Wheatland Realty Agent Nicole Tudisco shares her knowledge regarding mortgage loans.
I have 10 years of real estate experience and I have definitely developed certain base of knowledge that is helpful to be aware of when choosing a lender or a loan product. Here are my not so common tips I think everyone should know….
FHA Loans – PROS -There is a lower down payment of 3.5% and less strict credit and debt guidelines so more people can get approved. It’s NOT just for 1st time home buyers. CONS – The loan has an upfront fee of 1.75% of the loan amount added on to the loan. It also a higher rate of mortgage insurance over conventional loans. Lastly, loan officers tend to make more money on an FHA loan verses a conventional loan – This may be the right product for you but if you are feeling pressure or being told this is the only option check with a second or even third lender before you choose.
Paying Points - One point is equal to 1% of the loan amount which is added to the loan. So if you are paying 2 points that’s 2% of the loan amount etc. This is a way for the buyer to lower their interest rate by paying an upfront cost but it’s also a way for a lender or loan officer to pad their commission. If you are a high credit risk this may be the only way for you to start to re-build your credit and the lender should be able to have some insurance against a credit risk. It’s just important here to know how or why you are paying points.
Portfolio Loans – A portfolio loan is a loan that the lender keeps in house which means that they are funding the loan with their own money. This gives the lender more flexibility to make special exceptions for some of those great buyers who may need special considerations. A community bank is a good resource for this but not the only.
Mortgage Brokers – A mortgage broker can run your mortgage application against many different lenders and find you the best product. They have access to the big banks as well as smaller lenders.
Loan Products – Almost every lender has some specialty loan programs and/or state programs with down payment assistance. Another reason you should check with more than 1 lender before choosing.
Rate Locks – Rates are not locked in till you have an accepted offer on a home. So if you are quoted rates today but don’t find a home for a month please know the market does fluctuate and it could go up or down. So be prepared to have some flexibility.
Loan Applications – You aren’t locked into a lender till you pay the application fee which usually covers your appraisal as well. If you paid the application fee you can still change lenders till you pick a home but be prepared to lose that fee. You should be able to get a pre-approval from the lender without an application fee. You will want them to run your credit though for a solid pre-approval when making offers on homes.
We love to empower our clients with the tools to obtain their best possible outcome when buying their next home. Contact Team Tudisco for a complimentary consultation to reach your new home goals.
Nicole and Tony Tudisco