MORTGAGE 101


How to Obtain a Mortgage

I can not state it more firmly that the most important part of buying a home is getting a mortgage. Without a mortgage there is NO new home. Finding a mortgage lender is extremely important. There are many different kinds of lending institutions, offering a wide range of loan packages. So it is important to do some research and shop around, because what you don’t know could cost you. All lenders offer a variety of products, interest rates and fees for mortgage loans. Not all lenders are right for every customer, so be careful to choose one that fits your needs. The lender with the lowest interest rate may not be best because they may be new to the business or have a reputation for instability. You want a company that you can trust to deliver the mortgage package they promised and provide consistent service. As always, you should be able to turn to your real estate agent for advice. They quite likely have a mortgage company that they work with regularly who they depend upon to give their clients good deals and excellent service.

As your buyer's agent I can help you explore your financing options and, if required, refer you to some excellent mortgage professionals, so you can make the best possible mortgage decision. Getting pre-qualified for a loan with a lender before searching for a home to purchase is a must! That way you will have completely reliable information about what you can afford. Additionally, any offer that you make on a home will be taken much more seriously if you have been pre-qualified than if you haven’t (you’ll also be in a much better position when making an offer).

 Types of Mortgages and Down Payments
There are several types of mortgages out there to choose from. Different mortgages have different down payments.
  • Regular 30-Year Fixed Mortgage is a  traditional mortgage that  requires at least a 5% down payment.
  • FHA Mortgage is a  government-backed mortgage with a  minimum down payment of 3.5%.
  • VA Loan is a government  U.S. Veterans Affairs loan for U.S. military members and veterans home loans with zero down payment. The government does not  actually make the loans, they just guarantee the loan through a mortgage lender.
  • USDA Loan is a government U.S. Department of Agriculture loan with a zero-down payment loan guarantee program for specific rural areas. The government does not  actually make the loans, they just guarantee the loan through a mortgage lender.
Even if you are using VA or USDA loans, making a good size down payment will help cut your mortgage payment and you will not have to pay PMI (private mortgage insurance).
 

Is your online Lender Credible? Helpful Resource:

Today technology makes finding a mortgage lender online both easy and convenient. It is important to know the difference between a lender you find online and an Online Lender. Sometimes called fintech lenders and marketplace lenders. They say that they can do your mortgage digitally.  Just for the record there is no such thing as a 100% digital mortgage. Both local appraisals and settlement procedures are covered by the federal consumer protection laws and are too complex to handle online.

The government has an agency called Consumer Financial Protection Bureau (CFPB). They have a brochure about understanding online Lenders. Another government agency is National Mortgage Licensing System (NMLS) ; they have a government’s lender licensing database. You can research both the mortgage company and individual loan officer.

Going old school and asking friends, family and your real estate agent for recommendations is still the best way of getting your mortgage. Having a local mortgage specialist helps with all the local nuances of appraising property and settling a mortgage transaction.


Articles about the mortgage process that may be of interest
Understanding how the down payment for buying a home works.

Pre-Approved

Loan Application 

Credit Scores

PMI: Private Mortgage Insurance

Please contact Valerie Bomberger, ABR, AHWD with REMAX Harbor Country for help or questions on mortgages.


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