PennyMac Mortgage Review 2021

By Bankrate Staff

Please note: In response to the coronavirus pandemic, lenders are changing their requirements continuously. Although we strive for accuracy at the time of publication, please be sure to check with the lender for updated details on down payments, credit scores, etc.

At a glance

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4.3

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Loans offered

Conventional loans, FHA, VA, USDA, jumbo loans, adjustable-rate mortgages (ARMs), flex-term, investment property loans; refinancing options include cash-out refinancing and streamline refinancing; home equity loans, home equity lines of credit (HELOCs)
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Nationwide availability

Available in all U.S. states
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Min. credit score required

620 for conventional loans; 620 for VA loans; 580 for FHA loans; 700 for jumbo loans

Pros and cons

Pros

  • Online and phone customer service available
  • First-time homebuyer program with a low down-payment requirement (as little as 3 percent down)
  • Offers loan modification programs for eligible borrowers
  • Works with some employers to offer loan discounts
  • Offers a guarantee that they will close on time or the borrower gets a $500 Visa gift card (provided the late closing is the fault of PennyMac)

Cons

  • No brick-and-mortar locations
  • Customer service call center hours limited
  • Online information about loan costs limited

PennyMac overview

PennyMac, headquartered in Westlake Village, California, was founded in 2008. Today, it’s a publicly traded, direct national lender that offers a wide range of loan options, as well as a first-time homebuyer program with a low down payment requirement (as little as 3 percent). PennyMac also has refinancing options, plus home equity loans, home equity lines of credit (HELOCs) and streamline refinancing. Although there are sales office locations, borrowers must apply online or by phone. Borrowers can use PennyMac’s online portal and electronic documentation system to apply for a loan from anywhere. The lender also offers phone support at any point during the application process. Once approved, borrowers are matched with a loan officer who becomes the single contact throughout the closing process. PennyMac's offerings cater to various borrowing needs, including people with both excellent and average credit, investors, veterans, existing homeowners and first-time buyers. PennyMac not only originates loans, but it also buys loans and offers loan modifications in an effort to help borrowers stay in their homes. PennyMac will help reconfigure loans to make them more manageable for borrowers when possible. In addition to lending, PennyMac services loans, with more than 1.8 million PennyMac home loan customers on their books.

Loan types

  • Conventional loans
  • FHA
  • VA
  • USDA
  • Jumbo loans
  • Adjustable-rate mortgages (ARMs)
  • Flex-term
  • Investment property loans
  • Cash-out refinancing
  • Streamline refinancing
  • Home equity loans
  • Home equity lines of credit (HELOCs)

Lender fees

PennyMac lender fees include origination fees, rate-lock fees and closing costs. These expenses vary by loan type and applicant. According to PennyMac’s website, borrowers should talk to their loan officers about fees to minimize upfront costs.

“The closing cost of a loan will vary depending on your geographic location and the requirements of the loan product,” according to PennyMac.

Closing costs can include title fees, recording fees, appraisal fees, credit report fees, pest inspection, attorney’s fees, taxes and surveying fees.

PennyMac offers a “better rate promise” program which asserts that their pricing is better than other lenders. The lender backs this promise with a $250 gift card for borrowers who find cheaper lenders.

Minimum borrower requirements

PennyMac adheres to the conforming loan requirements for mortgages approved by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, as well as those backed by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).

For conventional loans, key requirements include good credit (typically a FICO score of 620 or higher) and a minimum down payment of 3 percent. However, anything less than 20 percent down will trigger the private mortgage insurance (PMI) requirement. Borrowers must also have a minimum of two months’ cash reserves to cover the closing costs; proof of employment or income; and, in most cases, a debt-to-income ratio (DTI) of 45 percent or less.

Keep in mind, you might be able to submit alternative credit data to improve your chances of getting a lower interest rate or just getting approved for a loan. Alternative credit data includes rental history and car payments.

For FHA, VA and USDA loans, those requirements are set by the government. You can find them here:

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