Business Insider's personal finance team compared Pennymac to the best mortgage lenders and found it to be a standard lender.
Pennymac Mortgage is one of the largest mortgage lenders in the U.S. It offers a good range of loan types and flexible term length options. But it ranks low in J.D. Power's latest satisfaction study, and borrowers have complained about the lender's customer service when it comes to loan servicing.
620
3%
Conforming, FHA, VA, USDA (streamline only), jumbo, home equity loan, investment property
- Option to lock your rate while you shop for a home
- Instant rate quote tool makes it easy to get customized rates
- Flexible term lengths
- Low J.D. Power customer satisfaction ranking
- Average fees are on the high end
- Available in all 50 states
- Minimum credit score and down payment displayed is for conforming mortgages. Only first-time homebuyers are eligible to put down 3%; others must put down at least 5%
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Rocket Mortgage
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AmeriSave Mortgage Corporation Mortgages
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New American Funding
Pennymac Overview
Pennymac is an online lender that originates mortgages in all 50 U.S. states.
Loan Options
Pennymac offers the following types of mortgages:
- Conforming loans
- FHA loans
- VA loans
- USDA streamline refinances
- Jumbo loans
- Home equity loans
- Investment property mortgages
Pennymac also offers a temporary buydown that lowers your rate by a percentage point for the first year.
If you're getting a mortgage refinance, the lender's flexible term length options enable you to get a new loan without taking on a longer term. You can choose a length between 10 and 30 years.
Pennymac's jumbo loan amounts go up to $3 million.
Pennymac Mortgage Interest Rates and Fees
In our review of Home Mortgage Disclosure Act data, we found that Pennymac's mortgage rates were around average compared to other mortgage lenders.
Pennymac makes it convenient to compare current mortgage rates. On its website, you can view today's sample rates or use its tool to get rates customized to your situation. These customized rates are based on the type, price, and location of the property you want to buy, your down payment, and your credit score.
In 2023, the average borrower getting a conventional mortgage from this lender paid $5,106 in origination charges, according to HMDA data. This is a bit high compared with other lenders.
Pennymac Pros and Cons
Pros
- Get customized rates without having to create an account or apply for a mortgage
- Has flexible refinance term lengths
- Lock your rate while shopping for a home
Flexible Term Lengths
Pennymac offers flexible terms on its loans, meaning you can choose how long you want to take to repay your loan.
The most common terms for mortgages are 30 years and 15 years. Some lenders may offer a few additional term options, such as 20-year or 10-year mortgages. But say you're refinancing and you have 24 years left on your current mortgage. While you could refinance into one of these available term lengths, moving into a longer term means you'll likely spend more on interest, while moving into a shorter term may come with a higher monthly payment. With Pennymac, you could potentially refinance into a new 24-year mortgage.
'Lock While You Shop' Option
Pennymac offers a feature called Lock & Shop, which lets you lock in your interest rate while you're still searching for a home. Most lenders won't let you lock your rate until you're under contract to purchase a home. But lenders like Pennymac that offer a "lock while you shop" option enable borrowers to lock in their rates when they get preapproved and ensure they don't have to worry about rate fluctuations while they shop for homes.
You can lock your rate for up to 90 days with Pennymac.
Cons
- Ranks low in J.D. Power's satisfaction study
- High average fees
Low Customer Satisfaction Ranking
In J.D. Power's annual Mortgage Origination Satisfaction Study, which measures customer satisfaction, Pennymac ranked below the industry average. The lender does have good online customer reviews on its Zillow page, so you may still have a good experience with this lender.
Is Pennymac Trustworthy?
Pennymac has an A+ rating from the Better Business Bureau and no major recent scandals.
What Borrowers Are Saying About Pennymac
Business Insider looked at positive and negative customer reviews, online forums, BBB complaints, and other sources to understand what borrowers think about Pennymac's mortgage experience.
Convenient Process With Good Communication
Many of the reviews we looked at talked about how smooth the process with Pennymac was. Previous borrowers spoke positively about the lender's easy-to-use digital tools and their communicative loan officers.
Pennymac as a Loan Servicer
Pennymac is also a large mortgage servicer. Servicers are the companies that borrowers make their monthly mortgage payments to after closing. Often, you'll make your initial payments to the same lender that you got your mortgage from, but after a while they might sell your loan to another servicer.
There are many complaints online from borrowers who had their loan servicing sold to Pennymac. Complaints about mortgage servicers aren't uncommon, especially when the borrower's escrow is recalculated and their monthly payment goes up as a result (this happens when your insurance or taxes increase, and isn't something the servicer can control).
There's not much you can do if your mortgage servicing is sold to a company that has poor reviews. But keep in mind that borrowers are more likely to complain when they have an issue than write a positive review when their payments are processed successfully month after month. So bad reviews don't necessarily mean you should worry if your loan ends up getting sold to Pennymac.
Compare Pennymac to Other Mortgage Lenders
Pennymac vs. Rocket Mortgage
To get personalized rates from Rocket Mortgage, you'll need to start an application. Pennymac, on the other hand, lets you easily explore rates without having to apply or create an account first.
Rocket Mortgage ranked high in J.D. Power's satisfaction study, while Pennymac ranked below average. If customer service is important to you, Rocket Mortgage might be a better choice.
Pennymac vs. LoanDepot
LoanDepot doesn't list any rates online, making it difficult to compare this lender to others if you aren't ready to apply for preapproval. By contrast, Pennymac's rate quote tool makes it easy to get an idea of what your rate might look like.
LoanDepot requires a minimum down payment of 5% on its conforming loans, while Pennymac allows down payments as low as 3%. LoanDepot's and Pennymac's average rates are comparable, but LoanDepot's fees are slightly lower.
Pennymac FAQs
We didn't rate Pennymac as high as some of our favorite mortgage lenders, but it's still an overall solid option, particularly if you're getting an FHA or VA loan. We like that Pennymac lets you get a rate quote without having to provide contact information.
Pennymac's mortgage rates are around average compared to other lenders.
Yes, Pennymac currently offers home equity loans.
To qualify with Pennymac, you'll typically need at least a 620 credit score, but this may vary depending on the type of mortgage you're getting and the details of your loan.
Pennymac generally has good reviews from borrowers who got their mortgage from this lender. But we saw many complaints from those who had their mortgage servicing transferred to Pennymac after closing with a different lender.
It can be more convenient when your mortgage is serviced by the company you initially got your mortgage from, since you don't have to set up a new account. But for the most part, it shouldn't make a huge difference if your mortgage ends up getting sold to a new servicer.
Pennymac does have a wholesale mortgage lending arm, so you may be able to get a loan from this lender when you work with a mortgage broker. But it depends on which broker you work with, since the lenders they work with vary.
You should shop around with multiple lenders to be sure you're getting the best deal. If you aren't sure about Pennymac, you might want to get quotes from another big lender like Rocket Mortgage, or a smaller lender or bank that's local to your area.
Why You Should Trust Us: How We Reviewed Pennymac
For our review of Pennymac, we used our methodology for reviewing mortgage lenders.
We look at four factors — loan types, affordability, customer satisfaction, and trustworthiness — and give each a rating between 1 and 5, then we average these individual ratings for the overall lender rating. Lenders get higher ratings if they offer a large number of loan types with affordable features, have positive customer reviews, and don't have any recent public controversies.
Our Overall Lender Rating
Loan Types: 4 out of 5
Pennymac's loan offerings should meet most borrowers' needs. It has conventional and government-backed mortgages, plus home equity loans. But if you're looking for a more niche type of loan, like a construction loan, you'll need to look elsewhere.
Affordability: 3.5 out of 5
Pennymac offers multiple low down payment options, including 3% down conventional loans and government-backed loans that allow between 0% and 3.5% down. But it doesn't have any specialty mortgage products or features (like down payment assistance) that help it stand out in affordability.
Customer Satisfaction: 2.67 out of 5
In J.D. Power's 2024 Mortgage Origination Satisfaction Study, Pennymac ranked below the industry average. However, the lender has a 4.34 out of 5-star rating on its Zillow profile, based on over 300 online customer reviews.
Trustworthiness: 5 out of 5
Pennymac has an A+ rating from the Better Business Bureau. BBB ratings are based on a company's response to customer complaints, honesty in advertising, and transparency about its business practices.
