Most mortgage loans today are structured around the individual borrower. In other words there isn’t much of a ‘rule of thumb’ any longer. There are many different loan products that can serve a variety of needs. There are also a number of web-based and remote lenders to choose from. The choice is yours to make, but it needs to be an informed choice. Do not be lured by promises of low interest rates and low lender fees. No lender lends money for free. What is given with one hand is usually taken back with the other, and at settlement when your attorney or settlement agent goes over the HUD settlement form with you, indeed there are no application fees or discount points. Instead you will find ‘wire service fees’, ‘money warehousing fees’, ‘document processing fees’, etc, etc, etc. Indeed most loans will come with fees other than just discount points and origination fees. Ask for the “Good Faith Estimate” of the transaction. By law, this has to be close to the reality you see at the closing table. And that LOW interest rate they advertise to get you in their office… You’ll find that rate is offered only to their most qualified borrowers.
Now let me say this, there are many lenders who are honest, straightforward, hard working and well serving. I find that many of my buyer clients who are shopping around for a mortgage product end up choosing a lender not based on the rate or fees (the straight-up lender’s products will all be fairly close) but on the personality of the person they talk to. They like that lender and feel comfortable working with him or her.
And I think it is a good idea to work with a local mortgage loan lender or broker. You can walk into that person’s office and see him or her face to face. The meaning of that will only dawn on you if you deal with a web-based or distant lender. Do be aware that underwriting may take place somewhere else and you may not see or communicate with the loan processors or underwriter, but your local lender will be known to them. Also consider that a local lender wants you and I to refer future business to him or her. That person will want you and I to be happy with the service you get.
Now just a quick word of advice in the event you are planning to purchase a home in the near future: Don’t make any big purchases (i.e., a new car, appliances, trips, etc. – anything that will show up on your credit record).
If you have debt that can be comfortably eliminated, do so. Your credit report may show debt that you have already paid off. You can generally get those items removed from your credit report fairly easily.
100 per cent loans are hard to get now. You will need money for down payment and closing costs. You will also need money for an earnest money deposit, a check that you will write at the time you make an offer on a property. The earnest money is applied towards your closing costs or the sales price of the home – it works for you dollar for dollar, and you will see it reflected on the HUD statement at settlement. You can ask the seller to pay some of your closing costs, but be aware that if the price of the home is reasonable to begin with, the seller will not want to give up very much.
I can give you the names and contact information for a number of mortgage loan brokers I have worked with in the past who are excellent. Just let me know.