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Whether you’re financing a new home purchase or refinancing an existing mortgage, Ally Bank home loans can make ownership more affordable by helping you secure the lowest mortgage rate.

Mortgage rates can vary considerably from bank to bank. Often times, rates offered by brick-and-mortar banks aren’t as favorable as those offered by online-only banks like Ally. Online banks tend to have fewer overhead costs, so these institutions can afford to pass their savings to their customers. This often results in higher interest rates on checking and savings accounts, and lower rates on mortgage loans.

Read on to learn more about Ally Bank’s mortgage rates and application process.

Mortgage rates

Interest — which is the fee banks charge for the privilege of borrowing — is tied to many types of loans.

Rates can vary among lenders, so it is wise to request a quote from at least two or three different lenders when shopping for a mortgage. A low rate can increase purchasing power and reduce the overall cost of a home. For this reason, Ally Bank is committed to remaining competitive with regard to its rates.

If you request a loan quote from Ally and another bank within the span of five days, and the other bank beats Ally’s quote, Ally guarantees to match this lender’s pricing.

To get this price match, however, the loan amount and terms must be similar, and you must submit your Loan Estimate to Ally Bank for review. A Loan Estimate is a document you’ll receive from a lender within three days of submitting your application. It includes details such as the loan amount or the maximum you can borrow, the term, as well as your estimated interest rate, monthly payment, and closing costs.

What affects mortgage rates?

It’s also important to understand factors that affect mortgage rates. Typically, only borrowers with the highest credit scores qualify for the best loan rates. You can get a mortgage with a credit score as low as 620 for a conventional home loan, and as low as 500 for an FHA home loan. Even so, some lenders only offer prime rates to those with a minimum credit score between 720 and 740.

To improve your credit, check your credit report before applying for a mortgage and dispute errors that could drive down your score. This includes negative information reported in error. Also, pay your bills on time and pay down debt. The amount you owe makes up about 30% of your credit score, and your payment history makes up about 35% of your credit score.

The amount of your down payment can also affect your interest rate. Many mortgage programs require as little as 3% to 5% down. However, a down payment of at least 20% can help you secure a better rate.

Also, the term and type of mortgage determines interest rates. For this reason, a 15-year mortgage will generally have a lower rate than a 30-year mortgage; and adjustable-rate mortgages typically start off with rates that are lower than a fixed-rate mortgage.

How to apply for an Ally Bank home loan?

Before submitting an application for an Ally Bank home loan, use the bank’s affordability calculator to determine whether now’s the right time to apply. Provide your annual income, the amount of your monthly expenses and estimated credit score. Based on this information the calculator estimates the maximum you can borrow for a home.

If you are comfortable with this number and confident that you can find a home within this price range, fill out the pre-qualification form. The bank will review your pre-qualification information, and if you’re a good candidate for a mortgage, you’ll receive instructions to complete an official mortgage application.

At this point you’ll also submit supporting documentation which the bank verifies. This includes paycheck stubs, complete tax returns, bank statements, and the bank will pull your credit report.

You’ll also speak with a loan expert to decide the best mortgage program for your situation (FHA, conventional, VA, USDA, etc.). If all goes well, you’ll receive a pre-approval letter, which is a powerful tool when shopping for a home. A pre-approval indicates that you’re a serious buyer, and some home sellers will only accept offers from borrowers who are pre-approved.

Using an online-only bank to get a loan for a house can be intimidating. However, Ally Bank makes the home loan process simple and convenient. With its Price Match guarantee and wide selection of mortgage products, the bank offers a program for just about every borrower.

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