Best mortgage lenders to know now, plus advice on buying and refinancing

Mortgage rates have surged recently, making it more challenging for prospective homebuyers to afford a home. As of October 1, the average rate for a 30-year fixed mortgage stood at 7.28%, up from 6.43% in early July. The choice of mortgage lender becomes crucial as even slight differences in rates and fees can significantly impact the cost of financing a home. Therefore, comparing lenders becomes essential, especially when rates are high.

Several factors should be considered when comparing mortgage lenders. These include interest rates, closing costs, discount points, and lender fees. Borrowers also need to consider the wide range of lenders and loan programs available. Banks, credit unions, mortgage companies, and online lenders may differ in terms of minimum qualification requirements, available loan types, closing timelines, and customer service.

Some lenders may be better suited for first-time buyers, government-backed loans, or jumbo borrowers, while others may offer a streamlined digital process.

Here are some of the best mortgage lenders to consider based on their strengths:

1. Best for streamlined digital experience: Rocket Mortgage

Rocket Mortgage offers a highly digital and convenient mortgage loan process. The lender's online platform guides users through each step, from document uploads to real-time application status tracking. Rocket Mortgage has consistently high customer service ratings and offers assistance programs to help with closing costs. They provide various loan options, including conventional, jumbo, FHA, and VA loans, with down payments starting at 1%.

Borrowers need a minimum credit score of 620 to qualify. However, Rocket Mortgage's interest rates tend to be slightly higher than some competitors.

2. Best for self-employed or non-traditional borrowers: Guild Mortgage

Guild Mortgage specializes in helping self-employed borrowers, those in the gig economy, or anyone with income that doesn't fit traditional W-2 documentation. The lender has expertise in evaluating alternative income sources and offers customizable loan structures for complex financial profiles. Guild operates in 49 states (excluding New York) and provides a wide range of loan options, including conventional, adjustable-rate, FHA, VA, and USDA loans.

Credit score requirements start at 620, but the borrower requirements vary depending on the loan type. Guild does not offer online applications, requiring borrowers to work with a loan officer throughout the process.

3. Best for competitive rates: PenFed Credit Union

PenFed Credit Union offers some of the lowest mortgage rates available due to its credit union structure, which prioritizes members over profits. The lender serves anyone who can open a savings account with a small deposit, granting immediate access to rate advantages and extensive loan options. PenFed offers conventional, adjustable-rate, jumbo, FHA, VA, and USDA products nationwide and in U.S. territories.

The lender requires a minimum credit score of 620 and accepts down payments as low as 3%. First-time buyers can also take advantage of additional incentives to reduce initial costs.