Introduction to Wells Fargo
Wells Fargo is one of the largest U.S. banks and a major presence in the country’s mortgage market. It is the nation’s fourth-largest bank in terms of total assets and is the biggest mortgage bank in terms of both mortgage lending and servicing.
Headquartered in San Francisco, it was founded in 1852 as a banking and express company, and its early involvement in overland mail service is still reflected in its iconic stagecoach logo. It was long known as a western regional bank, but expansion and mergers in recent decades have brought it to the point where it now has more than 9,000 branches in 39 states and the District of Columbia.
Wells Fargo holds the nation’s highest customer satisfaction ranking among large banks, according to the American Customer Satisfaction Index, a status it has held for several years. It ranks as the nation’s #1 small business lender (Community Reinvestment Act data) and the top home loan originator to minority and low-income neighborhoods (Home Mortgage Disclosure Act data).
Wells Fargo Mortgages
Wells Fargo offers a variety of home loan products, including mortgages, mortgage refinancing, home equity loans, home equity lines of credit (HELOCs), home improvement loans and construction loans. Lending options include 30- and 15-year fixed-rate mortgages, and adjustable rate mortgages (ARMs) with initial terms of 3, 5, 7 or 10 years.
Wells Fargo does not currently offer reverse mortgages (Home Equity Conversion Mortgages), having discontinued them in June 2011 due to unpredictable home values. It’s not known if the company plans to resume such lending once the housing market stabilizes.
You can obtain a Wells Fargo mortgage either directly through a Wells Fargo retail branch or through a mortgage broker. Mortgage brokers do not lend directly to borrowers, but work with multiple lenders to help borrowers find the one that best meets their needs, then assists with closing the loan.
Wells Fargo is an approved lender for both FHA and VA mortgages.
The mortgage industry is highly competitive, and major banks like Wells Fargo strive to attractive loan packages to their customers. Wells Fargo mortgage rates vary according to a number of factors, including loan type, length of the loan, the borrower’s credit rating, discount points, the amount borrowed, the size of the down payment, where the property is located and others.
Generally speaking, mortgage rates are lower on shorter term loans than they are on long-term ones. So interest rates on a 15-year fixed-rate mortgage will be much lower than on a 30-year mortgage available to the same borrower. Mortgage rates on ARMs tend to be even lower, since you’re only locking in the rate for a few years, rather than 15 or 30. However, be aware that rates on ARMs reset after their initial terms toward the prevailing market rates and will continue to do so periodically unless the mortgage is refinanced.
Your credit score is another major factor that affects your interest rate on a Wells Fargo mortgage. To get the lowest mortgage rates, you typically need a FICO score of 740 and above. Rates increase slightly down to about a score of 700, then begin to rise sharply from there. Anything around 620 or below will carry a steep premium in terms of a higher rate.
Discount points also affect your mortgage rate. These are a way of pre-paying mortgage interest in order to lower your mortgage rate. Each point costs one percent of the loan amount (one point) and can be used to buy down your mortgage rate. This can be useful for homeowners who expect to be in the property long enough for the lower rate to offset the higher up-front costs of buying points.
Wells Fargo mortgage rates will be higher on "jumbo" loans, which are mortgages that exceed the amounts for "conforming" mortgages that Fannie Mae and Freddie Mac will guarantee. These limits range from $417,000 to $729,750, and vary by county.
Wells Fargo mortgage refinancing programs are much the same as their home purchase mortgages, with similar rates. Many of the same rules and loan products apply. However, there are some key differences.
Mortgage refinance rates are pretty much the same as mortgage rates for purchasing a home. However, if rates have fallen since you bought your home, you can reduce your rate by refinancing, which is basically replacing your old mortgage with a new one.
Home refinancing allows you another way to save money by shortening your term. If you’ve been paying on a 30-year mortgage for several years and refinance it into a 15-year mortgage, you’ll not only pay it off faster, but get a really low rate as well, since interest rates on 15-year mortgages have been running much lower than those on 30-year loans.
Wells Fargo is a participant in the federal Home Affordable Refinance Program (HARP), which is designed to allow certain creditworthy borrowers to refinance their mortgages despite being in negative equity, or "underwater" on their mortgages, owing more than their property is worth. Borrowers approved for a HARP refinance should expect to pay a somewhat higher rate than on a regular refinance where the borrower has equity in the home, but the amount is capped by program rules.
Home Equity Loans
Wells Fargo also offers a variety of loan programs for homeowners who wish to borrow against their home equity. Such loans are often used for making home improvements, paying medical bills, covering college costs or other major expenses.
A Wells Fargo home equity loan allows you to borrow a certain amount of money in one lump sum and pay it back over 5-20 years. Interest rates are fixed, and tend to be higher than on home purchase mortgages or refinanced mortgages.
A Wells Fargo home equity line of credit (HELOC) authorizes you to borrow funds as needed, up to a certain limit, much like using a credit card secured by your house. Interest rates are lower than on a home equity loan, but you can choose between a fixed or a variable interest rate.
You can also do a cash-out refinance in which you simply refinance your entire mortgage while taking out some of the equity as cash at the end of the transaction. Interest rates on a cash-out refinance are usually higher than on a regular refinance.
The amount you can borrow in any home equity loan will be limited by how much equity you have; Wells Fargo does not indicate a set limit, but the general rule of thumb in the current market is that borrowers should retain at least 15-20 percent equity after taking out the loan.
Wells Fargo also offers a program where the cost of mortgage insurance is built into your interest rate, which may provide tax advantages for certain borrowers. Mortgage insurance is required on any home loan with less than a 20 percent down payment, or refinancing with less than 20 percent equity. The Wells Fargo option is called lended-paid mortgage insurance (LPMI); the other option is private mortgage insurance (PMI), which is paid through a fee added to your monthly mortgage statement.
Wells Fargo Information
A pioneer in online banking, Wells Fargo makes it easy for customers to obtain information about their mortgage products, submit inquiries or initiate the loan process through their web site, wellsfargo.com, You can also contact the company by phone at 1-800-869-3557.