“Cut The Crap, Mr. Lender…”
We realize you may have been burnt before or simply think all lenders are sneaky. Being “The Truth in Lending” in all that we do is why we have clients for life. No question is off-limits with us.
Questions many are afraid to ask
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That depends upon the structuring of your loan.
If you are doing standard financing (Conventional, FHA or VA) and do not need down payment assistance, every lender will make their money as a margin already “set” inside the interest rate.
If you’re going with down payment assistance, than every lender has a set contract with that program. The rate is dictated by the program and every lender must charge “points” to make any money.
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If you look everywhere – online, big banks, credit unions and every single mailer ever receive – they are offering “teaser rates“.
To put it bluntly, a teaser rate should really be called a B.S. rate. They are advertising rates based off of the best case scenario possible (odds are it’s not your scenario) AND charging points for a rate below market.
They do not have better rates than us, I can almost guarantee it. They are simply advertising teaser rates to get the phone to ring and hope you don’t question why there costs are thousands of more dollars more at closing.
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Never, and if anyone ever asks for you to pay for a credit report or they charge you an “application fee”, run!
As your advisor, I work with you from day one, for free. We pour our heart and knowledge into you and do not get paid until the day you close.
We have even worked with some clients for two years to clean up credit or get them to where they could purchase or refinance their home!
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15 years ago mortgage rates would change 0.25% up or down in a month. Today, the rate market is very volatile due to everything that is going on in the economy and world wide.
It’s important to know, rates move up or down on a marginal basis. Enough movement upwards in the margin and the rate will increase, same goes for the downward movement.
It’s also important to know that the secondary market updates rates three time a day (market open, mid-day and even late afternoon).
We can quote you a rate today, but could be +/- by tomorrow. If you’re ever shopping around for rate, it’s imperative you quote apples-to-apples (pricing from the same day for the same scenario).
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Nope! The Dodd-Frank Act outlawed pre-payment penalties on all conventional financing. If you buy today, hit the lottery tomorrow you can pay off the balance of your home without any penalties.
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Believe it or not, you don’t pay a penny to the real estate agent helping you find a home.
The seller pays their agent to sell the home and your agent for bringing you to purchase it.
Frequently Asked Questions
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Getting pre-approved for a new home completely depends upon the buyer. Once the application is complete, we will email you a specific list of documents needed, based on your specific scenario.
Returning all documents needed is the major decider on how long the process takes. If everything is sent back same day, we can usually finalize your pre-approval same day/next day. This assumes nothing further is needed after reviewing you documents.
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The answer is always before looking for a new home.
We often see new home buyers find a home they love and want to place an offer before being pre-approved. The problem with this is you don’t know if (1) the monthly payment is in-range with your goals, (2) if you have enough saved for the total cash-out-of-pocket, (3) if there is anything to work on with credit or sourcing funds to purchase before being able to close, and much more.
It’s always the right move to get pre-approved first, ever before looking at a new home. This will ensure you reach your goals and not encounter issues with the financing of the home.
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Technically your pre-approval is good for 90 days from the date of pulling your credit.
The reason for this is because the credit report expires after 120 days. If you get under contract, the escrow process to close usually is 30 days.
If your credit report expires during the 30-day escrow, it’s important we repull a new report before opening escrow. This will help to ensure a smooth process and avoid any last minute surprises or problems.
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As we tell all of our prospective clients, it’s a process you have to do in order to know YOUR purchasing power. There is nothing to it but to do it (go through the pre-approval process).
Essentially, there are numerous factors that go into how much you qualify for, but the main driving factor is your “debt-to-income ratio”.
Your debt-to-income ratio is simply a % based on your gross income (pre-tax) vs the new mortgage payment and all minimum payments showing on your credit report.
Depending upon your specifics, each loan program (Conventional, FHA or VA) offer their own ratio limits and nuances to provide options to purchasing your new home.
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Honestly, that all depends upon you, everyone is different. Each program is unique and one may offer you an option that another does not to reach your goals.
Here is a quick look at each option:
CONVENTIONAL FINANCING:
A conventional loan is not insured by the federal government but are backed by Fannie Mae or Freddie Mac.
Best For: Someone with good credit and the ability to put down a larger down payment. Down payments allows:
3% (Only when a first time buyer)
5%, 10%, 15% and
20%+
** With a 20%+ down payment, mortgage insurance (PMI) is no longer required.
FHA HOME LOANS:
Most first time buyers choose an FHA loan because they will have access to a low down payment and lenient guidelines. FHA allows a down payment as low as 3.50% whether it’s your first home or 5th home. However, Mortgage insurance will be required.
Best For: Those with little credit and/or low FICO scores (down to a 580 FICO) and a low down payment.
VA HOME LOANS:
VA helps service members, veterans and surviving spouses with access to financing with no down payment and with little to no money out-of-pocket.
Best For: Those who are active duty, veterans or surviving spouses.
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YES, and we do a lot of it!
As with any “niche program”, there are lending requirements, which are dictated by the specific assistance program chosen. The type of assistance comes in all forms (repayable, not repayable, grant, gifts, etc.).
More importantly, the “devil is in the details” as down payment assistance is good for some families, but not all.
The most important part of choosing an assistance program is understanding the specifics of it and if it will hinder our ability to refinance in the future.
