The Yahoo view: As a leader in FHA lending, Pennymac is an obvious choice for borrowers seeking a low-down-payment loan. However, it requires a higher credit score than many FHA lenders.
Pennymac is the largest FHA lender by loan volume in the nation — by a long shot. So, the company knows a thing or two about this popular government-sponsored program. That may seem surprising because Pennymac doesn’t have huge name recognition.
The reason: Pennymac is behind the scenes facilitating loans for other banks, credit unions, and independent mortgage brokers across the country. Called correspondent lending, it makes up the majority of Pennymac’s loan volume. However, you can still do business directly with Pennymac online.
Key benefits
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Pennymac offers a that lowers your interest rate by 1% for one year.
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A BuyerReady Certification shows home sellers that you are a serious — and credit-qualified — buyer. Plus, you will receive a $1,000 credit to apply to your closing costs.
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Use a Pennymac-affiliated and get from $350 to $9,500 cash after closing.
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If rates go down after you close a home loan with Pennymac, get a $2,000 credit toward your closing costs when you refinance within three years.
Need to know
Pennymac for FHA mortgage home buyers
makes more than any lender in America. That’s expertise. With FHA-backed purchase loans, streamlines, and cash-out refinancing, you get credit history flexibility because these government-sponsored loans serve borrowers who may not qualify for a .
The one downside to FHA-backed mortgages is MIP or . MIP is an up-front charge at loan closing and an ongoing premium built into your monthly mortgage payment. It’s the price you pay for getting into a home with a low down payment.
That mortgage insurance ends up in the hands of the U.S. Department of Housing and Urban Development, the agency that runs the FHA loan program. In the event of loan default, the FHA pays a claim to the lender.
That protection serves as an incentive for lenders like Pennymac to take a risk on borrowers who are on the lower end of the credit score band.
Pennymac for home equity lending
Getting your home’s equity paid out in a lump sum is Pennymac’s option for homeowners looking to get cash out of their home without selling it or refinancing their mortgage. That’s especially important if you already have an interest rate below today’s prevailing rates.
The Pennymac has a fixed interest rate and is available to owners with at least 15% equity in their homes.
Pennymac does not currently offer .
Pennymac mortgage rates
With Pennymac, you don’t have to hunt for mortgage rates; they’re right on the homepage. Three popular loan interest rates are featured: 30-year fixed rates for conventional, FHA, and . Discount points are also clearly revealed and adjacent to the .
The FHA interest rate assumption is for a $250,001 loan on a primary residence in Los Angeles with 3.5% down and a 680 FICO score. The FHA only requires a minimum 580 credit score on FHA loans with 3.5% down, and many other lenders accept this lower score.
You can also drill down deeper with a mortgage rates page that displays additional loan terms on the three major mortgage products as well as . For even greater rate accuracy — but still not a final-approval interest rate — you can input:
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Property use (primary residence, investment property, second home)
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Preference (lower payment or lower down payment)
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Credit score range
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Property value
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Down payment
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ZIP code
With that information, you will see the three mortgage options with additional loan terms that more closely align with your credit and financial profile.
All without providing a bit of personal information.
This would be the perfect mortgage rate page; however, are prepopulated and not adjustable. We would prefer having the option to price a loan with zero discount points.
Other than that, though, nicely done, Pennymac.
Applying for a mortgage with Pennymac
With an online application system, Pennymac lets you upload documents and even snap photos of required items. Using logins from your financial institutions, you can add savings account balances and existing loan information to complete an asset and liability profile.
Once you submit an online application, a loan representative will contact you to guide you through the process.
There are ample home-buying tools on the Pennymac site. Calculators include:
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How much can I borrow?
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How much will my payments be?
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Am I better off refinancing?
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Am I better off renting?
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How much is my home worth?
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How much should I put down for a new home?
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How advantageous are extra payments?
There are also hundreds of helpful articles in the Learning Center. Very impressive.
How Pennymac compares to other mortgage lenders
Pennymac vs. Guaranteed Rate
Pennymac is the nation’s largest FHA lender because of its vast network of affiliated mortgage brokers. However, as an independent business, it’s not always easy to find a local Pennymac lender near you. Thankfully, the loan process can be handled online and remotely.
is also an FHA lender with an online mortgage process — and one of Yahoo’s . And home buyers looking for face-to-face service may want to know that Guaranteed Rate has hundreds of branch locations across the nation.
Pennymac vs. Amerisave Mortgage
Pennymac’s Lender-Paid Buydown lowers your interest rate by 1% during the first year of a mortgage, effectively reducing your monthly payments. That helps temporarily offset fees that you may have financed into your loan.
offers FHA loans without . When loan offers vary between lenders, you’ll want to run the numbers to determine the most advantageous. In this example, a 1% rate reduction for the first year versus a loan without origination fees.
Shopping and comparing are essential when you’re buying and financing a home.