You've found the house of your dreams, but you're just not sure where to find a mortgage. Should you go to the local bank? Should apply for a loan online?
You have options for financing your house. But how do you choose a mortgage lender?
By the time you've finished reading this article, you will understand how to choose a mortgage lender and move forward with your house purchase with confidence.
The term "mortgage lender" is a broad term referring to any entity that will lend you money for a mortgage and help you unlock your dream home. Here are some common types of mortgage lenders.
Traditionally borrowers would go to local banks to finance their homes. These are still a viable and strong option if you want all of your finances with one organization. You can go to the bank where you have a checking and savings account.
This organization already knows you, so they should be able to make a decision pretty quickly on if you're a good candidate for a mortgage. Sometimes, though, the lending process can take longer with a bank compared to other types of lenders.
Credit unions differ from banks in that they are not-for-profit organizations. When you bank at a credit union, you're a part owner of it. This means getting a mortgage from the credit union also benefits you in the long run, helping your credit union stay financially healthy.
Credit unions offer lower loan rates and lower fees than banks. Unfortunately, many have limited loan products as well, so you may not be able to get the mortgage that you need.
Mortgage lenders exist specifically to lend money for mortgages. As a result, their process is faster than a bank process. They're also typically more flexible with you if you have poor credit.
The lender will examine your credit history, credit score, assets, and income when they consider offering you a mortgage. Often mortgage lenders have programs specifically for first-time homebuyers or individuals who need help with their downpayment.
As you look for a mortgage lender, you may come across a mortgage broker. Brokers aren't lenders, but they can help you find a good mortgage.
The mortgage broker acts as the middle man between the lenders and the borrowers. They do the shopping for you to find the best mortgage available in light of your finances and credit report.
They do the legwork for you when looking for a mortgage. Because of their relationship with lenders, they may be able to get you a premium rate with a lender.
You typically pay the mortgage broker their fee when you close on your house.
If you believe you've found a good mortgage lender, then it's time to interview them. You're looking at a 15 to a 30-year relationship with this organization, so you need to make sure you've found a good fit. Here are a few basic questions to ask about:
You should also ask them about fees and commissions up front, who pays for these fees, and how many quotes they typically review.
Once you ask these questions, begin to look at the lender. Your final decision should depend specifically on your financial needs and financial situation. What mortgage can you afford today and in the long run?
Here are a few ways you can narrow down your choices to the final mortgage lender you will use.
Come up with a list of filters that helps you weed out the lenders you don't want. For example, if you have a credit score below 600, look only at lenders that accept credit scores under 600.
Consider how much financing you need as well. For example, if you need 80% financing, only look at the lenders that offer 80% financing.
Remember that you're shopping for a mortgage. This means you need to consider more than just one lender. Get quotes from your top three choices and then place them side by side to see their similarities and differences.
You will have to pay the lender for their work in the form of fees. Ask about the specific fees that you need to pay, and then compare those between lenders. Here are some common fees that borrowers must pay:
Fees, in general, should not exceed more than 1% of the loan total. So take your total loan and compare it with the fee total. If a lender has more than 1 percent, take them off the list.
When you think you've found a lender, read the reviews online. Customers are brutally honest online, whether they've had a good or poor experience. Then ask the lender about the following topics regarding their institution:
The best lenders exist to serve you. So look for a mortgage lender that wants to give you the best deal possible and who can answer all of your questions.
When you're looking for a mortgage lender, ask all the questions. Compare the lenders side by side so you know who offers you the best deal. Then move forward and choose a mortgage lender with confidence.
Are you preparing to finance your dream home? If so, contact us. We will answer your questions and work hard to serve you well.
Around 23% of people purchase homes with cash, but the other 77% of home sales require mortgage loans. A mortgage loan offers a long-term repayment plan, making it easier for a person to afford a home.
Mortgages come in all shapes and sizes, but each type has requirements the borrower must meet to qualify for the loan. Do you need a loan? If so, do you have any military experience in the books?
You can apply for a VA loan if you do. However, you might want to research the requirements for a VA loan before applying to make sure you meet them.
If you're unsure what they are, keep reading this guide as we explain the requirements needed to qualify for a VA loan.
Before understanding the VA loan requirements, you might benefit by learning a few basic facts about VA loans.
First, the Department of Veteran Affairs is the entity that sponsors (backs) VA loans.
The VA developed these loans to help veterans become homeowners. Therefore, they're only available to people with military experience.
This program began in 1944 but has expanded over the years. More than 25 million veterans have benefited from this program over the years, and many will continue to benefit in the future.
VA loans offer competitive rates but have eased requirements, making it easier for vets to qualify for mortgages.
You must meet the requirements for VA loans to get one. Here are the primary things a lender looks for when a person applies for a VA loan:
One of the main eligibility requirements for VA loans is the COE. The COE is a certificate that proves you meet the VA's standards for VA loans. You won't qualify for a VA loan without a COE.
So, how do you get one? You must apply with the Department of Veterans Affairs to get one. When they evaluate your application, they'll determine if you served the appropriate time in the military. If so, they'll give you a COE.
There are several ways to qualify for a COE. One option is by serving 90 consecutive days in a war. Another option is by serving 24 consecutive months in active military duty.
The VA doesn't set credit score requirements for approvals. Instead, they let the lenders set their score requirements. As a result, every lender that issues them sets credit score rules.
Most lenders have lenient credit score rules. If you compare the requirements, you'll likely notice that a score of 620 is average. Therefore, you meet this requirement if your score is at least 620.
One of the best parts of a VA loan is the down payment requirements. You don't need any money down to get a VA loan. However, you must pay a one-time funding fee.
Lenders determine the fee rate by your down payment amount. If you want to pay a lower funding fee, you need to put more money down. The funding fee rate is the highest when you put no money down.
The current rate for a no-money-down VA loan is between 2.3% to 3.6%. On the flip side, you'll pay 1.4% if you put at least 10% of the home's purchase price as your down payment.
The DTI is a ratio that lenders use to see if a person can afford to repay a loan if approved. Lenders compare the person's income to debts to determine the answer.
Lenders generally set their DTI ratios themselves, so they vary. You should have no trouble qualifying for a VA loan if you have a steady job with enough income to cover your bills and a mortgage.
Next, you might wonder about the benefits these loans offer to borrowers, and there are many.
First, they offer competitive interest rates. The rates you get through VA loans are comparable to the rates of other loan types.
Next, you can choose from various durations, allowing you to customize your loan. For example, you can choose a 30-year loan if you need 30 years to repay it, but you can also choose a 15-year loan if you prefer.
Additionally, you won't pay private mortgage insurance with a VA loan. You must pay a one-time funding fee when the lender originates the loan, but you won't have ongoing fees to pay throughout your loan duration.
One final note about the benefits is that you can get a VA loan a second or third time. So, for example, if you had a VA loan in the past, you're not disqualified from getting another one. Instead, they're reusable.
Learning the requirements for VA loans can help you determine if this is the right mortgage type for you. If you believe you meet the VA loans requirements, you can contact a lender that offers them.
Some mortgage lenders don't specialize in VA loans, while others do. It's important to know that the VA doesn't issue these loans. Instead, they back them while mortgage lenders issue them.
When you're ready to get one, you can contact a lender, such as Southern Home Loans. They'll ask you to fill out an application and assist you with the other steps required in the loan application process.
You can determine if you meet the requirements for a VA loan before applying. Additionally, you can talk to a lender to learn more. VA loans are ideal for anyone who meets the requirements, as they offer numerous benefits.
Are you ready to learn more about VA loans? Contact Southern Home Loans if you'd like more information.
We offer VA loans and other loan types and can help you find the right mortgage. You can also apply for a loan online or call us if you have questions.