NextAdvisor Methodology How We Review Mortgage Lenders

How We Review Mortgage Lenders

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At NextAdvisor, we take pride in providing accurate and thorough information to our readers. Because we want to empower you to make your best financial choices, our lender reviews and scores seek to measure the accessibility, transparency, and customer experience you deserve from a lending institution. 

While we may present partner offers on our website, our lender reviews and scoring are made independently by our writers and editors, without any influence from partners or business interests. 

Here is a deeper dive into our mortgage lender review process. 

How We Chose Which Lenders to Review

While our goal is to review as many mortgage lenders as possible, we prioritize which lenders to review based on consumer interest. It’s our philosophy to meet our readers’ interest and present them with our best take on the companies they are seeking information on. We can gauge interest based on our knowledge of the mortgage lending market, lender loan volume, and search interest. Whether a particular lender is reviewed or unreviewed is not indicative of its quality. 

Our Methodology

We developed a framework to evaluate mortgage lenders using a weighted average score between 0 and 5 based on the following criteria. A higher weight was given to the criteria we determined to be most important. 

  1. Online Convenience: A lender is scored 1 through 5 based on the company’s online application experience. A 5 is awarded if the company’s mortgage application can be completed fully online with a streamlined process, including uploading documents and a customized rate quote. A lower score is awarded if additional phone calls are needed to process an application or for a poor online user experience. 
  1. Transparency: Lenders are scored 0 through 5 based on the accessibility and transparency of mortgage rates, lender fees, and credit check requirements for rates and/or fees. A 5 is awarded if the lender advertises rates and fees on its websites and doesn’t require a hard credit check to get rates and/or fees. Conversely, a lower score is awarded when consumers cannot easily acces rate and fee information and/or must go through a hard credit check to access them.
  1. Nationwide Availability: Lenders are scored 1 through 5 based on the company’s geographical footprint. A lender can score a 5 if it operates in all 50 U.S. States. 
  1. Loan Product Variety: Lenders are scored 1 through 5 based on their loan product menu and variety of products offered. A high score of 5 is given if most or all mortgage products are available, with a lower score awarded for a limited mortgage menu. 
  1. Customer Satisfaction: To measure customer satisfaction, we reviewed the number of complaints filed against each lender with the Consumer Financial Protection Bureau in 2020. We divided the total consumer complaints with the total number of loans originated over the same time period to get a complaint ratio per 1,000 loans originated. We sourced the total loans originated using publicly accessible data provided under the Home Mortgage Disclosure Act and regulated by the Federal Financial Institutions Examination Council (FFIEC)

The average complaint ratio among lenders we reviewed is 2.094 per 1,000 loans, or just over 2 complaints per 1,000 originated loans. A score of 5 was awarded to a lender if its complaint ratio was lower than the average. Conversely, a lower score is awarded if a complaint ratio is greater than the average. In situations where no customer satisfaction data was available, an average star rating across all reviewed lenders of 3.58 was given.

Lenders Without a Score

Some of the lenders we reviewed are considered wholesalers or lender marketplaces. Wholesalers mostly fund independent mortgage brokers, and marketplaces connect lenders and buyers. While wholesalers and marketplaces have some reviewable criteria, they may lack other criteria or data. If some or all data is not available to evaluate a lender, then a score of N/A is rendered. 

What We Did Not Evaluate in Our Scoring

When comparing lenders, we did not evaluate factors like rates, fees, and minimum credit scores. 

Mortgage rates and fees can change daily and are based on each borrower’s specific financial situation. Rates and fees can vary based on geographic laws and regulations, and credit score minimums can vary based on loan type. Therefore, we don’t believe it’s possible to accurately evaluate rates, fees, and credit score requirements from lender to lender.

The NextAdvisor Mortgage Lending Philosophy

It’s in your best interest to shop around between a few mortgage lenders before making a final decision. Submit applications with at least three lenders and ask each lender to provide a Loan Estimate. Use the Loan Estimate to compare the interest rate and closing costs. We also recommend using an online mortgage calculator to help you figure out how much you’d spend each month on interest and principle with each option. 

Lenders We’ve Reviewed