Unless you have lots of money to finance all of your needs, a home mortgage loan is the best alternative available for significant personal financing as a consumer in the market to buy a home. From buying a house, car to financing your kid’s education or starting a long-term investment, a mortgage can be the catalyst to achieving your dreams. Before thinking about a mortgage, you should already have good credit, which typically means a FICO score of 700 or higher, that shows you are a responsible borrower and not in any financial crisis. Building a good credit history automatically puts you in the game for the real task of actually acquiring, or buying, a property by utilizing the services of a reputable mortgage lender knowledge about various lending programs, including creative financing options, that will best suit your needs and your budget.
Finding the right mortgage lender is more than just securing the lowest interest rate. It requires some critical factors, some of which have been highlighted below.
Learning how the mortgage market works will make it easier to find and secure the right lender you need to fuel your dreams of buying a home. A close study of lending companies available should include reviewing their interest rate sheet, estimated closing fees, and knowing the additional loan details such as your cash to close requirement, meaning how much money you have to have wired to escrow in order to get that loan to fund and close, your monthly payment structure meaning if it an interest only loan where your monthly mortgage payment only pays the principal and interest, for example, or are the taxes and insurances costs escrowed from your payments as well, which is refered to as PITI, principal interest taxes and insurance costs are all included costs in the one monthly mortgage payment you make to one entity, which would be your lender, each month. You also want to know things like the loan type which is also extremely important. This means you want to know if you are applying for a FHA government-backed loan, conventional loan, jumbo loan, private loan, portfolio loan, or a USDA loan just to name a few of the most common. The mortgage company, whichever one you research and feel most comfortable with, should be able to help you understand all of these critical components to shopping for a home loan, including educating you on the process from the initial onset of your process, through the very end, when you’re ready to have that loan fund and close. Once you have chosen a lender and officially submitted a loan application, the lender should be the one to take it from there to shop rates, terms, and types while you focus your efforts on the search for your property.
Mortgage brokers can speed up your mortgage application and get you access to loan programs you otherwise may have never known existed. The steps involved in finding the right mortgage lender can be a daunting task, so many homebuyers will forgo that search and process all together. But like Thomas Edison once said, “opportunity is often missed because it’s dressed in overalls and looks like hard work.” That is one of our favorite quotes because it holds true whether being applied to home buying, loan shopping, parenthood, business or just life in general. In fact, many mortgage lenders out there may not be the right fit for your vision. That doesn’t mean you shrink the vision, that means you expand your search and cast your net wider to find a lender who can see your vision for the home you want to live in, enhance it, and help make it come true for you and/ or your family.
Since many lenders vary from one to another, hiring a mortgage broker can save you many sleepless nights and stress so a good mortgage broker is worth their weight in gold. Some mortgage brokers may charge a substantial amount compared to other mortgage brokers, but definitely do the “hard work” of reviewing your options, getting recommendations, and analyzing each mortgage brokers loan programs to identify the best one to suit your needs. Also be aware that some might charge a fee, while others might request a commission which you must pay at the closing. All you have to do is consult a reputable broker with many years of proven experience and they will know it is their duty to provide proper disclosure to you regarding any and all fees involved in getting a mortgage loan. At the end of the day, if you have a mentor or coach, business colleagues and/ or other investor friends and family, they are a great first and maybe even only stop you’ll need to make to get immediate recommendations so you have to look no further.
Perhaps you finally found a lender; what’s next to do? Start application? No, ask questions. Just because you got lots of recommendations still doesn’t mean you can’t get it wrong. Ask the lender questions, such as:
Even if you’re working with a mortgage broker and a realtor who possibly may have referred you to the broker, make sure you ask questions and be sure to get satisfying answers directly and yourself before making a definitive decision on who you will go with. Just as easily as a good mortgage broker can make deals, they can just as easily cause deals to fall apart and you to lose a lot of sleepless nights and money at your expense for the incompetence of a bad mortgage broker.
So do not forget to talk to friends and experts for references first to potentially save yourself the time and energy spent going at it alone. If you know anyone who has done significant projects in the past, talk to them – they might be able to suggest a lender you can possibly work with. Other important factors that will facilitate your success with mortgage borrowing are:
As a prospective home buyer, a very important step in the home-buying process is to get pre-qualified for a mortgage. Why?
If you want to learn more about securing a mortgage for your first or next real estate purchase, stick around for more exciting blogs. In the meantime, for more information and access to programs to help you kick-start your journey to homeownership right away, click HERE to take the next step towards finding your home, which is getting pre-qualified for a home mortgage loan.