Wells Fargo Is Taking A Hard Pass On 53% Of Black Mortgage Applicants
WFC , the nation’s third largest bank by assets, is stifling Black homeownership by rejecting refinance applications sent in by Black homeowners, while approving almost three-quarters of those sent in by white applicants. A Bloomberg analysis found that Wells Fargos 47% approval rate gave it the worst record among major lenders when considering refinancing for Black homeowners. Homeownership is still one of the main avenues for all Americans to build wealth, though the national rate of Black homeowners stands at 41%. With nearly $200 billion lost in wealth and equity since the Great Recession, African Americans are at risk to have all median wealth extinguished by 2053, and Wells Fargo gamesmanship with mortgage applications will only make things worse.
The Breakdown You Need To Know: CultureBanx reported that for Black America the pursuit of the American Dream through homeownership has never wavered with adults in this demographic, between the ages of 26 and 39, sparking a nationwide rise in the overall rate. U.S. Census data shows this group raised the homeownership rate for all Black Americans by more than 2% during the first three quarters of 2020.
A National Association of Realtors analysis showed 5% of Americans who bought homes were Black. However, Wells Fargo fell well below industry averages when it came to lowering interest rates through a home refinance to African Americans, who were approved 71% of the time by all other lenders.
Alternative Investment Property Financing
Your seller may be happy to have an income stream from you without the hassles of being a landlord. Seller financing can be cheaper than banks or brokers.
The seller may be more interested in unloading the property than in profiting from your mortgage. But make sure you get the home appraised and inspected before buying.
Alternatively, there are lenders that specialize in financing commercial residential property from homes to apartment buildings.
As long as the property income is sufficient to cover the mortgage and other expenses, they may finance you for less.
Wells Fargo Mortgage Rates
30-Year Fixed-Rate Mortgage
- Largest mortgage lender in America
- Plenty of branches
- Anyone unsure of what type of loan to get
Wells Fargo is one of the largest mortgage lending institutions in the U.S. The bank backs that distinction up with many different mortgage options that vary in term-length, style and size. This breadth provides a high level of customization to make choices based on your specific profile. Thats often lacking when it comes to other lenders and provides a leg up for Wells Fargo. A financial advisor can help you with mortgages and any other financial issues you have.
But taking a mortgage with Wells Fargo isnt all great. In fact, its interest rates and annual percentage rates are slightly higher than a sizable portion of its direct competition. This is partially an indication that Wells Fargos extra costs are higher too, as the APR includes fees and other expenses that the interest rate does not.
|These rates assume a credit score of 740 and 0.50 discount points.|
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Math Behind Rental And Investment Property Loan Rates
Behind the scenes, the rate your mortgage lender charges isnt totally up to the lender. Property lenders often adjust rates to meet rules set by Fannie Mae and Freddie Mac.
Fannie and Freddie set rules and fees for most mortgages today and the fees they charge directly affect the final interest rate you pay.
Because of the increased risk of purchasing or refinancing investment properties, Fannie Mae and Freddie Mac charge higher fees on those transactions. Their fees trickle down to you as a higher interest rate.
|Type of investment property|
*Rates shown here are an example set meant for comparison only. Your own rates will vary.
For instance, an investment property loan with a 20% down payment would require a fee equal to 3.375% of the loan amount.
This is the same as $3,375 for each $100,000 borrowed.
In most cases, the borrower chooses to pay a higher interest rate instead of extra dollars in closing costs. So, how do these fees translate to your final rate?
In this case, 3.375% in investment property loan fees can be covered by an extra 0.5% to 0.75% added to the rate.
Keep in mind this is for a single-family home. Buy a duplex and you might pay another 1.0% in fees, or 0.125% to 0.250% added to your rate.
To get the best rates, you will want to put at least 25% down. The ideal loan-to-value ratio for investment purchases is 75% or less, advises Jon Meyer, The Mortgage Reports loan expert and licensed MLO.
Wells Fargo Mortgage Rate Transparency
Mortgage rates are easy to find on the Wells Fargo website. A dropdown under “Loans and Credit” offers access to a mortgages page with options for buying a home, refinancing or taking advantage of home equity. Choose one to find rates, loan comparisons and other tools. You can look at sample rates for common loan products, or enter your location, desired loan amount and down payment amount to get more personalized rates.
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Whats The Difference Between Interest Rate And Apr
The interest rate is the percentage that the lender charges for borrowing the money. The APR, or annual percentage rate, is supposed to reflect a more accurate cost of borrowing. The APR calculation includes fees and discount points, along with the interest rate.
A major component of APR is mortgage insurance a policy that protects the lender from losing money if you default on the mortgage. You, the borrower, pay for it.
Lenders usually require mortgage insurance on loans with less than 20% down payment or less than 20% equity .
Refinancing With Wells Fargo Cons
At the same time, youll want to consider these drawbacks:
- Youll pay more in interest. Refinancing may involve extending your loan term. The new rate could be lower and your monthly payment will be more affordable but that means youll spend more in interest over time.
- Youll pay origination and closing costs. When you refinance, youll be starting from scratch with a new loan. This means youll pay loan origination and closing costs. The good news is that you may be able to roll these fees into your new loan but you might pay a higher interest rate if you go that direction.
Talk your Wells Fargo mortgage officer through these pros and cons to help you decide whats best for your situation.
Eligibility & Application Requirements
Eligibility and application requirements for Wells Fargo home loans vary depending on the type of mortgage you want.
Generally, Wells Fargo works with a vast array of borrowers based on credit score and history, type of mortgage loan needed, and down payment availability. The basic criteria for being eligible for a Wells Fargo mortgage include:
- A satisfactory credit score. Wells Fargo doesnt disclose its minimum credit requirements, but a score of at least 620 is ideal for conventional loans.
- A high enough income to support a new loan payment.
- An ability to prove a reliable future income.
- For all but VA home loans, a down payment of at least 3% is required.
Tips For Adding A Mortgage To Your Financial Life
- If you want additional guidance, use the SmartAsset financial advisor matching tool to get paired with up to three advisors who serve your area. A financial advisor can help you account for a mortgage in your long-term financial plan.
- Before you apply for a mortgage, it might be wise to do a complete review of all your monthly costs. This will give you a better look into how well these new payments will fit into your your overall finances.
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Other Considerations With A Streamline Refinance
FHA does not let lenders roll costs into the streamline loan. So, if you are considering a no cost refinance, it might have higher interest rates. The premium charged from the interest rates are what the lender pays borrowers closing costs.
You cannot do a cash-out refinance requiring a title change through the streamlined refinance program either. If youre an active duty service member, you may be eligible for a different variety of assistance programs. Look into the Servicemembers Civil Relief Act or applicable state law.
A streamline refinance may help you suspend a current foreclosure if you can prove this case, but you will have to submit copies of some proof of income, recent tax returns, monthly expense statement and a detailed description of your current hardships in addition to your mortgage refinance application.
Investment properties, or properties the borrower own but dont live in, may be refinanced with a streamline option, but only without an appraisal.
What Mortgage Rates Does Wells Fargo Bank Offer
Mortgage rates change daily based on market conditions and vary significantly depending on the loan type and the length of the term. For instance, fixed rate mortgages will typically have a higher interest rate than mortgages with variable rates, and jumbo loans usually have higher mortgage rates than conforming conventional loans. Find the best interest rate available to you by getting quotes from three or more mortgage lenders before choosing a home loan.
Wells Fargo mortgage offers home loans with APRs starting at 2.345% .
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How A Wells Fargo Streamline Refinance Works
The FHA streamline is available to homeowners who currently have an FHA loan and are currently a Wells Fargo customer. Just like with other refinance options, a borrower must have a good payment history. One of the key differences between a streamlined refinance and a more conventional option is that lenders typically do not need an appraisal which can cost $400 or more to approve a streamlined loan, and homes that have lost value and are now underwater are still eligible.
One of the benefits of taking advantage of a streamline refinance is the reduced paperwork associated with refinancing. Existing Wells Fargo customers dont have to pay application fees, either.
General interest rates are lower than theyve been in a long time, but because the economy is on the upswing, rates could start to inch upward. If you lock into a Wells Fargo streamlined mortgage refi, you can reduce your monthly payment without a whole lot of hassle.
One of the best features of a Wells Fargo streamline refinance is the reduced paperwork and fees associated with a refinance.
Wells Fargo At A Glance
Wells Fargo Mortgage has been a leading originator and servicer of residential mortgages for most of a quarter century. The bank has a loan product selection that is long and wide, along with ample online conveniences to streamline the mortgage application experience.
Heres a breakdown of Wells Fargos overall score:
Variety of loan types: 4 of 5 stars
Ease of application: 5 of 5 stars
Rate transparency: 5 of 5 stars
Rates and fees: 3 of 5 stars
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Wells Fargo Pros And Cons
Compare the benefits and drawbacks of a mortgage with Wells Fargo.
- Fees. You wont know the fees associated with your loan up front.
- Slow customer service. Some customers complain of slow response times.
- Numerous lawsuits. Wells Fargo has been at the center of many high-profile lawsuits over the years.
Make A Bigger Down Payment
The surest way to get a lower interest rate on your investment property is to make a bigger down payment. Much of the added cost goes away if you can put at least 20% down.
It might be worth borrowing against the equity in your current home to increase your rentals down payment. You can also buy a cheaper house, or find a foreclosure you can buy at below market value.
You could even consider if this is an exceptional investment borrowing against your 401.
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What Mortgage Programs Are Available
Besides conventional mortgages, Wells Fargo mortgage offers the following mortgage types:
- FHA loans: FHA loans are mortgages insured by the FHA. They offer competitive mortgage rates and have less stringent eligibility requirements. However, borrowers must pay a mortgage insurance premium. For instance, you can apply for an FHA loan with a credit score as low as 580. Co-applicants are allowed and you can qualify for a down payment as low as 3%.
- Jumbo loans: Any mortgage with a loan amount above the conforming loan limits set by the Federal Housing Finance Agency .
- USDA loans: A zero down payment mortgage loan with low mortgage rates for suburban and rural homebuyers. The USDA doesn’t require a minimum credit score, but most mortgage lenders require a minimum credit score of 640.
- VA loans: A zero down payment mortgage or a refinance of up to 120% of the home’s value for American military members, veterans, and their spouses. VA loans offer competitive mortgage rates, and don’t have a minimum credit score. However, the mortgage lenders that offer them will typically require a credit score of at least 640.
What Customers Are Saying About Wells Fargo
Wells Fargo is one of the top competitors for supplying customers with home loans, refinancing, and home equity products and services. The Wells Fargo fraud scandal a few years back caused customer trust to waiver for a time, but most new customers seem to have put that behind them and are now trusting Wells Fargo with one of the biggest financial commitments, buying a home. On trusted review site BestCompany.com, Wells Fargo is standing out as a powerhouse among its competitors ranking as the 3rd best mortgage company with a high score of 7.3 out of 10. But what does this all mean?
The score is broken down by two major ranking factors:
On the customer side, customers seem to really enjoy Wells Fargo mortgage services. Out of 170 reviews, 70% of those reviews gave Wells Fargo an overall 4-5 star rating whereas only 19% respondents gave Wells Fargo a 1-2 star rating. It is often praised for its personalized customer service, low rates and convenience â while on the other hand consistent complaints have risen from people in regards to hidden fees.
Overall, Wells Fargo is a great option to look into if you are in search of financing a new home.
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The Benefits Of A Wells Fargo Mortgage Refinance
As with any major financial decision, its always best to shop around and conduct thorough research. Use a refinance mortgage calculator to help determine which refinance product and lender make the most sense for you. If youre having difficulty understanding the options available, consider using a mortgage broker. Though the charge a small fee, brokers can help assess your financial situation and pair you with the appropriate program to save you the most amount of money.
What Are Todays Investment Property Rates
Mortgage rates for investment properties are higher than those for primary residences because they are viewed as higher risk.
Still, rental properties are usually a great investment in the long run, and a slightly higher rate might not matter much when compared to the returns youll see on the property.
Every applicant is different. The best way to get your current investment property mortgage rate is to get quotes from multiple lenders and make them compete.
Rates change all the time, so contacting lenders online is the quickest way to get a fist full of rates to compare.
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Next Steps To Utilizing Your Home Equity Loan Or Line Of Credit
For any real estate related needs you should always consult with an experienced, local professional. A local agent can give you advice on what repairs are renovations will add the most value in your housing market, update you on local market conditions, and point you toward the right financing tools for your needs.
A great agent can also help you find deals and investment opportunities that will fit your budget based on how much of a home equity loan you qualify for. Leveraging your existing home equity to start or expand your investment portfolio, or to invest for retirement, can be a wise idea.
If you are considering taking out a home equity line of credit to finance the sale of your home or to purchase a property, a Clever Partner Agent can help you. Clever connects you with the top agents in your area and guides you through every step of the home search, negotiation, and closing process.
Why Did Wells Fargo Stop Offering Reverse Mortgages
Upon the announcement that it would exit the reverse mortgage business, Wells Fargos executives told industry press outlet Reverse Mortgage Daily that home price unpredictability combined with HECM program restrictions made it difficult to determine whether borrowers could meet their loan obligations.
These obligations, which continue to apply to reverse mortgages today, include ongoing payment of property tax and homeowners insurance, as well as upkeep of the property to Federal Housing Administration standards.
As part of any FHA-insured reverse mortgage loan, the borrower must maintain these obligations in order to keep the loan current.
In turn, borrowers with FHA-insured reverse mortgages are guaranteed that they will continue to receive their loan payments as stated in the loan contract, and that they will never owe more to repay their reverse mortgage loan than the home is worth at the time of sale.
The housing crash in 2008 led to widespread home price uncertainty Wells Fargo could not predict home prices and the ability for borrowers to meet their loan obligations Banks at the time were focusing on core operating channels rather than ancillary businesses