PennyMac Mortgage Review 2022

Customer Experience

PennyMac is a California-based mortgage lender established in 2010 and of the largest mortgage lenders in the U.S. They service a large number of the loans they originate rather than selling them.

PennyMac provides their rates for both Refinance and New Home Purchase products on their site so you can compare them to other lenders. If you want a quote more specifically tailored for you, they offer a custom rate tool that asks you to provide some additional information about your needs. Rates will vary among customers based on several factors such as credit history, type of mortgage, and home location.

PennyMac offers an online platform for much of their application process, though many consumers opt to utilize their call center to speak to one of their licensed Loan Officers. They also allow you to schedule a time for one of their representatives to call you. They state that their standard loan origination fee is $1,100, which is a little higher than some other lenders out there, but they also waive their lender fee on new home purchase mortgages. They provide a number of articles to help customers understand the mortgage process and the products available to them.

PennyMac Loan Types

PennyMac offers a wide range of loan products to finance the purchase or refinance of a primary residence, an investment property, or a secondary/vacation home. The online mortgage lender issues conventional, jumbo, FHA, VA, and investment purchase loans with fixed and adjustable mortgage rates.

While the lender has a good selection of loan options, they don't issue home equity lines of credit (HELOCs). Here is a breakdown of PennyMac’s purchase and refinance loans:

Purchase Loans

Conventional loans

You can get a 15-year, 20-year, or 30-year fixed-rate home loan from PennyMac that conforms to Fannie Mae and Fred Mac's guidelines. The lender also offers adjustable-rate mortgages (ARMs) with fixed-rate periods of five, seven, or ten years before the rate adjusts every six months. PennyMac’s ARMs have initial, subsequent, lifetime and payment adjustment caps to limit how much your adjustable mortgage rate will fluctuate. To qualify for a conventional loan, you’ll need the following:

• A minimum initial down payment of 5%. However, you’ll need a 20% initial down payment to skip private mortgage insurance premiums.

• A minimum credit score of 620

• A debt-to-income (DTI) ratio of 45% or less

Federal Housing Administration (FHA) Loans

Backed by the Federal Housing Administration, FHA loans require little down payment, making them a popular choice among first-time homebuyers. However, they require mortgage insurance premiums in the form of an upfront fee and monthly payments.

According to PennyMac, FHA loans require one-time upfront mortgage insurance premium of 1.75% of the loan amount. You can roll this amount into your loan to reduce your out-of-pocket costs at closing. Here are the requirements to qualify for PennyMac’s 20-year and 30-year fixed-rate FHA loans:

• An initial down payment of 3.5%

• A minimum credit score of 640

• A max debt-to-income ratio of 50%

Veterans Affairs Loans

The VA mortgage program allows active duty service members and veterans to purchase a home with no down payment, no mortgage insurance premiums, and lower interest rates. However, you may be required to pay a one-off VA funding fee that helps sustain the VA loan program. PennyMac offers 20- and 30-year VA fixed-rate mortgages with the following requirements:

• A minimum FICO score of 640

• A certificate of eligibility

• A funding fee of between 1.25%--3.3% of the loan amount at closing. This fee can also be rolled into your loan

Jumbo Loans

PennyMac’s Jumbo loan allows you to borrow above conforming limits up to $3 million. The lender offers a 30-year fixed-rate jumbo mortgage loan with the following requirements:

• An initial down payment of between 10.01%--25%

• A credit score of at least 700

• Significant cash reserves of 9–12 months

Investment Property Loans

If you’re looking to earn passive income through a single-family home, condo, townhome, or multi-family property, check out PennyMac’s investment loans. The loans come with a reduced origination fee, in-house servicing, and lower rates. While PennyMac doesn’t specify the exact credit score requirement, it requires that your credit score falls into a “good or an excellent score range.” Here are other requirements:

• Besides closing costs, you need a minimum of six months of cash reserves

• An down payment of at least 15% for a single-family home and 25% for a 2–4 unit property.

• A debt-to-income ratio of 50% or less

• Proof of a stable income

Refinance Loans

Conventional Refinance Loans

With PennyMac’s conventional refinance loans, you could lower your interest rate, extend your loan term, or switch from an adjustable rate to a fixed rate. All you need is a loan-to-value (LTV) ratio of 80%. You could also tap into your home equity to get cash for any purpose, including financing home improvements or paying off other high-interest loans.

FHA Refinance Loans

PennyMac offers a number of options to FHA borrowers looking to refinance. The first option is the FHA to conventional refinance, which allows you to eliminate mortgage insurance as long as your LTV is 80% or less. PennyMac also provides a streamlined FHA refinance, which can help reduce your payments with less documentation and no appraisal. You can also take out an FHA cash-out refinance to fund school tuition or any other purpose.

VA Refinance Loans

You can refinance your current VA loan with PennyMac’s interest rate reduction refinance loan (IRRRL) to get a lower interest rate or shift from an adjustable to a fixed-rate mortgage. With the VA cash-out refinance, you can access up to 90% of your home value.

Jumbo Refinance Loan

USDA Streamline Assist

Borrowers with an existing United States Department of Agriculture (USDA) backed loan can refinance with PennyMac’s USDA Streamline Assist loan for lower home loan interest rates. The USDA Streamline Assist refinance loan offers reduced fees. Additionally, the loan has a simpler and more streamlined application process than the standard USDA refinance as no appraisal or inspection is required. However, you’ll need 12 months of timely payments on your existing USDA loan and the new loan must produce minimum monthly savings of $50 ($600 annually) to qualify.

PennyMac Rates and Fees

PennyMac is transparent about its rates, making it easy for borrowers to compare mortgage rates without providing personal information. You can view current rates for all its loan products by clicking on the rates button at the top left of its website. Rates fluctuate at least daily and are based on the assumption that you have an excellent credit score, a 20% down payment, and are paying discount points to lower the rate.

Your actual interest rate will vary based on your financial situation. To get a customized rate quote tailored to your location, the price of the property, amount of your down payment and credit score, click on “get instant quote” at the top right of PennyMac’s website.

PennyMac recently launched a “lock and shop” product that allows you to lock your rate for up to 90 days as you find your new home. If interest rates decline, the product lets you float down your rate just once. You can also extend your lock-in period but at a fee.

PennyMac charges an origination fee of $1,100, which is waived periodically during special promotions. Depending on your loan product and state, you may also incur an appraisal fee of between $350–$1200.

Other closing costs may include title fees, credit report fees, recording fees, escrow costs and optional discount points. Get preapproved or apply for a mortgage to determine how much cash you'll need at closing, including third-party and lenders' fees.

PennyMac Loan Application Process

To get a pre-approval or start your loan application process with PennyMac, you can either call and speak to a loan officer, leave your contact information for a loan officer to reach out to you, or create an online account through their website.

To create an account online, head to their website and click “apply now” to get to the lender's mortgage access center (m.a.c.)---a user-friendly online portal that supports a complete online and streamlined mortgage loan process. Sign up by entering your username and password and confirming your email address.

Once your account is ready, log in and select what you need (purchase or refinance loan). At this stage, you can choose whether you want a loan application or a pre-approval. Fill out all the required personal and financial information and follow the steps until your application is complete.

With PennyMac’s mortgage access center, you can directly upload your W-2s and import bank statements, making verifying your income and asset information easy. All you need is your social security number, bank account, and employer information.

Documents can also be uploaded by dragging and dropping from your device or even by taking photos and uploading them. The system further allows you to monitor the status of your application and e-sign documents and disclosures to close on your loan.