- Minimum Credit Score:620 conventional; 580 FHA
- Minimum Down Payment:0% to 5%, depending on loan type
- Can Apply Online:Yes
- Operates In:49 States (Except New York)
NextAdvisor’s Take
- Advertises daily interest rates for purchases and refinances
- Customized rate quote available online
- User-friendly online experience
- Available in 49 states (not available in New York)
- Maintains 16 branch locations spread across nine states
- Doesn’t offer home equity products, jumbo mortgages, reverse mortgages, construction loans, and renovation loans
- Doesn’t share information about minimum qualification requirements on its website
PennyMac Loan Services offers every major mortgage program in nearly every state and follows industry standards when it comes to loan qualification. These factors could make the lender a good fit for first-time homebuyers across the U.S. The website also makes it super easy to get a rate quote and start the mortgage preapproval or application process. However, borrowers won’t be able to take out specialty products such as construction loans, renovation loans, jumbo mortgages, and home equity loans.
Editorial Independence
As with all of our mortgage lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.
PennyMac Loan Services Full Review
Headquartered in Westlake Village, California, PennyMac Loan Services has helped more than 2 million homeowners since it launched in 2008.
The lender offers all major mortgage programs in 49 states and Washington, D.C., and you can get a customized rate quote in just minutes online. When you’re ready to start the mortgage preapproval or application process, you can handle most of the paperwork online and get over-the-phone help along the way. PennyMac also services the mortgages it originates, which is helpful if you want insight into the customer service you’ll receive when paying down the loan.
Here’s what you should know about the lender before applying.
PennyMac Loan Services: Mortgage Loan Types and Products
PennyMac originates mortgages for people who want to purchase a home, refinance an existing mortgage, or buy an investment property. Here’s what they’re offering right now:
- Conventional loans
- Federal Housing Administration (FHA) loans
- Department of Veterans Affairs (VA) loans
- U.S. Department of Agriculture (USDA) loans (refinance only)
- Refinance loans
- Fixed-rate loans
- Adjustable-rate loans
- Investment loans
When shopping for a mortgage loan, borrowers can choose the type of interest rate they receive: fixed or adjustable. With a fixed-rate mortgage, the rate never changes and your principal-and-interest payments are predictable for the life of the loan. These are available at PennyMac for terms ranging from 10 to 30 years.
Adjustable-rate mortgages, or ARMs, come with a fixed rate only for a certain amount of time. For instance, on a 5/1 ARM, the interest rate is fixed for the first five years. After that period ends, the rate may go up or down once a year based on market conditions for the remaining loan term. PennyMac offers terms of 3/1, 5/1, 7/1, and 10/1.
However, PennyMac doesn’t offer niche products such as construction loans, renovation loans, jumbo mortgages, reverse mortgages, home equity loans, and home equity lines of credit.
PennyMac Loan Services: Mortgage Transparency
PennyMac’s website is easy to use and has a lot of the information you’ll need to get started. You can get a custom rate quote without a hard credit pull, which is important because you’ll see if the lender’s a good fit without it affecting your credit.
After checking your rate, you can set up an account to get preapproved or start the application process using the secure “m.a.c.” (mortgage access center) portal. Or, you can request a phone call from a loan officer if you have questions.
Either way, a loan officer will call you after you complete the application to provide a consultation. PennyMac will also pair you with someone you can contact during the underwriting process, which is helpful if you get stuck during key points of the process.
PennyMac Loan Services: Mortgage Rates and Fees
PennyMac advertises daily interest rates for each product it offers: conventional loans, VA loans, FHA loans, and USDA refinances. These rates can change every day and are typically based on the assumptions the borrower has excellent credit, put down 20%, and purchased discount points, which is an optional fee you pay to lower your interest rate. You can also customize the rate quote based on your own credit score, down payment, and loan amount.
PennyMac’s origination fee is $1,100, although the lender may waive it periodically during special promotions. Borrowers also pay an upfront appraisal deposit of $445 to $650 or an application fee of $100 if there is no appraisal. You can lock in your interest rate for up to 75 days for free, but there’s a fee if you lock the rate and then want to extend it.
For a complete breakdown of the amount of cash you’ll need to close — including lender fees and third-party fees — you’ll need to get preapproved or apply for a mortgage. It helps to understand some of the closing costs that are common when buying a home:
- Application fee
- Appraisal fee
- Credit report fees
- Government taxes
- Optional discount points
- Origination fee
- Prepaid escrow costs
- Prepayment penalties (PennyMac does not charge these)
- Recording fees
- Title insurance costs
PennyMac generally aligns with industry standards when it comes to qualifying for a home loan. So borrowers typically need a credit score of at least 620 and a down payment of 3% to 5% to get a conventional loan. For FHA loans, your credit score may be as low as 580 if your down payment is at least 3.5%. You won’t need a down payment if you’re getting a VA loan or USDA loan, but you’ll need to check with the lender for minimum credit score requirements.
Refinancing With PennyMac Loan Services
If you have an existing mortgage, a refinance could help you lower your mortgage payments, borrow cash, or even get rid of mortgage insurance. Many homeowners decide to do this when interest rates drop and home values rise.
There are several refinance programs to choose from, depending on your goals and existing loan type. Here’s what PennyMac offers:
- Cash-out refinance if you want to borrow money using your home equity as collateral. You can use the extra money for any type of expense, but both your payoff timeline and monthly mortgage payments will increase.
- Rate-and-term refinance if you’re looking to adjust your monthly payment by changing the interest rate, loan term, or both.
- VA interest rate reduction refinance loan (IRRRL) if you have an existing VA loan and want to lower your monthly payments. PennyMac also offers VA refinances with full documentation.
- FHA streamline refinance if you already have an FHA loan and want to refinance with minimal paperwork. You can also do the full-documentation FHA refinance, which might be a good option if your home value recently increased.
- USDA streamlined assist refinance if you have a USDA loan and want to refinance with no appraisal and minimal paperwork.
PennyMac Loan Services Compared to Other Mortgage Lenders
| PennyMac Loan Services | Rocket Mortgage | Churchill Mortgage | |
|---|---|---|---|
| Minimum credit score | Typically 620 for a conventional loan and 580 for FHA loan | 620 for conventional; 580 for FHA | 620 |
| Minimum down payment | Typically 3% to 5% for conventional loan; 3.5% for FHA loan; 0% for VA loan and USDA loan | 0% to 3.5%, depending on the loan program | 0% to 5%, depending on the loan program |
| Where does the lender operate? | 49 states and Washington, D.C. | All 50 states and Washington, D.C. | All 50 states and Washington, D.C. |
| Major loan types | Conventional, VA, FHA, USDA, fixed-rate, adjustable-rate, refinance, cash-out refinance, several streamlined refinance options | Conventional, jumbo, VA, FHA, fixed-rate, refinance, cash-out refinance | Conventional, jumbo, VA, FHA, USDA, various renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, reverse mortgages, home equity loans, home equity lines of credit |
How to Shop Around to Get the Best Mortgage Rate
When you’re starting the homebuying process, it’s a good idea to contact a lender and ask for a mortgage preapproval. The lender will look over your most recent tax returns, W-2 forms, paystubs, and bank account statements to get a feel for how much you can borrow and the loan terms you might receive. They’ll put the loan information in a preapproval letter, which will help you set a homebuying budget and support your purchase offer.
But you don’t have to get a mortgage with the lender that preapproves you. When you’re ready to officially apply for a home loan, submit loan applications to multiple mortgage lenders and ask for a Loan Estimate. To reduce the hit to your credit, try to submit these applications within a short time frame, about two to four weeks. Use the Loan Estimates to compare the interest rate and closing costs on each loan, and check an online mortgage calculator to figure out how much you’d spend on interest with each option.
According to research from the Consumer Financial Protection Bureau, interest rates can vary by 0.5% or more between two similarly qualified borrowers. But even a smaller difference in interest rates can help you save a lot of money over the life of the loan.
For instance, take a look at one example: Let’s say you receive two mortgage rate quotes on a home worth $400,000 with a 20% down payment and 30-year term.
| Interest rate | Monthly principal and interest payment | Total interest paid over 30 years | Interest saved |
|---|---|---|---|
| 3.25% | $1,392 | $181,522 | – |
| 3% | $1,349 | $165,718 | $43 a month or $15,804 over the loan term |
With a 3.25% interest rate, the monthly principal and interest payment comes out to $1,392. But with a 3% interest rate, you save $43 a month on interest costs. That adds up to $15,804 in savings over 30 years.
Editorial Independence
As with all of our mortgage lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.
