Finding A Mortgage Lender

mortgage lender

Finding a good mortgage lender is hard work. It can be done with proper due diligence and care. There are several ways prospective homebuyers can buy a home. You can search the internet for reviews of lenders. Also, you can ask through your social network about who people bought their homes with. Potential homebuyers can work through a mortgage broker or a bank loan officer. There are pros and cons to working with each of these groups and they will be discussed.

Use Bank Loan Officers

Bank loan officers typically work at a credit union or a bank or another top of lending companies. Their jobs are to sell and process mortgages and other types of loans that their company makes. The loan officer works with you to find a loan that suits the homebuyer’s needs. If you pass the application process, your credit is approved to commence the home buying process.

Look for a Mortgage Brokers

Mortgage brokers get paid to bring lenders and borrowers together. They work with many different lenders to secure the best mortgage loan for them and the borrowers. These mortgage brokers seek out homebuyers and determine their financial risk. If the mortgage broker thinks the potential homebuyer is a low risk of defaulting, they set them up with a lender

It should be noted that mortgage brokers do not always act in their client’s best interest. Sometimes they will set people up with the most profitable loans. This may mean a loan that is terrible. There are predatory mortgage lenders around so potential homebuyers should be aware of this.

Ask your Real Estate Agent

Real estate agents are good sources of knowledge. They are usually good people to ask about finding a good lender. Potential homebuyers should be careful because sometimes the builder of the homes offers loans. Buyers should be wary of this and always shop around and look for other loan offers.

Ask a Friend

Word of mouth advice is often the best advice. This is usually the most candid way to get advice. You can get the pros and the cons from a friend or someone else in your social network that has bought a home. You can also benefit from a friend’s personal advice on what they could have done better. If you do not know anyone personally who has bought a home, then you should look for homebuyers.

Internet

The internet is a good way to find a mortgage lender. Possible homebuyers can look online for reviews and experiences people have had with companies. The internet has limitless information. Some good sites to look at are zillow.com. Although this website mainly looks at home values sometimes people advertise mortgage lenders on the website. However, prospective homebuyers should realize sometimes companies review themselves or pay people to do reviews.

These are just some of the ways to find a mortgage lender. If you search though all these various sources, a prospective homebuyer should find a great lender to work with.

Identifying Real Estate Funding

real estate funding

Funding your home is an important step in your real estate purchase. You will have to think about funding issues, the moment you decide to buy a home. Fortunately, there are numerous avenues available for funding your real estate purchase. Familiarization with some terms of real estate funding will help you evaluate your options. Some such terms are listed here,

Rate of Interest

Every Home Funding Institution will charge you interest on the amount it gives you as a loan. This interest is cost of loan that you will take. Ask all your lenders the rate of interest and then compare these rates. A difference of 1% point for a loan of USD 500,000 will save you USD 336 per month.

Taxes on Property

You will have to pay property tax on any new property, which you acquire. If you buy property closer to where you live now, you may save more then USD 100 per month. This extra money can be diverted to the payment of your mortgages.

Homeowners Insurance

This is the insurance money you need to pay to acquire the home. Check in advance what is the premium you will be required to pay every month and net cost of insurance. All of these are additional cost to the cost of your home. Now that you know what you will have to pay for that dream home, you can hunt for a funding source.

Sources of funding a real estate purchase include –

FHA Loans

Federal Housing Administration (FHA) has been providing funding assistance to home buyers since 1965. FHA does not give out loans perse, it is just an insurer of loans. A home loan insured by FHA means that lenders can close the loan without worrying about a default. Today, the FHA limit of the maximum mortgage that can be availed is USD 625,500. FHA loans are available to people who have lower FICO Scores, or people who have had bankruptcy declared. Even if a person has faced foreclosure, but maintained a good credit history thereafter; he/she can avail of home loans from FHA.

Veterans Administration Home Loans

People who have served in US Armed Forces may avail of home loans from private mortgage lenders etc. Veterans Administration ensures a part of this loan. The guaranteed amount for such a loan is called Entitlement. Maximum entitlement for a loan of USD 144,000 is USD 36,000. One can get full funding for a VA Loan without any down payment. For loans backed by VA, no Private Mortgage Lending Insurance is required. You can get extremely competitive interest rates also.

Private Mortgage Lenders

You can get all the funding from private lenders as well. There are numerous lenders who will evaluate the credit history and provide you with a free quote of their charges as well. These lenders will offer you a loan based on their evaluation of your credit history, cost of your home etc. There are numerous lenders who compete in this category and you can find many on the Internet also. You will be provided with online quotes as well.

Funding your real estate property will be easy if you have a good credit history. In case you have had a bad history, your choice of funding institutions is limited, but not eliminated altogether.

Mortgage Fraud

No one wants to get caught up in a mortgage fraud scandal as the buyer or seller of the home. If you lie on any part of your application, this is considered mortgage fraud. This should be avoided at all costs. However, there are other types of mortgage fraud as well. During the home buying process, you are working with various types of real estate and financial professionals. There are many ways that they could be using deceptive practices. This is a guide to avoid it.

For Sellers

They should get previous business professionals contact information who has worked in real estate or with mortgages professionals. This will help people avoid dealing with the wrong people. Also, it is important to make sure the professional you work with is licensed. It is also important for sellers to comprehend everything that they sign. Hire a lawyer if something is not clear. Also, it is important to not sign anything with information left blank. This means someone could fill in the blank part however they want and that could be a trap. It is important for sellers to be firm about their asking price. Sellers should not agree to an amount above your asking price. This could lead to mortgage fraud. This extra important if you are asked to make up the difference after the property closed. You should also deny in extra money for ‘repairs’ or anything of that nature. This could lead you to fraud. It is also important to be careful of proposals that claim will save you from foreclosure. The seller could end up paying thousands of dollars and end up losing their home. It is a better idea to work with a good, reputable lender that will give you the whole set of closing documents.

For Buyers

Homebuyers should look out for “no money down” offers. This is a red flag for sure. It is important to review the sales history of the property you would like to purchase. Also, it is important to have your own real estate professional or appraiser determine the value of the home you would like to purchase. It is important to make sure the seller really owns the property. There are scams like this that happen so it is best to take caution. Also, do not give any personal information to someone claiming they are going to purchase a house for you in their name. This would be a bad move that good lead to legal problems for years to come. Just like sellers, buyers need to understand everything that they sign during the home buying process. Do not sign anything you do not understand. If there is any lack of understanding, hire a lawyer to assist you. As mentioned before, do not sign any forms with information left blank or that may contain incorrect information. Many times a broker will try to overstate the homebuyer’s income in hopes of making more money for themselves. You should always deal directly with whoever you are borrowing money from so there are no discrepancies. Every homebuyer should have the complete set of the closing documents. This will contain all the information they need and protect themselves against fraud.

You should be honest about your employment income. If you lie about it, there is potential for this to escalate. You should make sure that the professional you are working with does not lie about this as well. This could be a big problem. These are all things to look out for when you are either a seller or a buyer in the process.

Real Estate – Shared Equity

shared equity

Shared equity is an innovative form of joint mortgage/joint ownership the government promotes to help the ones who are first-time property buyers. It includes many features that are attractive to a buyer so that he can materialize his dream of owning a new house.

Shared Equity Scheme

The shared equity scheme is launched because of the struggles of the first time buyers become a major political issue in the recent past and it is estimated that the scheme will create an extra 100,000 homeowners in the UK alone by 2010. The major attraction of the scheme is that the buyers could take a 75% mortgage and the remaining part of it will be covered by an equity loan from the government and the lender. This way the buyer gets to save a significant sum on his investment. People will find it quite easy and convenient so that he does not have to go for other alternatives that may be tricky and confusing.

The Chief Features

The shared equity envisages that the first time buyer of the property does not own it in conjunction with any other party as against in the case of shared ownership. At the same time, the scheme takes out more than one loan for the property – an equity loan and a mortgage. There is not going to be any co-owner of the property and you are the sole person on the deeds; however, if the property is to be sold, then the property buyer has to repay all the loans and he has to pay a proportion of the increase in the equity of the property (if there is any) to the party who is making the equity loan. One of the major features of the shared equity scheme is that there is much flexibility and ease to implement it so that the person who is going to buy will be quite relieved at the prospect of a great help from the part of the government.

In certain countries, one of the initiatives was termed as the Open Market Home Buy Scheme and it allows the prospective buyer to choose any property from the open market that comes within their range. The scheme is available to all the key public sector workers, the ones who are on a council waiting list, social tenants and other priority first time buyers that include the ones with a household income of 65,000 pounds or less. There are similar projects in the United States as well and the aim of the project is to revitalize the housing sector by making real estate investments affordable.

Conclusion

The shared equity scheme is quite different from the mortgage loans and the processes and procedures involved in it help the buyer in general and the materialization of the wishes of the buyer, especially the first time buyer, come true. It is a great option for anyone looking to own a real estate property at an affordable rate.

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