SoFi is a modern finance company that offers wealth management tools and loans for mortgages, student loan refinancing, personal loans and more. As a marketplace lender, the company is available to individual and institutional investors and take pride in evaluating applicants based on their well-rounded financial history and not just their credit score.
SoFi stands for 'social finance' and seeks to provide a refreshing change from traditional bank lending when it comes to obtaining a mortgage. If you're looking for a simplified way to take out a mortgage and put enough money down to avoid having to pay private mortgage insurance, SoFi may be a great option for you. Let's take a closer look at what they offer borrowers who wish to obtain a mortgage.
An Overview of SoFi's Mortgage Offerings
SoFi takes a unique approach to lending which allows them to approve applicants based on a variety of factors and offer better rates when compared to a traditional lender. Their underwriting approach allows borrowers to qualify for more financing and down payments ranging from 10-50%.
Their motto when it comes to mortgages is 'More House, Less Headache' and they allow borrowers to put a minimum of 10% down and receive no requirement to pay mortgage insurance. This is huge given the traditional notion that borrowers who put a down payment down that is less than 20% of the purchase price of the home are often required to pay private mortgage insurance which adds to their monthly mortgage payment. Paying that extra money each month is not ideal, but for people who are ready to buy in every other sense, or believe they could potentially save more by buying a home instead of renting, taking out a mortgage and just dealing with the extra requirement of paying PMI becomes a costly reality.
Other benefits and unique features that SoFi's mortgage product offers borrowers include:
- Flexible debt-to-income limits - while your debt-to-income ratio could potentially hold you back from purchasing a home or limit your loan amount, SoFi is more flexible in terms of evaluating this factor allowing you to purchase more house to meet your needs.
- No hidden fees - SoFi doesn't have application, origination, or other lender fees to consider. Working with a lender who tells you exactly what to expect in terms of fees is ideal because it allows you to properly prepare your budget for pre-mortgage expenses.
- SoFi offers an interest-only mortgage option that allows borrowers to put 15% down on mortgages up to $3 million and only pay interest on their loans for the first 10 years. The loan is usually a 40-year ARM loan with no mortgage insurance or origination fees. Borrowers can apply for this loan quickly in about two minutes according to SoFi's website.
Cons to Consider
SoFi only services a select area in the U.S. and their services are not available to everyone. SoFi is allowed to originate mortgages in the following states:
Alabama, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, New Hampshire, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Washington, Washington, D.C., Wisconsin, and Wyoming.
In addition, rental properties, tenancies-in-common (TICs) and co-ops are not eligible properties if you wish to obtain a mortgage through SoFi. In order to qualify for a mortgage with this company, you must have at least 10% to put down. Since SoFi waives the requirement for PMI and other fees, this amount is necessary at minimum. Therefore, borrowers with less money to put down will have to look elsewhere for approval or wait until that have at least 10%.
Terms and Rates
SoFi offers a variety of 30-year fixed, 15-year fixed, and a 7/1 adjustable-rate mortgage (ARM). Interest rates are dependent on where you live and how much you put down along with your term, but generally range from a high 2% to mid 4%.
If you'd like to know more specifics about what interest rate you could potentially receive, you can create an account on SoFi's website and fill out a brief quote form to determine your rate offers.
SoFi implements a quick and efficient application process that typically closes in 30 days or less. Their process takes place mainly online and can be streamlined when applicants have all the proper documents in place. The application process is broken down into a few components:
- Pre-Qualification: This initial process allows you to find out your rate and eligible loan amount in usually 48 hours or less. A soft credit pull is conducted at this time so it does not affect your credit.
- Pre-Approval: The next step involves applicants verifying their income by uploading documents to ensure a complete approval.
- Automatic Appraisal & Offer Letter: During this phase of the process applicants need to provide specific details about the property they wish to purchase so SoFi can conduct an automated valuation of the property and prepare an offer letter.
- Pre-Closing: SoFi verifies the title, HOA details and schedules and in-person appraisal which won't affect the pricing.
- Closing: At this point in the process, the end is near. The final step includes going over the final documents with a closing agent.
Tools and Resources
If you have general questions, you can check out SoFi's mortgage FAQ page that offers clear answers and insightful details that can help you at the beginning stages of the process or when you are considering getting a quote.
SoFi also has a customer support and mortgage support line that is available by phone 7 days a week during specific hours.
Verdict - Average
SoFi is an exceptional option for individuals or families who have a down payment of at least 10% and are seeking flexible mortgage options. SoFi's unique underwriting benefits and ability to help applicants obtain a better loan and home makes the entire process easier, quicker, and more rewarding.
While SoFi isn't the best option for everyone, if you live in one of the states the company services and you are interested in learning more, you can always head to their site for extra tips and advice or check out our mortgage resource page.