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SoFi Mortgage Review 2019

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SoFi
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Our Rating: 4.49/5
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SoFi Mortgage Overview

SoFi was founded in 2011 and is headquartered in San Francisco, California. The financial startup has raised $2.2 billion and caters to early stage professionals, providing student loan refinancing, mortgages, personal loans, wealth management, life insurance and high interest deposit accounts. 

The internet-based company does not operate any brick-and-mortar locations. All customer interaction is accomplished online or by phone.

Today's Rates

National Average Rates

Product Today Last Week Change
30 year fixed 4.58% 3.63% +0.96
15 year fixed 3.88% 3.21% +0.67
5/1 ARM 4.77% 3.42% +1.35
30 yr fixed mtg refi 4.38% 3.54% +0.84
15 yr fixed mtg refi 3.88% 3.17% +0.71
7/1 ARM refi 3.78% 3.48% +0.30
15 yr jumbo fixed mtg refi 3.62% 3.51% +0.12

National Mortgage Rates

Source: Freddie Mac Primary Mortgage Market Survey, SmartAsset Research

Regions Served by SoFi

Does SoFi Operate in My Area? 

SoFi is licensed to issue mortgage loans and refinances in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Texas, Tennessee, Vermont, Washington, Washington, D.C., Wisconsin and Wyoming. 

What Kind of Mortgage Can I Get With SoFi?  

Fixed-rate mortgage: SoFi offers 15-year and 30-year fixed-rate mortgages. This type of loan has the same interest rate over the life of the term. That means your monthly principal and interest payments stay the same. Most homebuyers opt for 30-year fixed-rate mortgages as it combines low monthly payments with a stable interest rate.  

Adjustable-rate mortgage (ARM): You can generally find a lower interest rate with an ARM. But that interest rate won’t stay the same. SoFi offers 5/1 and 7/1 ARMs. With this loan, your interest rate is fixed for the first five or seven years of your mortgage. After that, your rate will adjust up or down once per year until the end of your term. Buyers who flip homes or plan to move and sell the home within the fixed-rate term often opt for ARM loans. SoFi requires 10% down for 7/1 ARMs and 25% down for 5/1 ARMs. If you choose a SoFi 5/1 ARM, you’ll pay interest only for the first 10 years and pay back the principal for the remaining 20 years.  

Jumbo loan: The conventional conforming loan limit is $453,100, a number set by Fannie Mae and Freddie Mac, two mortgage corporations tied with the U.S. government. Home purchases over that number (or $679,650 in areas with high-priced real estate) require a jumbo loan. SoFi offers jumbo loans up to $3 million to borrowers with 10% down with no private mortgage insurance (PMI).  

Refinance: If you have at least 20% equity in your home, you can apply for a refinance with SoFi. Keep in mind the company doesn’t offer FHA or VA loans, so you won’t be able to refinance those loans unless you’re switching to a conventional mortgage. Refinancing only makes sense if you qualify for a lower rate or more favorable terms. However, you’ll have to pay closing costs on the loan again.   

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What Can You Do Online With SoFi? 

As you would expect with an online-based startup, SoFi has a robust digital experience. You can prequalify and get preapproved online, and you can complete the entire application process online from your home computer. In addition to applications, SoFi offers online homebuyer education with an 18-page PDF that covers topics ranging from how to budget for a mortgage to what to expect during the closing process.  

For visual learners, there are a few brief videos that help you get a sense of SoFi as a mortgage lender. You can also find current rates for the offered loan terms. 

There’s a detailed frequently-asked-questions section as well. The only thing missing, really, is an online chat system where you can ask questions in real time without calling. That said, the company does have a mobile app and also boasts customer service hours that cover 4 a.m. to 9 p.m.   

Would You Qualify for a Mortgage From SoFi? 

Because SoFi only offers conventional mortgage loans, the general standards will be higher than what you’ll find from a lender who offers VA, FHA or other government-backed loan options. While SoFi doesn’t publish credit score minimums, most lenders require a 620 or above FICO score for conventional loans. For the best rates, you’ll want to have a credit score of 740 or above.  

SoFi will closely consider your debt-to-income ratio (DTI), an important financial health marker. The company states “we use a unique underwriting approach which allows us to offer flexible DTI limits and ascertain creditworthiness based on other factors outside of the usual financial criteria (things like employment history and merit).” That means if you have a steady job and high income, you’re more likely to qualify for a SoFi mortgage even if your DTI is outside of the normal range. Most lenders require a DTI of 36% or less, but SoFi promises to be flexible. To find your DTI yourself, add your monthly debt payments, including student loans, credit card debt, car payments and child support or alimony if applicable. Add your potential monthly mortgage payment as well. Divide that total by your pre-tax monthly income and multiply by 100. That percentage is your DTI.  

Down payment savings is the next qualification consideration. SoFi offers jumbo and conventional mortgages for as little as 10% down. Most lenders require 20% down unless you’re getting a government-backed mortgage, such as a VA, FHA or USDA loan. If you put less than 20% down, you’re required to pay private mortgage insurance (PMI). With SoFi, you’ll only pay PMI if you pay less than 10%. That’s very rare to see with jumbo loans, which usually require a solid 20% to 25% down.  

While you may not as much in savings with SoFi as you would with another lender, you will need to have enough cash saved up to cover closing costs, homeowners insurance and the first few months of your mortgage, at the very least.   

What’s the Process for Getting a Mortgage With SoFi? 

SoFi advertises that you can start by getting your rates in two minutes with a “painless prequalification.” You sign up for an online login and proceed to the prequalification application. You’ll need to provide your personal contact information, citizenship status, current homeownership status, employment and income information and property details. In addition, you’ll need to specify details such as the property type and location as well as whether the loan is for a new property, refinance or cash out.  

SoFi has a school information section including undergraduate and graduate school name, degrees and graduation dates. Most lenders don’t ask this information as it’s not a loan qualification requirement. The form states, “While education is not used in mortgage underwriting, this info helps SoFi better understand our members.” SoFi refinances student loans, so this information request is likely a way for the company to see if you’d be a good fit for additional products.  

To get your rate, you’ll need to enter your Social Security number for a soft credit pull. After you see if you qualify for a loan, and what rates you could get if you do, you can move forward to preapproval if you wish. Preapproval takes more time and is more in-depth than a prequalification. You’ll need documents such as your W-2, tax returns, pay stubs, bank account statements, assets and retirement documentation and any additional paperwork requested by SoFi mortgage representatives. 

After preapproval, SoFi allows you to request a 30-day rate lock. Before you can do that, however, you need to show a signed purchase contract. That means you can lock a rate only after your offer on a home is accepted.  

If you proceed with the home loan, SoFi will process and underwrite it. The last step is closing. That’s when you’ll sign final documents with your real estate agent and lawyer and get the keys to your new home.  

How SoFi Stacks Up 

Homebuyers seeking conventional loans should consider SoFi as a lender. The company offers no origination fees and PMI-free mortgages with 10% or more down. Those are two huge advantages. While SoFi is a startup, it’s well-funded and relatively transparent. You can find fees, rates and all the information you need online without having to call a representative or fill out a form, something many competitors require. 

That said, if you want to compare your government loan options, SoFi isn’t for you. The company doesn’t offer FHA, VA, USDA loans or any type of down payment assistance programs or other loan options for underserved homebuyers. The company’s target market is young professionals working in technology. That’s a population that generally doesn’t opt for government-backed options, so it’s clear who SoFi wants as a customer.  

If you’re looking for a lender that offers a wide array of options as well as online access, you could try Rocket Loans (Quicken’s online-only mortgage arm) or even a big bank lender such as Chase or Bank of America. The benefit of larger lenders is that you can choose whether you want to work with your loan officer online or in-person. Smaller, online-based lenders like SoFi, Lenda and Better.com don’t offer that option. 

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