputation & Transparency

We evaluated consumer complaints with the CFPB, as well as the number of regulatory actions filed against each mortgage company with the NMLS, and selected those with the best track record.

Ads by Money. We may be compensated if you click this ad.Ad
See the Best Mortgage Lender in Your State
Select your state to see a top ranked mortgage lender and find your rate.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
View Today's Rates

Your Mortgage Questions Answered

Should I go for an adjustable- or a fixed-rate mortgage?​

Right now, I think adjustable rates don't make any sense at all because rates are so ridiculously low.

The only way that I would suggest an adjustable rate is if you're expecting some big inheritance or if you're able to pay off your mortgage in two or three years. Otherwise, it's a big risk having that adjustable rate because at this point it can only go up, so you might as well lock it in for 30 years and never worry about it again.

Tim Lucas, Managing Editor for
The Mortgage Reports

I qualify for both conventional and government-backed loans. Which one should I choose?

If you qualify for both a VA loan and a conventional loan, usually the VA loan will be the better option based on the interest rate if you select the proper lender.

Jason Sharon, Mortgage Broker, US Navy Veteran and owner of
Home Loans, Inc

According to Sharon, it's best to consider the overall costs that will be unique to your loan. VA loans, for example, never have private mortgage insurance (PMI), while conventional loans will require PMI if you make a down payment of less than 20% of the purchase price.

The Department of Veterans Affairs funds their operations and insures defaulted VA loans by charging veterans a funding fee on their loan amount at closing. That funding fee may be as low as 0.5% or as high as 3.6%.

While most VA loans will have a funding fee of 2.3%, that funding fee may be waived for veterans with a disability rating or active duty service members awarded a purple heart. On a $250,000 purchase loan, that will average $5,750, says Sharon. This amount will be added to the loan amount. Conventional loans, by contrast, do not have a funding fee.

In Sharon's opinion, choosing a VA loan could potentially save you hundreds of dollars on your mortgage in the long-run compared to opting for a conventional loan.

What documents do I need to apply?
Copies of your last two pay stubs. A copy of your most recent tax return, W-2 and/or 1099 (although some lenders may require up to two years worth of these, depending on your employment history). A state-issued photo ID, such as your passport or driver's license. Statements of all your assets (IRAs, investment accounts, checking and savings accounts, etc.). Bankruptcy discharge documents (if applicable). A recent credit report. Statements of any outstanding debts.

In some cases, lenders may require additional documentation, like a history of alimony payments and gift letters, so make sure to ask before you apply.

Will I have a higher interest rate because I'm self-employed?

No. Interest rates are typically based on your credit score and the type of loan you get.

Being s​elf-employed​ will basically affect your qualifying status. You'll have a greater chance of being denied because the underwriter for that loan is going to have a harder time proving that you make a certain amount of money.

Tim Lucas, Managing Editor for
The Mortgage Reports

If I want to buy a house, where should I start?

We spoke to Andy Harris, owner of Vantage Mortgage Group, Inc., and he suggests that getting pre-approved before you decide on a property can be crucial to avoid getting ahead of yourself and looking at homes you can't actually afford.

I think what happens is that most consumers get motivated by the piece of real estate because that's the fun part of the transaction, and that's what they're motivated to buy.

No one really wants to go through the process of setting a budget and applying for a mortgage and doing all these things, but you can't put the cart before the horse. You must be pre-approved before you start looking at properties, otherwise, you have no idea of what your target budget is.

Andy Harris, Owner of
Vantage Mortgage Group, Inc.

Buying A House In 2021

UPDATE: WHO declared COVID-19 a pandemic on March 11, 2020.

As of March of this year, the ​Federal Reserve​ has taken extraordinary measures to stabilize the market in response to the coronavirus pandemic. The year started off with mortgage rates plummeting to a 50-year historic low — and while rates have risen slightly, they have remained well under 4%.

As we head into summer, interest rates are projected to stabilize as the economy recovers, according to the Mortgage Bankers Association (MBA). Last month, when rock-bottom mortgage rates caused a boom in applications, the MBA's Adjusted 2020 Forecast​​ revealed that total mortgage originations would reach a whopping $2.61 trillion — a 20.3% increase from last year.

According to Adam DeSanctis, MBA's Director of Public Affairs, these projections aren't expected to change. In fact, their most recent report shows that refinancing is still 176% higher than 2019​​ as borrowers continue to take advantage of low mortgage rates.

So, if you're looking to make the most out of the current market conditions and are financially ready to make the dream of homeownership a reality, our list of best mortgage lenders can be a great starting point to help narrow down your options.

Mortgages and COVID-19​

On March 18, Freddie Mac, Fannie Mae, and the US Department of Housing and Urban Development (HUD) announced​ they were taking measures to protect those affected directly or indirectly by the novel coronavirus. This includes:

  • A nationwide suspension of all foreclosure sales and evictions
  • Additional mortgage relief options and the expansion of forbearance programs to incorporate those affected directly and indirectly by this crisis, effective immediately
  • Loan modifications such as loss mitigation, which is usually offered for natural disasters, may be available as well — depending on your mortgage lender

Additionally, as per the ​Financial Services Forum​, some lenders are implementing supplemental relief efforts such as fee waivers and are not reporting negative credit to credit bureaus. If you have a loan with one of the entities mentioned above, please contact your mortgage lender as you may be entitled to some relief programs if you were affected by COVID-19.

Is Now the Right Time to Buy?

There is no single answer to the question of whether or not it's a good time to buy. ​There's no denying that COVID-19 put a halt to the longest period of economic growth in U.S. history. Social distancing has paused the economy, and economists at the Federal Reserve of St. Louis now predict that by the end of Q2, a total of​ 47.05 million people ​will be laid off ​—​ unlike any other event experienced in the United States in the last 100 years.

In effect, the financial market's uncertainty has caused mortgage rates and applications to continue experiencing significant volatility, according to Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

"The bleaker economic outlook, along with the first wave of realized job losses reported in [last month's] unemployment claims numbers, likely caused potential homebuyers to pull back," said Kan in the latest MBA weekly survey. "Purchase applications were down over 10 %, and after double-digit annual growth to start 2020, activity has fallen off last year's pace for two straight weeks."

However, despite all odds, ​mortgage loan applications have increased​ due to lowering interest rates​, according to the MBA.

In an effort to recover from the coronavirus, Freddie Mac is working with the Federal Housing Finance Agency (FHFA), to make it easier to buy, sell, or refinance a home. Specifically, Freddie Mac is relaxing employment verification requirements and offering appraisal alternatives in light of the crisis.

Additionally, Freddie Mac and Fannie Mae have announced a nationwide relief plan to help borrowers facing financial hardship as a result of COVID-19, effectively suspending all evictions and offering forbearance plans for up to 12-months.

"We are committed to helping families affected by the virus and we are instructing servicers to work with borrowers who are unable to make their mortgage payments to ensure they are evaluated for a forbearance plan or other appropriate assistance," said Kevin Palmer, senior vice president of Single-Family portfolio management at Freddie Mac.

So if you want to take advantage of low rates and this window of opportunity, contact your mortgage lender first to evaluate the options that are available to you.

Latest Mortgage News

Homeownership Facts

Sources​: Census.gov, Nar.realtor, Mortgage Bankers Association

Market Projections Timeline According to Experts

Where We Were

The 2008 Subprime Crisis, AKA The Great Recession

The United States mortgage crisis was a nationwide financial crisis that began in the mid-2000s and ran until 2010. Borrowers were approved for loans they couldn't afford and there was a stark rise in foreclosures that led to the bankruptcy of multiple lending institutions across the US, contributing to what is now known as the Great Recession.

  • Hundreds of US banks went under and, as a result, Freddie Mac and Fannie Mae, two government-sponsored companies, were nationalized to stimulate the housing market
  • In 2009, the Federal Deposit Insurance Commission (FDIC) closed more than 100 banks for the first time since 1992
  • According to the US Bureau of Labor Statistics, nearly 8.7 million jobs were lost
  • Consumer spending declined more than at any time since World War II and, consequently, Americans increased their personal savings as a precaution to potential job loss, reductions in income, confidence, and credit access
  • US credit markets came to a sudden halt when the residential housing bubble burst in 2007 - 2008, affecting small American businesses that relied heavily on bank credit

Where We Are Now

Unemployment Rates and The Economy Today

Roaring 20s? According to economists at Goldman Sachs, the start of the decade is looking more like we're roaring into a recession. A month ago, the US Bureau of Labor Statistics projected that by 2020, job growth would reach up to 94.7 million jobs by 2022. Now, as COVID-19 infections spread in the US, unemployment rates have soared to historic levels.

Goldman Sachs' Chief Economist Jan Hatzius expects that this recession, however, will be much shorter than the one in 2008.

"The good news is that we don't think it's going to last as long as the global financial crisis. This, of course, depends on the medical news and the responses to that," said Hatzius in a statement.

The effects of the recession that started between 2007-2008, lasted several years after that due to the culmination of a decade or more of financial imbalances that were slowly built up in the economy, more specifically in housing. According to Hatzius, that's the key difference between the downturn of 2008 versus the economic crisis we're facing today due to the novel coronavirus.

Hatzius added, "So you had a pretty deep downturn and long lasting downturn and then quite a slow recovery following the crisis. This is much more of a black swan event. There's a large constraint that has been put on economic activity in a very short period of time, Q1 and Q2 of 2020. But once that is behind us, and once the medical news is improved, the recovery should come swifter and should be stronger than what you saw coming out of 2008."

For those facing financial hardship as a result of reduced hours or recent unemployment, government entities have already moved to help the nation overcome this temporary blow. The US Treasury Department, Internal Revenue Service (IRS), and the US Department of Labor have announced several measures as well as new legislation to protect and provide relief to employees and employers during this difficult time.

This includes up to 80-hours of paid leave for sick workers, protections for small businesses, and unemployment insurance flexibilities, to name a few.

What lessons from the recession can we apply today?

In order to better assess this question, we reached out to experts, including Keith Gumbinger, Vice President of HSH Associates and Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors.

Mortgage Lenders are now more cautious about how much and who they lend money to.

According to Yun, one of the biggest mistakes that led to the subprime mortgage crisis was that mortgage lenders didn't conduct proper checks on borrowers and their ability to repay their mortgages. Thankfully, new rules and regulations have been established to prevent this from happening, and to protect lenders and borrowers alike in case of a recession.

Homebuyers will probably exercise caution in days to come.

According to Gumbinger, it's probably a good time to exercise caution and reassess finances. Down payment funds that may have formerly invested in the stock market may be no more, and in the case that someone wants to purchase a home they should consider alternatives such as taking a low down payment FHA-backed mortgage rather than a conventional mortgage.

Additionally, home buying plans may be affected by a serious lack of properties for sale in the markets.

"With 'stay at home' orders covering perhaps 80 million Americans at the moment, it's a good bet that even those considering selling their homes this spring may step back from the market until there is greater clarity about the course of the disease and economy," said Gumbinger.

Insights Into the Mortgage Industry

As interest rates remain low, economic indicators​ project that people will be more likely to purchase as the economy improves.

It's worth noting, however, that the market is susceptible to external geopolitical events such as the current coronavirus pandemic. Rate shifts of this kind are not a novel occurrence, as last year mortgage rates dropped in part due to Brexit.

"We're linked to global capital markets, and that's sort of a benefit for consumers as it keeps interest rates low," said Leonard Kiefer, Deputy Chief Economist at Freddie Mac about rate fluctuations in the mortgage market. "But this also means that if there are shocks around the world, that creates volatility in rates."

But what does that mean for prospective homebuyers? Can we stay ahead of the market and attempt to predict when mortgage rates will drop? According to Shashank Shekhar, founder and CEO of Arcus Lending, geopolitical events have a short-term impact on mortgage rates, but those events can be difficult, if not impossible, to predict.

He gave us the example of the novel coronavirus, which has unexpectedly affected the global markets. "Good news for the economy is bad news for rates and bad news for the economy is good news for rates," Shekhar said. "Once things get better, rates will go up again to where we started, but that was low interest to begin with," he added.

Despite the clear influence of world events on mortgage rates, Shekhar believes these factors have little bearing on real estate sales. If mortgage rates decrease by a half percent, that won't necessarily mean more people will be queuing up to buy homes.

Historically, there has been little correlation between mortgage rates and home prices or sales, which means the decision to purchase property is also driven by economic, financial, and emotional factors beyond interest rates.

Moving Forward

While low interest mortgage rates alone shouldn't drive a prospective homeowner to take the plunge, being up to date with national economic shifts can give people a good sense of the overall market stability in relation to their financial situation.

Here's what our experts believe is in store for the mortgage market in the short and long term:

The Mortgage Industry, Short-Term (2020-2025)

Home Prices Will Continue to Rise, But at a Slow Pace

We certainly are tracking a number of markets where affordability is a real challenge. Particularly in some of the coastal markets, home prices were increasing two to three times the rate of wage growth and that just can't be viable for too long before you scare away potential buyers. Our expectation is that, with the additional units coming on the market the rate of home price growth will decelerate a bit. So prices still increase but more slowly, and we expect that it will actually line up with the rate of wage growth, so that will build a stronger foundation for future increases in sales.

Mike Fratantoni, Chief Economist and Senior Vice President of
Industry Research Technology at the Mortgage Bankers Association

Mortgage Rates Will Remain Low, but It'll Still Be a Seller's Market

Compared to a year ago, mortgage rates are down a lot, and they have recently been heading down even more. So that's going to provide a boost for the housing market. For the long-term, that's going to persist for more than six or nine months.

The US is undersupplied for all types of housing, not just owner-occupied housing, but also rental housing. So the fact that there's such little supply relative to demand does give sellers in any markets a big advantage, and so that's probably going to persist.

Leonard Kiefer, Deputy Chief Economist at
Freddie Mac

The Mortgage Industry, Long-Term (2026-2040)

An Increase in Housing Supply

Although there's still room for improvement, things are looking up in the housing market.

The data on housing is starting to show better conditions and is steadily moving in the right direction of more production. We are not back to normal yet, but at least directionally, we are moving towards a less severe housing shortage with each passing month.

Lawrence Yun, Chief Economist and Senior Vice President of
Research at the National Association of Realtors

The more challenging aspect of the current shortage is that more Millennials are also setting their sights on the dream of homeownership.

There's a wave of people entering their 30s. The challenge here for them is that the generation of Millenials and Baby Boomers are all trying to be homeowners at the same time for the next 5 years.

Then we expect that our Silver Tsunami will kick off opening up units for potential homebuyers as demand increases.

Jeff Tucker, Economist
at Zillow's Research Department

The Silver Tsunami

In the next 10-20 years, more than a quarter (27.4%) of the nation's currently owner-occupied homes are likely to hit the market as their owners vacate the property or pass away. This phenomenon, referred to as the "​Silver Tsunami​," will leave room for Millennials and Gen Xers to purchase homes at affordable rates, providing a boost to the housing market.

By 2037, an estimate of 1 million homes that are currently occupied by seniors aged 60 and above are expected to be vacated each year.

As the Silver Tsunami approaches, we can expect an extra 440,000 units to be released into the market, that's an increase of 40% by the end of the 2037 timeframe.

Jeff Tucker, Economist
at Zillow's Research Department

According to Tucker, about 700,000 homes were made available to homebuyers each year for the last 10 years.

Areas​ that are likely to benefit from the Silver Tsunami include Miami, Orlando, Tampa, Tucson, Atlanta, Austin, Dallas, and Houston, to name a few.

Millennials and Gen Xers are currently projected to be the primary driving force behind the housing market, accounting for 37% and 24% of current home buyers respectively, according to the National Association of Realtors.

Millenials and Gen X are getting into buying homes and their process has been a bit different. I see that they want to do it on their own. There's a sense of accomplishment when saying 'this is mine.' I do find a lot of people that have spent some time online either filling out their pre-qualification or preliminary approval.

Debbie Reynolds, Real Estate Agent for
Century 21 Platinum Properties
(collaborator on​ Money's Best Places to Live 2019)

Among all borrowers, the top three reasons provided for liking the online application process were:

Quicker Time To Close (66%), A Simpler Application Process (61%), Information More Readily Available (54%) Source: Ellie Mae's 2018 Connecting with Borrowers Online

In fact, fintech vendor Ellie Mae's 2019 ​Connecting with Borrowers Online​ study reveals that borrowers have increasingly opted to use online resources and tools to research and contact mortgage lenders. Interestingly, however, only 50% of borrowers preferred lenders that offered an online portal or application process.

Borrowers Who Preferred an Online Process Share of Homebuyers by Generation: Millennials [​Born 1981-1996]​ - 37%, Gen X [​Born 1965-1980]​ - 24%, Boomers [​Born 1946-1964]​ - 32%, Silent Generation [​Born 1928-1945] ​- 7% — Courtesy of the National Association of Realtors

How Much Will I Pay

To Summarize: Best Mortgage Lenders of 2021

In the end, the best mortgage lender in 2021 is the one that can offer you the best terms and interest rates, plus the lowest fees.

Still, our list of top picks can serve as a starting point to simplify your journey and point you in the right direction, when looking for the right financing option to purchase the home of your dreams.

We’ve included affiliate links into this article. Click here to learn what those are.

Sign Up for Our Newsletters

Sign up to receive the latest updates and smartest advice from the editors of Money
SUBSCRIBE