Trim Your Mortgage Rate With a 'Nonbank'

You may get the best rate on a home loan, with faster approval and closing, if you borrow from a direct lender. In 2016, nonbanks issued nearly half of all mortgages, led by Quicken and PennyMac Financial.

Guide to Scoring the Best Deals in 2017

When we shopped a handful of banks and direct lenders for a 30-year fixed-rate loan, we found that the direct lenders tended to beat big banks by an eighth to a quarter of a percentage point. Compared with the big banks, nonbanks are more willing to compete on rate, offer greater flexibility in underwriting and are less likely to penalize borrowers who have, say, a less-than-stellar credit score or a small down payment, says Guy Cecala, the publisher of Inside Mortgage Finance, which covers the mortgage industry.

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Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.