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Wells Fargo Overview
Established in 1852, Wells Fargo is now a leading financial services company and the one of the largest mortgage originators in the country. Beyond mortgage lending, Wells Fargo also offers consumer banking services, credit cards, investment products, and several types of loans.
The bank originates mortgage loans in all 50 states and Washington, D.C., and customers can apply online, over the phone, or at one of 7,200 offices spread across the U.S.
In addition to its full menu of loan products, Wells Fargo offers several down payment assistance programs and education courses for first-time homebuyers. However, it’s always a good idea to check out a lender’s customer service record, as this one has been involved in several consumer controversies over the years. Here’s what to know about this lender before applying.
Pros and Cons of Wells Fargo
|It’s a full-service bank that offers mortgages and other consumer products, including banking services and credit cards.||Does not offer home equity loans, and home equity lines of credit may be temporarily unavailable.|
|Advertises interest rates on its website.||Offices are located in only 32 states (though you can get a mortgage in any state).|
|Offers several down-payment assistance programs.||A series of financial scandals has damaged consumer trust in recent years.|
|The bank’s mortgage calculator estimates your closing costs and provides a rate quote.|
Wells Fargo Loan Types and Products
Wells Fargo offers a full lineup of conventional and government-backed loans, jumbo mortgages, refinance loans, construction loans, and renovation loans. It doesn’t offer home equity loans or home equity lines of credit. Here’s what’s on the menu right now:
- Conventional loans
- Federal Housing Administration (FHA) loans
- Department of Veterans Affairs (VA) loans
- U.S. Department of Agriculture (USDA) loans
- Jumbo loans
- Refinance loans
- Cash-out refinance (certain loan products)
- Fixed-rate loans
- Adjustable-rate loans
- Construction loans
- Union Plus mortgage
- Relocation loan
- Renovation loans
The bank offers a choice between fixed-rate and adjustable-rate mortgage (ARM) loans on most of its products. With an ARM, the rate is fixed for the first five, seven, or 10 years. After the fixed period ends, the rate may go up or down periodically.
Qualified borrowers can take out a large amount through a jumbo loan, and the lender says existing Wells Fargo customers may even qualify for a discount on these mortgages.
The bank also offers a specialized loan product, the Union Plus mortgage. This loan is designed for active and retired union members and comes with a gift card up to $500. Borrowers are eligible for interest-free loans and grants to cover mortgage payments in case of disability, job loss, a lockout, or a strike. The first $1,000 of the loan or grant doesn’t need to be repaid.
Wells Fargo also recognizes many borrowers struggle to come up with the funds to cover a down payment or closing costs, so Wells Fargo can connect borrowers with state or local assistance programs.
It even offers several of its own. In select areas, Wells Fargo’s “Dream. Plan. Home.” program provides a closing cost credit for eligible low-income borrowers who are purchasing their primary residence. The credit is worth up to $5,000 and may cover nonrecurring closing costs, such as appraisal fees, processing fees, title-related fees, recording fees, and tax stamps.
Another program, NeighborhoodLIFT, provides down payment assistance for low- and moderate-income borrowers by providing forgivable, interest-free loans in certain areas. Eligible homebuyers can use the money to cover the down payment and closing costs. Then, to qualify for loan forgiveness, they’ll need to complete a HUD-approved homebuyer education program and live in the home as a primary residence for at least five years.
Wells Fargo Transparency
Wells Fargo’s website is less intuitive than some of its competitors and also offers fewer education materials. But the application process is straightforward, and you can connect with a loan officer within minutes if you need help understanding your options or you get stuck along the way.
The bank’s mortgage calculator is also much more in-depth than ones you’ll find elsewhere. Once you plug in basic information about your home loan, financial profile, and location, the calculator provides a customized rate quote, estimated monthly payment, and a list of relevant closing costs you may pay in your region. This offers one of the most transparent comparison-shopping experiences out there.
When you’re ready to request a preapproval letter or apply for a mortgage, you can pull information straight from your Wells Fargo accounts if you’re an existing bank customer. You can also link accounts from other institutions, upload tax returns and pay stubs, track your loan’s progress, and sign certain disclosures online.
From start to finish, the closing on a purchase generally takes 30 to 90 days. The timeline varies based on a number of factors, such as the time of year, type of loan, the home itself, and how quickly the borrower submits paperwork.
Despite earning high marks in many areas of the mortgage process, Wells Fargo’s reputation has taken a hit in recent years. According to a 2018 multistate investigation, the lender opened millions of fake bank accounts, credit cards, and insurance policies on behalf of borrowers without their consent and unlawfully charged borrowers certain mortgage fees. Wells Fargo was ordered to pay $575 million as a relief settlement to affected consumers and set up a website for consumers regarding compensation and redress efforts.
More recently, about 1,600 mortgage borrowers across the U.S. accused Wells Fargo of forcing them into mortgage forbearance plans during the coronavirus pandemic. Unwanted forbearance can be problematic for borrowers who are pursuing a refinance or bankruptcy.
Before you start shopping for a home, it’s a good idea to get a loan preapproval. This is a document from a lender that shows how much you can borrow, based on details like your credit, income, and monthly debt payments. It helps you shop within your budget and shows sellers you’re serious about your offer because you’ve been vetted by a lender.
Wells Fargo: Rates and Fees
Wells Fargo advertises daily refinance and purchase rates for 15-year loans, 30-year loans, 20-year loans, VA loans, and jumbo loans. These rates can change every day and may include discount points, which are fees you can pay at closing in exchange for a lower interest rate. To receive the best mortgage rates, you may need good to excellent credit.
The lender also offers a mortgage calculator that lists some of the closing costs you’ll pay according to your location. Some of those costs may include:
- Processing fees
- Tax service fees
- State and local statutory fees
- Recording fees
- Appraisal fee
- Credit report fee
- Title costs
The minimum credit score required by Wells Fargo varies depending on the type of loan. According to a company representative, borrowers may qualify for certain loans with a credit score as low as 620. If your credit score is lower, talk with a loan officer to understand your options.
Wells Fargo doesn’t charge prepayment penalties on any of its loans. There can be late fees, which vary depending on how late the payment is. For a complete breakdown of the closing costs, including lender fees and discount points, you’ll need to submit an application.
You can lock in your interest rate for 45 to 720 days, depending on the program, and you may pay a fee upfront. The longer rate locks may help if you’re building a new home or if you’re buying a condo that needs board approval. And if your loan isn’t ready to close by the time the lock expires, Wells Fargo may extend your rate lock for free.
Refinancing With Wells Fargo
A mortgage refinance allows homeowners to take out a new mortgage, pay off their existing home loan, then pay down the new mortgage over time. At Wells Fargo, you do the following types of refinances:
- Rate-and-term refinance on all loan types
- Cash-out refinance
- FHA Streamline Refinance
- VA Interest Rate Reduction Refinance Loan (VA IRRRL)
While the lender doesn’t advertise a typical refinance closing timeline, the industry average for these loans was 51 days in March 2021.
Wells Fargo does list some of the fees you pay to refinance through its mortgage calculator. Some of these include:
- Discount points (optional)
- Processing fees
- Tax service fees
- State and local statutory fees
- Various recording fees
- Appraisal fee
- Credit report
- Costs associated with title closing and lender’s policy
You can contact the lender to get an accurate quote for the specific costs you’ll pay to refinance. If you want to avoid the extra upfront expenses, Wells Fargo may be able to roll your refinance closing costs into your new home loan.
Wells Fargo Compared to Other Mortgage Lenders
|Wells Fargo||Guild Mortgage||Fairway Independent Mortgage Corp.|
|Minimum credit score||620||620 for conventional loans; 600 for FHA, VA, and USDA loans; 680 for jumbo loans||620 for conventional loans; 660 for jumbo loans; 600 for FHA loans; 600 for VA loans|
|Minimum down payment||0% to 3.5% (may differ, depending on the mortgage program)||0% to 3.5% on most loans; 15% on jumbo loans||0% to 5%|
|Where does the lender operate?||All 50 states and Washington, D.C.||All 50 states and Washington, D.C.||All 50 states and Washington, D.C.|
|Major loan types||Conventional, jumbo, VA, FHA, USDA, adjustable-rate, fixed-rate, refinance, cash-out refinance, construction loans||Conventional, jumbo, VA, FHA, USDA, various renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, energy-efficient mortgages, manufactured-home loans, bridge loans, reverse mortgages||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
Borrowers stand to save hundreds or thousands of dollars on their home loans just by gathering multiple mortgage estimates.
Take a look at one example: Let’s say you’re looking to buy a home worth $300,000 with a 20% down payment and 30-year term. The first mortgage rate quote you receive is for 3.25%, and your monthly principal-and-interest payment comes out to $1,028. You request a second quote with another lender. They offer the same price on closing costs but a 3% interest rate with a monthly P&I payment of $1,011. The lower rate saves you $17 a month — and while that might not sound like much, it adds up to $6,120 in savings over 30 years.
When you’re shopping for a mortgage, it’s a good idea to submit applications to at least three lenders and ask for a mortgage Loan Estimate. This is a standardized form, so it should be easy to figure out which lender is offering the best interest rate and lowest closing costs. You might be able to negotiate for even better terms if you have strong credit, too.
These mortgage applications can trigger a hard inquiry on your credit reports, but the impact could be minimal because credit-scoring companies know consumers shop around. FICO, for example, says it treats all mortgage inquiries made within 45 days as just one inquiry. Try to submit your mortgage applications within this window to minimize the impact to your credit.
Wells Fargo is one of the biggest mortgage lenders out there, though it has a relatively standard online presence. Borrowers can take out conventional and government-backed loans, construction loans, and jumbo loans. But Wells Fargo could be a strong contender if you need help covering your down payment or you’re an existing Wells Fargo customer and qualify for a discount. If you’re looking for something more specialized, you may need to look elsewhere. Either way, it’s always a good idea to shop around with multiple lenders when buying a home.