SoFi (short for Social Finance) is a leader in the world of tech-based mortgages. The lender specializes in working with high-income borrowers that have non-traditional forms of credit. In particular, they provide unique opportunities and benefits for mortgage customers.
Whether you’re looking for a traditional fixed-rate mortgage or an adjustable-rate product, SoFi has plenty of options for you to choose from.
This article will review the kinds of home loans SoFi offers, what it takes to qualify, and the perks come along with choosing this lender.
Mortgage Application Requirements
When it comes to applying for a mortgage, SoFi is kind of a mixed bag. That’s because they have strict credit requirements in certain areas, and are very lax in others.
Every SoFi borrower is required to put down a down payment of at least 10%. And because their mortgages are reserved for high-income borrowers, the minimum loan amount is $100,000.
But SoFi is flexible when it comes to debt-to-income ratios. For instance, borrowers with hefty student loan debt are still eligible to apply for a mortgage through SoFi.
SoFi is a great option for borrowers that can meet the requirements, but they aren’t available everywhere. SoFi is only licensed to originate mortgages in the following states:
Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington, D.C., Wisconsin, and Wyoming.
Types of Home Loans Available
Another thing that makes SoFi unique is that they don’t offer any government loans. That means you can’t apply for a VA, FHA, or USDA loan through SoFi.
However, they do offer a wide variety of different loans lengths and types of mortgages. Here are the different types of mortgages you can apply for through SoFi.
30-year Fixed-Rate Mortgage
This is a standard mortgage product offered by most mortgage lenders. The advantage of this mortgage is that since your interest rate is fixed, your payments will remain stable over the life of the loan. This will almost be the most affordable plan for most borrowers.
The minimum down payment required is 10% and there’s no PMI required. On top of that, you can check out up-to-date mortgage rates on their website. It’s a popular option that offers stability along with spread out payments.
20-Year Fixed-Rate Mortgage
Like the standard 30-year mortgage, a 20-year mortgage is set at a fixed rate. That means your payments won’t change over the life of the loan. It’s a good option for borrowers who want to pay their mortgage off a little sooner and save money on interest, but aren’t ready to commit to a 15-year mortgage.
15-year Fixed-Rate Mortgage
With a 15-year mortgage, your monthly payment will stay the same because your interest rate doesn’t change. The major difference is that you can save a lot of money on interest if you can manage the higher payments.
That’s because interest rates are usually less with a 15-year mortgage. Plus, you’re repaying the loan over a shorter period of time, so the interest has less time to accumulate.
Of course, because of that shorter window for repayment, your monthly payments will be higher compared to a 30-year mortgage. Still, if it’s a manageable amount, it’s worth comparing your options to find out how much you’ll save in interest.
10-Year Fixed-Rate Mortgage
SoFi also offers a 10-year fixed-rate mortgage for borrowers who are serious about paying their mortgage off quickly. This type of mortgage will come with the most competitive interest rates and offer the most savings.
Of course, not everyone will be able to swing the higher monthly payments. But it’s a great option for borrowers with high incomes that are serious about owning their own home.
The 7/1 ARM is the only straightforward adjustable-rate mortgage SoFi offers. Like the other loans, the minimum down payment is also 10%.
If you’re not familiar with an ARM, the way it works is for the first seven years, you’ll enjoy a fixed interest rate. After that, the rate adjusts on an annual basis for the rest of the 30-year loan.
The biggest benefit with this type of mortgage is that interest on a 7/1 ARM starts off much lower than with a fixed rate. If you plan on moving from your house or refinancing within seven years, it could be a smart choice to save money in the near-term.
However, this could put you in a difficult position financially if things suddenly change and you’re stuck with the mortgage once the rate changes.
And finally, if you already own a home but are looking to secure a lower interest rate, SoFi also offers refinancing options. The interest raets are competitive and come with no hidden fees.
You can also apply for a cash-out refinance and use the equity in your home to pay down high-interest debt or make home renovations. SoFi also offers borrowers the option to use the equity in your home to pay down your outstanding student loan debt.
Fees and Rates
SoFi is relatively unique in that their loans don’t require primary mortgage insurance (PMI). On top of that, there are no origination fees or application fees as long as you meet the minimum 10% threshold.
Rates are competitive and published online. Plus, you can see your own personalized quote early on in the process, even before proceeding with the formal mortgage application.
SoFi’s Mortgage Process
To apply for a mortgage with SoFi, you’ll need to get prequalified. Once you set up your account and enter some of your personal information, you’ll receive a personalized rate in about two minutes. And getting prequalified won’t hurt your credit score.
In addition to your financial information, you’ll need to let the lender know how much you want to borrow and the type of down payment you expect to put down. From there, you can review your available loan options and terms.
If you’re happy with the rate SoFi offers, you can continue the process and get preapproved for the loan. From there, you’ll move forward with the application process.
The application will be completely digital and SoFi uses a nontraditional underwriting process. But you can always speak to a loan officer if you have any questions or need advice.
In addition to looking at your FICO score, SoFi also considers other less tangible factors, such as:
- Professional history
- Earning potential
- Payment history
Another unique feature of the SoFi mortgage process is that you only have to submit your information once. Using that data, SoFi can underwrite your loan in order to strengthen your offer on a home.
This is especially important in competitive markets where bidding wars are common. According to SoFi, most mortgages close within 28 days.
Additional perks for SoFi mortgage borrowers include career counseling and community events. Whether it’s a local happy hour or networking event, SoFi is committed to helping borrowers stay on track with their careers.
SoFi also offers a mortgage calculator that makes it easy to see how much money you can save on your mortgage with different rates and down payments.
SoFi offers both traditional and unique lending products for borrowers who can demonstrate strong earning potential and future career growth. This can work well for those who don’t have a lot of cash saved for a down payment.
SoFi is also a good option for borrowers with a high debt-to-income ratio, especially if it’s due to student loans. Check with SoFi to see if your finances warrant using this digital lender for your next home purchase.