Freedom Mortgage Review: Government-Backed FHA and VA Loans

Freedom Mortgage Review: Government-Backed FHA and VA Loans

Freedom Mortgage is an active and experienced lender for FHA and VA loans, but its reputation for customer satisfaction is uncertain.
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Editor's Rating

3.5

Good for

  • Focus on VA and FHA loans with low down payments
  • Flat $995 origination fee won't increase with loan amount
  • Affiliated loan officers in all 50 states and D.C.

Bad for

  • Rates aren't competitive for conventional loans
  • Mixed picture in customer service satisfaction

Freedom Mortgage is one of the largest lenders of government-backed mortgages in the US, which makes it a logical option for borrowers who qualify for FHA and VA loans. Although Freedom's loan officers are likely to have the right experience if you're considering either of these loan programs, the lender's record in customer satisfaction is more of a mixed picture.

Freedom Mortgage Review: Focused on Government-Backed Mortgages

Freedom Mortgage is most effective for borrowers who are seeking a government-backed purchase mortgage, such as an FHA or VA loan. It's one of the top ten lenders in the US for these mortgages, which allow much lower down payments in exchange for mortgage interest premiums. Over the past five years, these government-backed mortgages have made up nearly 82% of all the company's new loans. Freedom Mortgage is also a popular option for financing smaller purchases, with the average loan size at just under $200,000.

However, the data isn't as clear about the quality of customer service at Freedom Mortgage. While the lender claims to focus on helping people navigate the ins and outs of the mortgage process, its loan servicing earned a below-average rating in a 2016 customer survey conducted by JD Power. Meanwhile, the CFPB reported a much lower rate of consumer complaints against Freedom compared to other popular mortgage lenders. These conflicting data make it unclear whether you'll have a good or poor experience working with Freedom Mortgage.

How Do Freedom Mortgages Compare?

Freedom Mortgage isn't a lender with much lower rates or fees, but it does try to distinguish itself as a reliable choice for government-backed home loans. While most of these consist of FHA purchase and refinance loans, Freedom also participates in the VA loan program that helps many veterans eliminate their down payment requirements completely.

30-Year Fixed Rate Mortgage Estimates at Major Banks

Freedom MortgageChaseBank of AmericaWells Fargo
Interest Rate4.38%3.88%3.63%3.88%
APR4.50%4.15%3.87%4.13%
Monthly P+I$890$838$813$838
Origination Fee$995$595$1,185$995

To compare the rates for a standard mortgage at Freedom, we asked for a quick quote based on a home price of $198,000, down payment of 10% and a credit score of 740. Freedom's quote was at least 50 basis points higher than the online estimates provided by any of the three major US bank lenders. However, at least one of these banks based their rate on the purchase of discount points, which reduce your mortgage rate in exchange for additional upfront fees. Meanwhile, Freedom's flat one-time fee for origination was similar to fees charged by Wells Fargo and Bank of America.

Finally, Freedom also offers cash-out refinancing for people with existing mortgage balances. Cash-out refinances allow you to switch into a mortgage for a higher principal amount and withdraw the surplus in cash. While taking a cash-out refinance with Freedom Mortgage might help you deal with immediate financial needs, it can also increase your interest rate, monthly payment and loan term. Regardless of the lender, you should only consider cash-out refinancing if you're confident that the value of your home will rise or at least remain stable.

Customer Service and Mortgage Servicing

Customer satisfaction is a more complicated question with Freedom Mortgage. In JD Power's 2016 consumer satisfaction survey on mortgage servicers, Freedom received a worse rating from its customers than the three major US banks. At the same time, we found that Freedom Mortgage showed up far less often than other mortgage companies in the CFPB's public database of consumer complaints.

Mortgage-Related Complaints at Major Banks, 2013-2017

CompanyMortgage OriginationsCFPB ComplaintsRatio2017 JD Power Rating
Freedom281,1401,1400.40%719
Chase948,00014,7781.56%764
Wells Fargo2,155,22225,1821.17%745
Bank of America1,172,11328,1872.40%767

With the industry average for JD Power's satisfaction survey at 754, Freedom Mortgage performed quite poorly relative to the rest of the field. According to the survey, this implies that the company behind in areas like new customer orientation, billing and payment procedures, mortgage fees and general communication. However, Freedom did appear to have much fewer reports lodged against it by consumers using the CFPB's public database of business-related complaints.

Mortgage Loan Products at Freedom

With a strong focus on government-backed loans, Freedom Mortgage is a reasonable place to start looking for lower down payments sponsored by the FHA or the VA —so long as you meet the eligibility requirements. With FHA loans at Freedom, you'll also need to consider the added cost of mortgage insurance.

Freedom Mortgage - FHA vs. Conventional Home Loan

Interest RateAPRMonthly P+IMonthly Mortgage Insurance
Conventional 30-year fixed4.38%4.50%$890-
FHA 30-year fixed4.25%4.40%$877$119

Freedom's representatives provided quotes for our $198,000 loan example based on a 10% down payment and credit score of 740. As we expected, the interest rate was lower on the FHA loan, but that advantage was canceled out by its mandatory mortgage insurance premium. In exchange for a smaller down payment, FHA loans come with a monthly premium that gets added to your payment. Each year, the FHA insurance premium will cost between 0.8% and 1.05% of your initial mortgage balance.

At Freedom Mortgage, adding mortgage insurance to the monthly payment on an FHA loan made it $106 more each month than the company's quote for a conventional mortgage. However, the reduced down payment requirement offered by Freedom's FHA loan products may be the better option if you can't afford to meet higher upfront costs for your home loan. While you can't eliminate FHA mortgage insurance, you can refinance later on to obtain a mortgage with no insurance requirements.

Where Can You Get a Mortgage With Freedom?

Freedom Mortgage originates home loans in all fifty states as well as Washington DC. The company doesn't operate branches in every single state, but instead employs mortgage loan officers who are mostly licensed to do business in multiple states. Calling in to Freedom Mortgage will eventually get you connected with someone who is qualified to serve your loan in the location you provide. If you're not at the stage of calling for quotes, Freedom's website offers some limited information about its products.

How Does Freedom Compare to Today's Mortgage Rates?

If you want to view how Freedom compares to different mortgage companies, use the table below to explore alternative lenders.

LenderAPRMonthly PaymentLoan Fees
ConsumerDirect Mortgage, a division of First Bank4.570%$810.70$1,312.00Inquire Now
Interstate Home Loan Center, Inc.4.775%$834.64$457.00Inquire Now
Homestead Funding Corp4.780%$834.64$545.00Inquire Now
CF Bank4.875%$846.73$0.00Inquire Now
Ally Bank4.922%$846.73$865.00Inquire Now

Rates assume a home purchase of $200,000 in New York with a 20% down payment and credit score of 740. Estimates include origination fees and points but don't include other closing costs.

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