Low mortgage rates and rising home values are pushing fence-sitters into deciding to buy a home.
As these buyers enter the market, many face the reality of a market with significantly reduced inventory, creatingÂ stiff competition for todayâ€™s home buyers.Click to see today's rates (Jul 22nd, 2017)
To know youâ€™re working with the best, youâ€™ll first need to understand who the players are in the field of mortgage lending.
Mortgage bankers work for financial institutions like banks, credit unions or savings and loans. These lendersÂ fund mortgages with their own money, which they get from depositorsÂ or investors.
Their advantage is that they can often close quickly, since they are working with their own money. They can sometimes (not always) be cheaper if you want a plain vanilla loan and have no approval issues.
The downside is that they may have fewer products and stricter underwriting.
Mortgage originators alsoÂ fund mortgages with their own money and in their own names. After the loan closes and funds, theyÂ sell your loan to otherÂ institutions. Once that happens, the borrower getsÂ written notice of the sale, including instructionsÂ about sending in future payments.
Mortgage originators may offer more products than banks, and they may do some brokering as well as in-house lending. The main drawback is that your loan will be sold.
Mortgage brokersÂ work with wholesale mortgage lenders. They function as the sales force for wholesale lenders, matching borrowers to the best loan product and lender for their situation.
The advantage with brokers is access to more products. This can be helpful if you or the property have any quirks, and you expect problems qualifying. The disadvantage is that the loan process is out of the broker's hands, can take longer, and may cost more.
Mortgage banks and originators are make their money by either keeping and servicing your mortgage themselves or selling the right to collect your payments to investors or other institutions.
Brokers make their money from commissions collected from the borrower or the wholesale lender. Your best deal may be with any of these entities, so compare quotes from all of them.
One of the best ways to find a great company is by asking around. Friends, family, neighbors and real estate agents are a great source for this.
If youâ€™ve never directly asked for a referral online, try using Facebook or Google Plus. You will have no shortage of comments directing you to someone theyâ€™ve either used or know personally.
After you get some names and numbers, go deeper in your quest. Find out if the transaction was similar to yours -- size of loan, purchase or refinance, etc.
Ask lots of questions and donâ€™t be shy about finding out not only what they liked, but also what they didnâ€™t like about the company.
Should you use your real estate agent's "preferred" lender? You can, but subject them to the same inspection you give all other lenders, and make sure their quote is competitive.
Nowadays, your cell phone, your tablet or your computer can the quickest and easiest way to request referrals.
If you're like most people, the interest rate and costs of the loan are a main consideration. You can get multiple mortgage quotes from competing lenders by making one single online request.
Lenders usually provide an official Loan Estimate (this provides consumer protection) or some sort of worksheet or scenario (not as binding as a Loan Estimate).
It's important to get all your rate quotes at about the same time because interest rates can change frequently -- even more than once a day!
Compare offers, select a fewÂ of the most competitive, and then check out the lenders. Call them allÂ and ask the loan professional what product he or she recommends for you, and why. If you think you might have trouble qualifying, ask about minimum credit scores Â and overlays.
Getting a mortgage can be stressful. Choose someone who will make that experience good for you.
Whatâ€™s important to you may not be the same as whatâ€™s important to someone else.
For your friend or neighbor, their decision may have been because the mortgage company had the lowest rate and closing costs.Â But you may place more emphasis on accuracy, efficiency and timeliness. This could be especially true if you need to get your loan closed inside of 30 days.
Some mortgage companies, especially online companies, may be great at refinancing but not quite as strong when it comes to purchase transactions.
After youâ€™ve gathered names and contact info from your friends, family or real estate agent, look them up.
Thanks to todayâ€™s technology at your fingertips, itâ€™s easier than ever to conduct your own research on a mortgage company.
Some popular sites for todayâ€™s consumer seeking online reviews include the following:
Look out for things such as the number of loans in default, predatory lending complaints, and customer feedback.
The National Multistate Licensing System (NMLS) for mortgage lenders offers a consumer portal you can use to verify lenders'Â licenses and see if there have been disciplinary actions against them. You can also view loan professionals'Â employment history, which can tell you the extent of their lending experience and how many times they change jobs.
Online reviews arenâ€™t always 100 percent accurate, but it can at least give you a frame of reference, especially if the mortgage company has more positive than negative feedback.
Not only do mortgage companies come in many shapes and sizes, the way they conduct business varies greatly.
Big brand mortgage names arenâ€™t necessarily better than smaller, less known companies.
Ask the lender how they typically communicate with their clients (email, text, phone calls, etc.) and how often.
Inquire about whether the lender does everything â€śin-houseâ€ť or otherwise.
Some lenders take the initial loan application, handle the loan processing, the underwriting, even the preparation of the closing documents in a centralized location.
Other lenders may take your loan application and gather your income and asset documents, but then turn everything over to another location.
This isnâ€™t always a bad sign, but itâ€™s worth investigating. It could have a significant effect on your loan is processed, and the amount of time it takes to get your loan completed.
Finding a great mortgage company involves more than just getting the lowest interest rate and closing costs.
The best mortgage companies typically offer competitive rates, are accessible online, have quick and adaptive communication methods, and are readily available when you need them.
Whether you are buying a home or refinancing one, your home is typically the biggest financial investment youâ€™ll ever have. Comparison shop mortgage companies before pulling the trigger.Click to see today's rates (Jul 22nd, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Barry L. Systems Analyst
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)