27
Jul
By First Rate Financial Group
Mortgage

The Top Questions To Ask A Mortgage Lender

The Top Questions To Ask A Mortgage LenderWith many people interested in taking out a home loan, it is critical for potential homeowners to think carefully about which loan structure is right for them. There are a lot of home loan options out there, and potential homeowners need to make sure they consider the benefits and drawbacks of all options. This means asking the right questions. What questions do you need to ask your mortgage lender?

How Big Of A Down Payment Do I Need?

The first question you need to ask your mortgage lender is about the down payment you need to make. A smart rule of thumb is that you need to put 20 percent down for your house; however, this is a large sum of money that many people do not have. If you are buying a home for the first time, you might be able to get a home for 3.5 percent down. Always talk to your mortgage lender about this issue.

Is My Credit Score High Enough?

Next, talk to your mortgage lender about your credit score. The higher your credit score, the easier it will be for you to qualify for a home loan. You may want to talk to your mortgage lender about your credit report to see if there are any inaccuracies that need to be fixed.

Do I Need To Get Mortgage Insurance?

Do not forget to ask your mortgage lender if you need to get mortgage insurance. If you put less than 20 percent down on your house, you might need to get insurance, but your premium should go down as your equity goes up. Then, once you reach 20 percent equity in your home, you should be able to get rid of mortgage insurance. Clarify this with your mortgage lender.

Find The Right Home Loan For Your Needs

These are a handful of the top questions you need to ask your mortgage lender if you are thinking about taking out a home loan. With so many loans available, it is easy to get confused. Remember that the right loan for one person is not necessarily the right loan for you. Your mortgage lender can help you put yourself in the best position possible to be successful. 

26
Jul
By First Rate Financial Group
Mortgage

What To Consider Before Taking Out An Adjustable-Rate Mortgage

What To Consider Before Taking Out An Adjustable-Rate MortgageIf you are purchasing a house in the near future, you are probably reviewing your loan options. There are plenty of choices available, and one option is an adjustable-rate mortgage, which is usually shortened to ARM. There are a lot of people who get lured in by the advertisements on ARMs, but are they right for you? There are a few important factors you need to keep in mind.

Adjustable-Rate Mortgages Can Change Your Interest Rate Quickly

First, an adjustable-rate mortgage can change the amount of interest you owe on a home loan quickly. Typically, the ARM has an initial period during which the interest rate will not change. Then, there will be a periodic cap, which is the amount of interest that can be added or reduced to the loan in a set amount of time. There will also be a lifetime cap, meaning that the interest rate cannot rise above a preset boundary.

The Pros of an ARM

There are a few situations where an adjustable-rate mortgage can be beneficial. The biggest benefit is that the interest rate on the ARM is typically lower than the market rate when you take it out. You could get that low interest rate set for anywhere from a few months to a few years. If you plan on selling the house quickly, or if you think interest rates will drop in the future, then an adjustable-rate mortgage could be for you.

The Cons of an ARM

On the other hand, there are a few drawbacks as well. The biggest drawback is that the interest rate on an adjustable-rate mortgage could go up significantly. When this happens, you could end up getting priced out of your house. You might have to sell, or you might foreclose on your home. You need to run the numbers carefully before going with an adjustable-rate mortgage.

Think Carefully About Your Options

In the end, these are just a few of the many points you need to consider if you are thinking about taking an adjustable-rate mortgage. While they can be beneficial in some situations, they also come with a lot of risks. You should talk to a professional before you settle on a loan for your home.

20
Jul
By First Rate Financial Group
Home Mortgage Tips

Understanding Automated Underwriting and How It Impacts the Mortgage Application Process

Understanding Automated Underwriting and How It Impacts the Mortgage Application ProcessWhether you’re embarking on the process of obtaining a mortgage for the first time or just preparing yourself for the advances in the industry, the implementation of automated underwriting in recent years has significantly changed the application process. From the time you’ll have to wait to the documentation that is required, here are some of the details on what you can expect when dealing with an automated underwriter.

Reduction In Document Requirements

In the past, most homebuyers submitting mortgage application documents were required to go into their backlogs to provide the paystubs for the previous 2 months pay, as well as W2’s for the last 2 years. Now, with automation, most homebuyers will only need to submit their most recent paystub in order to move along to the approval process.

The Time Line Is Shortened

Since the loan approval process previously had to go through an underwriter, there was a delay between when the documents could be reviewed and approved, and how long it would take for this information to be passed on to the homebuyer. However, since a Findings Report is automatically created from the applicable data during the automated process, the timeline homebuyers have to wait is shortened considerably.

Approval Rates Are Improved

Previously, approvals that were completed by an underwriter were held to a standard that was made up of a person’s financial health and credit report, so having one and not the other could lead to a declined application. Due to the fact that automated approval is based on the degree of the deciding factors, homebuyers who previously may have been turned away have a greater chance of approval.

A Useful Bargaining Tool

While most homebuyers have identified their ideal home before getting too involved in the application process, automated underwriting actually enables those who want to apply to get approval prior to deciding on a home. Instead of being an expenditure of time, this can actually be a good bargaining chip when it comes to putting in an offer on the right home.

With the advances in technology and the ever-shifting real estate market, there are many changes on the mortgage market that are important for future homebuyers to be aware of. Fortunately, there are many advantages to the automation of underwriting that can offer great benefits to those going through the application process. If you’re applying for a mortgage soon, you may want to contact one of our mortgage professionals for more information.