At a Glance

PennyMac Loan Services was one of the top 20 mortgage lenders in the United States in 2020, with $34.9 billion worth of originations overall. Founded in 2008, it is owned by PennyMac Financial Services, whose other main focus is the management of investments related to the U.S. mortgage market.

How it Works

To get started, apply through the online mortgage access center (MAC), call PennyMac directly, or request a call back from a loan officer. Note that applications to the MAC skip straight to preapproval, speeding up the mortgage approval process but impacting your credit score.

You’ll need to create an account to apply online. Next, you’ll be asked to fill out a short online form containing all the usual questions lenders ask when you first apply, including information about yourself (and spouse or co-borrower, if you have one), the house you’re purchasing/planning to purchase, and income, assets, and relevant disclosures.

Once you’re preapproved, you can then securely upload documentation through the MAC portal. The platform lets borrowers automatically upload documents like W-2 and bank statements just by giving permission, which serves to speed up the process. You can keep up to date with the status of your loan application 24/7 by simply logging into your MAC account.

PennyMac offers a number of features that most other top lenders don’t. For example, it lets you pick any repayment term between 15 and 30 years (e.g. 22 years). It offers a discount worth 0.50% of the loan amount for getting pre-approved prior to purchase. It offers higher-than-usual conforming loan limits through its PennyMac Expanded Loan Limit program, meaning you can take out a jumbo-sized loan without paying a higher APR.

On the downside, PennyMac doesn’t have home equity loans or home equity lines of credit. Also, it’s not licensed to do business in New York State, which means about one in 16 American borrowers is automatically excluded from being able to access its products.

Types of Loans

PennyMac offers all the most popular conventional and government-backed loans, for use in purchasing a new home or refinancing an existing mortgage. It also offers some perks you’ll struggle to find elsewhere.

• Conventional loans. Typically with a 20% down payment, although PennyMac also offers the option of paying a 3% down payment with PMI.
• Expanded loan limit. Unlike most lenders, PennyMac offers expanded conventional loans worth around $75,000 more than the national conforming loan limit. The PennyMac Expanded Loan Limit can be used on loan amounts up to $625,000 in all states and counties without having to pay the higher rates typical of jumbo loans.
• Jumbo loans. Higher-interest loans above PennyMac’s expanded loan limit.
• FHA loans. Government-backed loan with as low as 3.5% down payment.
• VA loans. For military service members, veterans and their families, with zero down payment.
• USDA loans. For borrowers in rural areas, with zero down payment.
• Investment loans. For single-family, townhome, condo, or multi-unit property being purchased with the intention of renting it out.

Loan Features

As promised, here are more details on the top PennyMac loan features, including the ones we touched on earlier when discussing pros and cons.

• 0.50% lender credit. Customers pre-approved with PennyMac prior to locking any purchase loan with PennyMac get 0.50% of the loan’s principal amount, applied as a discount off total closing costs and/or principal curtailment. (Currently valid till end of 2021 although may be extended).
• $0 lender fee. Customers approved for conventional and FHA purchase loans have their $1,100 origination fee waived, while on VA purchase loans the original fee is reduced by $1,100 from whatever the original amount was. (Currently valid till end of 2021 although may be extended).
• Mortgage relief programs. PennyMac offers several mortgage relief programs to borrowers who find themselves in trouble, with the aim of keeping people in their homes. This may include modifying the terms of the existing loan to lower the size of monthly payments.

Rates and Terms

PennyMac is transparent about its rates, displaying current sample rates for different loan programs on its website. Overall, PennyMac’s rates are slightly better although not hugely different from the national average. Of course, your rate depends on your credit profile. Like other top lenders, PennyMac offers the option of paying a certain amount of cash upfront in exchange for a lower APR and lower monthly payments.

Repayment terms are 15-30 years for most mortgage products, with ARMs of 3/1, 5/1, 7/1, or 10/1.

The following tables show the starting rates and APRs for selected PennyMac loans in October 2021 (when the average interest rate in the U.S. was 3.05% for a 30-year fixed-rate mortgage, 2.30% for a 15-year fixed mortgage rate, and 2.55% for a 5/1-year ARM).

Purchase rates

Refinancing rates

Contact PennyMac

PennyMac Loan Services is headquartered in Westlake Village, CA.

Its digital application process takes you straight to preapproval. If you’d like to speak to a loan officer about prequalified rates, then phone (866) 549-3583 or click the prompts on the PennyMac website to request a call with a licensed loan officer.

Summary

PennyMac offers competitive rates on a range of loan programs, but it’s all the extra discounts and features that make it an attractive proposition. For example, borrowers can earn back up to 0.5% of their loan amount (e.g. $1,500 on a $300,000 loan) just for getting pre-approved prior to purchasing. The various benefits offered by PennyMac could potentially add up to substantial savings on your next mortgage.