Freedom Mortgage Corp. is a family-operated mortgage lender that launched in 1990. The lender is based in Mount Laurel, New Jersey, and offers home loans in all 50 states plus Washington, D.C.
Whether you’re looking to buy a home or refinance an existing mortgage, you’ll have a choice between several loan programs, including a mix of conventional and government-backed loans. Freedom Mortgage is the leading lender in volume with Veterans (VA) loans and offers several cash incentives and competitor price matches.
However, borrowers should understand some of Freedom’s limitations before moving forward. Freedom has a history of lawsuits, consumer complaints, and fines with the Consumer Financial Protection Bureau Protection (CFPB). The company also lacks rate and fee transparency on its website and requires a hard credit pull just for a rate quote.
Pros and Cons of Freedom Mortgage Home Loans
Offers home loans in all 50 states and Washington, D.C.
Borrowers may be eligible for cash incentives
About 100 brick-and-mortar locations
Leading lender in VA loans origination
Cash back incentives for late closings or rate matches
Will contact you if rates drop under Eagle Eye program
History of lawsuits, fines, and consumer complaints
Doesn’t offer jumbo loans, construction and renovation loans, home equity products, or reverse mortgages
Mortgage rates aren’t listed online
Must speak with a loan officer to apply or get a rate quote
Freedom Mortgage: Home Loan Types and Products
Freedom Mortgage originated nearly $40 billion in Veterans (VA) loans in 2020 alone, making it the largest lender by volume for this type of mortgage. But Freedom offers other types of home loans, too. Here’s what’s on the menu right now:
- Conventional loans
- Federal Housing Administration (FHA) loans
- Department of Veterans Affairs (VA) loans
- U.S. Department of Agriculture (USDA) loans
- Refinance loans
- Fixed-rate loans
- Adjustable-rate loans
On adjustable-rate mortgages (ARMs), the terms depend on the type of mortgage you want to take out. FHA and VA loans at Freedom Mortgage come with terms of 3/1, 5/1, and 7/1. Here’s how the rate works: On the 7/1 ARM, for instance, the interest rate is fixed for the first seven years. After that period ends, the rate may go up or down once a year for the remaining loan term. On conventional loans, you can choose from ARM terms of 5/1, 7/1, and 10/1.
If you decide to apply for one of Freedom’s mortgages, you may qualify for one of its borrower incentives. The lender promises to pay you $1,000 if your loan doesn’t close on time, will take $250 off closing costs, and will either meet a competitor’s mortgage rate on a home purchase or pay you $250.
Freedom Mortgage also runs a program called Eagle Eye, in which the lender will contact you if rates drop or your home value increases. These factors may help you refinance into a new loan to save money on interest or tap your home equity for cash.
Freedom Mortgage Transparency
Freedom Mortgage’s website offers several resources to help you understand the homebuying process, such as checklists, a mortgage glossary, videos, and blog posts. But there’s very little information about what it takes to qualify for a home loan with the lender, the rates you may receive, and lender fees you might pay.
It’s also worth noting Freedom Mortgage has been involved with several regulatory issues with the Consumer Financial Protection Bureau and 11 state governments in the past decade or so. For instance, the CFPB fined Freedom Mortgage a penalty of $1.75 million in 2019. According to the consumer agency, the lender had intentionally reported incorrect Home Mortgage Disclosure Act data over a period of several years. Additionally, the CFPB has logged more than 800 consumer complaints against the lender since 2011. NextAdvisor reached out to Freedom Mortgage for comment on 9/15/2021 but we haven’t received a response as of yet.
Freedom Mortgage: Home Loan Rates and Fees
On its website, Freedom Mortgage doesn’t advertise mortgage rates, list lender fees, or explain costs borrowers might pay when taking out a mortgage with the lender. Additionally, you won’t be able to get a rate quote without contacting a loan officer and agreeing to a credit check.
This is significant because a hard credit pull can temporarily lower your credit score by a few points. Other lenders will provide a quick rate quote based on information you provide, which means there’s no impact to your credit. This “prequalification” can help you determine whether you want to move forward and get a preapproval with the lender.
However, we were able to confirm a few details via phone call with a loan officer. Borrowers pay a lender fee of $1,295 on all loans, and you can choose to buy down your interest rate using discount points. And while borrowers can lock in a rate for free up to 90 days, there are fees to extend the lock.
Aside from these lender fees, you’ll need to budget for third-party closing costs that will be listed on your closing cost worksheet or Loan Estimate. When you get one of these documents, look for:
- Lender origination fees
- Appraisal fees
- Credit report fees
- Flood certification fees
- Tax service fees
- Survey fees
- Title search and title insurance costs
- Discount points, if you choose to buy them
- Prepaid costs for escrow
- Fees to lock the rate or extend the rate lock
The loan officer also filled us in on the minimum credit score and down payment requirements you’ll need to get a mortgage with this lender:
- Conventional loan: minimum credit score of 620 and down payment of 3% to 5%, depending on whether you’re a first-time homebuyer
- FHA: minimum credit score of 600 and down payment of 3.5%
- VA: minimum credit score of 580 to 620 and no down payment, although you may need to pay a funding fee
- USDA: minimum credit score of 660 and no down payment, but there are some upfront mortgage insurance costs
During the underwriting process, the closing timeline depends on the type of loan you’re taking out. From end to end, a conventional home purchase may take 30 days to close, which is faster than the current industry average. A government-backed purchase loan may take longer to close, around 45 days. A rate-and-term refinance closing also takes about 45 days, while a cash-out refinance takes 60 to 90 days.
Refinancing With Freedom Mortgage
If you have an existing mortgage, you can refinance with Freedom Mortgage using these options:
- Cash-out refinance is a home loan where you borrow more than you currently owe on your home. The loan funds pay off the existing mortgage and you receive the difference in cash. Then, you pay back the new loan over time. You can use the extra funds for any type of expense, but you’ll have a higher loan payment going forward with a longer payoff timeline.
- Rate-and-term refinance allows you to swap out your mortgage with a loan that comes with a new loan term, interest rate, or both. Many homeowners refinance to lower their monthly mortgage payments, get rid of private mortgage insurance, or accelerate their payoff timeline.
- VA interest rate reduction refinance loan (IRRRL) is a refinance loan that’s available to homeowners with an existing VA mortgage. Applicants may get a lower interest rate or switch from an adjustable rate to a fixed rate.
- FHA streamline refinance is a mortgage that’s available to homeowners with an existing FHA loan. If eligible, you’ll receive a lower interest rate in the refinance, which can help you save money. In place of the normal credit check or income verification, homeowners may qualify if they’ve had a perfect on-time payment history.
- USDA streamline refinance also allows homeowners to skip some of the typical credit and income verifications. If you have a USDA loan and you’ve made on-time payments for the last 180 days, you may qualify for a USDA streamline refinance to help you save money.
Freedom Mortgage Compared to Other Mortgage Lenders
|Freedom Mortgage||Fairway Independent Mortgage Corp.||New American Funding|
|Minimum credit score||620 for conventional; 600 for FHA; 580 to 620 for VA; 660 for USDA||620 for conventional; 660 for jumbo; 600 for FHA; 600 for VA||580|
|Minimum down payment||0% to 5%||0% to 5%||0% to 5%|
|Where does the lender operate?||All 50 states and Washington, D.C.||All 50 states and Washington, D.C.||Washington, D.C., and all states except New York and Hawaii|
|Major loan types||Conventional, jumbo, VA, FHA, USDA, adjustable-rate, fixed-rate, several refinance options||Conventional, jumbo, VA, FHA, USDA, various renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, reverse mortgages, home equity loans, home equity lines of credit||Conventional, jumbo, VA, FHA, USDA, renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, reverse mortgages, home equity lines of credit|
How to Shop Around to Get the Best Mortgage Rate
Before you start shopping for a home, it’s a good idea to contact a lender and ask for a mortgage preapproval. After pulling your credit and looking at some of your financial documents, the lender provides an estimate for how much you can borrow. This will help you define your budget and support your purchase offer. But you’re not locked in with that lender, so you can check out others when you’re ready to apply for a home loan.
Once you’ve found a home and the seller accepts your offer, submit mortgage applications with multiple lenders. (You can minimize the hit to your credit by applying for the loans within a short window, around two to six weeks.) You’ll receive a Loan Estimate that lists all the borrowing costs you’ll pay with that lender. Use these documents to compare the interest rate and closing costs, and use an online mortgage calculator to help you figure out how much you’d spend on interest with each option.
Take a look at one example: Let’s say you receive two mortgage rate quotes on a home worth $225,000 with a 10% down payment and 30-year term.
|Interest rate||Monthly principal and interest payment||Total Interest Paid over 30 years||Interest saved|
|3.1%||$960||121,051||$37 per month or $13,371 over the loan term|
With a 3.4% interest rate, the monthly principal and interest payment comes out to $997. But with a 3.1% interest rate, you save $37 a month on interest costs. That might not sound like much, but it adds up to $13,371 in interest savings over 30 years.
The Bottom Line
Freedom Mortgage might be a good fit for first-time homebuyers since it offers all three government-insured loan programs: FHA, VA, and USDA loans. Each of these mortgage programs comes with more flexible down payment and credit score requirements than conventional loans.
But Freedom Mortgage might not be a good option if: You want to apply online, you want a digital mortgage experience, you don’t want phone calls with a loan officer, you are not ready for a hard credit check, or if you’re looking for a specialty loan product. As with any home loan, it’s a good idea to shop around for the best deal. So if you get preapproved with this lender, make sure you compare the offer with others.