Finding the right home for you is your primary goal, but enjoying it with a lower payment and better mortgage terms is a very important secondary goal. I’ve worked with many lenders over the years, and here are a couple of things to keep in mind when beginning the process.
There are several common categories my clients fall into with their own set of considerations. Here are three common ones.
The employed with a consistent paycheck – Just because there’s nothing out of the ordinary about your income stream, and you’re getting a paycheck every week, that doesn’t mean that there won’t be differences in mortgages and lenders for your needs. Every mortgage broker and most lenders tend to work within their own requirements and procedures, so finding the one with friendliest terms for a salaried or hourly wage earner is crucial.
The self-employed borrower – Since the mortgage and housing crisis that began in 2007, it’s become a grueling process for a business owner or self-employed person to get a mortgage. Documentation of income and expenses is much more detailed, so being prepared with your paperwork before you begin will make the process that much easier. Some lenders have systems in place for the self-employed and are easier to work with, provide the best terms and will get you to the closing in the fastest amount of time.
Less than stellar credit – All types of lenders have become tougher in our new financial environment, and it’s easy to get a ding or two on your credit these days. It doesn’t even take a mistake or late payment, as credit scores are reduced for the amount and ratio of debt, as well as types of debt. Millions of people pay their bills on time and still don’t have those high end credit scores. There are several lenders in the area ready to provide good mortgages for less than high end credit scores. It’s just a matter of researching them.
There are several other things to know once you’ve found a lender and are headed to the closing table. This applys to all borrowers regardless of the type of loan you’re getting.
Financial Disclosures – Expect lenders and their underwriters to scrutinize financial, income and expense information much more closely than you might expect. Be prepared to dig out a lot of documentation, and it’s best to be forthcoming with any financial information that impacts your ability to pay the mortgage payment. Even if it’s not asked for early in the process, be prepared for questions and requests for documents throughout the process. Also, it’s highly recommended that you not add any credit card or other debt between the purchase contract and the closing. Just before closing, most lenders will do another credit check and a check for any liens or encumbrances.
Watch the Fees and Question Them – There are a number of fees associated with getting a mortgage, and the total of origination and other fees is usually the highest closing cost aggregate item in the deal. Never hesitate to ask about all fees, why they’re charged and why they’re a certain amount and how they’re calculated. It’s your money, and you’re the customer.
If you’re looking for a good lender, there are several that I recommend. You can find them here. Let me know if I can help with your search for a great lender.