Purchasing a house is often one of the most significant life events. It is the end of paying monthly rent and the start of building equity. There are several things you must consider when planning on purchasing a home. You will have to factor in regular maintenance and upkeep, furniture and appliances, and your home’s utility costs. However, there is another primary factor you need to consider: hiring a professional mortgage broker!
A professional mortgage broker serves as a middleman who works on finding lenders willing to offer you a mortgage based on your needs and wants. If you are looking for a mortgage broker, a simple internet search can benefit you. However, you can also reach out to mortgage brokers directly. They will be more than willing to sit with you and discuss all your options. Today’s article will look at a few commonly asked questions related to mortgage brokers. These answers should help you paint a clear picture regarding your next big real estate purchase.
Whether you are looking for a new house or wish to refinance your current mortgage, a professional mortgage broker can help you put together several financing options to choose from as they assess your overall ability to borrow.
All mortgage brokers are connected to several different lending institutions, meaning they have access to more mortgage services and products than you can probably find on your own. A good mortgage broker is someone ready to meet you, listen to your concerns, and offer financing solutions based on your unique situation.
Our team from Lighthouse Lending believes that you must always start with an online search since it can help you find a trustworthy broker in your area. A simple google search should give you the names of the top brokers in your area. Once you have that, you can start checking them individually to ensure they have the right experience and credentials for your needs. It’s recommended to look at their online reviews to get an idea about how good a mortgage broker is at their job.
However, if you don’t find anyone compelling enough to contact online, you can ask your friends, family, and fellow employees for suggestions. Real estate agents can also be a fantastic source for finding a mortgage broker. Some real estate firms also have in-house brokers who can assist you in the home buying process. Once you narrow down your list, you must talk to these brokers in person. We suggest you interview at least three brokers before deciding which one fits your needs the best.
Acquiring broker commissions from lenders is one of the most common compensation methods, ideally amounting to anywhere from 1% to 3% of your total home loan amount. All professional mortgage brokers get paid either by the lender you close a loan with or the borrower. However, a few rare instances where a broker may directly charge a borrower for their services. In such cases, the fee is ideally the same but is added to your financial closing costs.
A professional mortgage lender will lend you the money required to buy a home. However, there are several different kinds of money lenders and loans. A professional mortgage broker will act as a middleman and connect you, the borrower, with various potential lenders.
When looking for a home loan, you might be wondering whether you should use a mortgage broker or a loan officer. Even though both these people will ask you the same questions about your financial situation and assist you in filling out a loan application, they offer different roles. A loan officer will provide you with mortgage options only from the financial institutions they work for. In contrast, a mortgage broker will act as a matchmaker between you and several other kinds of mortgage lenders.
Working with a professional broker can help you save a lot of time and effort in the application process and save a lot of money over the life of the loan itself. A professional broker can get lenders to waive appraisal, application, origination, and several other fees. Moreover, some mortgage lenders work exclusively with brokers, meaning that you will have access to loans that would otherwise not be available to the general public.
Just like any other significant choice in your life, there are various options you must consider when applying for a mortgage. Even though a mortgage broker can provide you with additional alternatives and help you speed the process, negotiating directly with a bank can give you greater control over the deal and is generally less expensive.
Whether you should contact a mortgage broker or get a house loan directly from a bank is a matter of personal financial circumstances and taste. For example, if you anticipate having a lot of difficulty qualifying for a mortgage, a mortgage broker may be the right choice for you.
You must keep in mind that your monthly mortgage and housing expenses will not exceed more than 28% of your total monthly income. A professional lender will confirm this amount after looking at your annual salary. You can afford a mortgage payment of $700 per month on a yearly income of $30,000 if you use the 28% rule. Your property should not cost more than three times your annual salary. So if you earn $30,000 per annum, your maximum budget can be $90,000.
If you are a home buyer who earns $40,000 every year, the maximum amount of mortgage-related payments at 28% of your total income is $9,333. So, yes, you can buy a decent home if you earn a 40K salary a year.
A mortgage broker will ideally ask you a few basic questions regarding how much you plan to spend on a property, your total yearly income, and how much you plan to put down on a property. If you are looking to access equity, refinance, or obtain another mortgage, they will ask you all information about your current loans already in place, if any. Once your professional broker has a good idea of what you are looking for, they will provide you with the best mortgage solutions.
In most cases, a professional broker will have almost everything they need to proceed with an application at this point. If everything goes as planned, they will ask you to provide documentation to submit your application to a potential lender, such as notices of assessment, letter of employment, and pay stubs.
If you buy a property, you will work with either a real estate agent or a broker associate. The primary difference between the two is the overall level of responsibility within the real estate firm and the kind of services they offer. Professional mortgage brokers ideally run the office real estate agents work out of, while agents deal directly with clients. A real estate broker and real estate agent can provide you with the same level of service, so deciding the right choice for you often comes down to the kind of services you are looking for and the total experience you are comfortable with.
You need to understand that you need to be fully transparent with your lender and mortgage broker. You must never lie about your credit history or felonies and be completely honest about your current financial situation. Remember that deception can lead to mortgage fraud. Nevertheless, some people suggest not disclosing any irresponsible spending habits you might have since it may make getting a deal complicated.
If you are all set to buy a home, here are three things you must know before you start talking to your mortgage broker. The sooner you clear out these things, the sooner you can apply for the loan, and the quicker your process will go.
Income: What is your annual income? To verify your income, a mortgage broker will need some documents. You can gather these documents electronically or print them to have them on hand for your initial meeting.
Put down: how much money are you ready to put down? The best way you can determine this is by calculating 3% to 3.5% of the total purchase price. It is considered the minimum amount one can pay as a down payment for a residential property. Nevertheless, if this amount is out of your price range, you can still qualify for a home loan. You can find other loans with as little as 0% down payment options. Speak with your mortgage broker before you get set on this option to ensure you qualify.
Credit: check your credit score when leading up to applying for a mortgage. Doing this should give you some time to improve your credit score or ensure it stays as high as possible when applying.
Most mortgage brokers will scrutinize your credit report when they review your loan application. When looking at your credit score, they will also look deeper and check your recent applications, payment history, credit utilization ratio, and more. Your gross income is another critical factor in getting approval for a home loan. A mortgage lender will prefer borrowers with a predictable, stable income over those who don’t. When they check your income from any work, they will also include any additional income (from any investment) in their assessment. Remember that any employment or income you mention on your application is verified, so ensure you use correct information. The chances are that the lender will view your income documentation and might even contact your employers for verification.
The answer to this question is that they earn their money in several different ways, not only by charging for trades. Most brokers hope to earn from their client’s financial behavior in other ways by giving customers free trades. For instance, a brokerage firm doesn’t pay for idle cash sitting in an account. Like a bank, these brokers can use this cash for other purposes like lending and investing—this is why they can earn much higher rates than what they get from customers. Brokers can also make money by charging you for investment-advisory services.
Nothing should stop you from talking to one or more mortgage providers. The more offers you have, the better! Since all mortgage brokers have relationships with different lenders, it can be worth speaking to several mortgage brokers before finalizing a deal.
When a lender assesses how much cash they can lend you, they will look at several things, including affordability (the amount they believe you can afford to repay), your credit rating, any existing debts, and your overall income. If you wish to maximize the total amount you can borrow, you must contact a real estate mortgage broker. They can help you minimize anything that may be a red flag for lenders and ensure your finances are in the best shape possible. To do this, they might suggest you pay off any debts, improve your credit rating, get a pay raise, and organize your accounts.
Acquiring a mortgage from your bank may seem like an easy option with certain benefits attached to it, but there are much better options out there are much better options available if you keep looking. A mortgage is a significant long-term commitment, and you can find thousands of deals in the market. It is a highly competitive industry, and many mortgage providers and other financial institutions are determined to get your business, especially if it’s at the expense of their rivals.
Yes, you need to prove where your deposit comes from. What kind of proof you need to provide will depend on what you disclose as your source of funds. You can show several things as proof of funds when buying a property, such as signed contractual agreements, certain forms of certification, and bank account statements. A professional mortgage adviser will help you gather all necessary documents and ensure you present everything in the right way.
A mortgage won’t necessarily increase your credit score. It might have the opposite effect on your credit score. Keep in mind that a mortgage is a large loan, so your credit score is more likely to drop for a while. Nevertheless, a properly managed mortgage can positively influence your credit score over time.
Our team from Lighthouse Lending has noted down the top seven things you must not do when purchasing a property. These include:
The most common questions that professional mortgage brokers tend to ask a borrower before finding an excellent deal for them include:
Under ideal circumstances, it takes an average of one month for a broker to get you a mortgage. However, if there are any issues with your application, getting approval may take much longer. Thus, you should start the application process as early as possible if you wish to shorten this process.
Start with your budget – you should always inform your broker what you think your budget is. Thell then a rough estimate of the range of houses you are hoping to get.
Ask questions about the loan – you must ensure there are no hidden rules in your contract. Try to understand what the mortgage process will be like fully.
Find out if there is any fee you will be paying – there are several other fees that are often tacked onto mortgages.
Are you excited to start your next home buying process? Or do you still have a few doubts regarding the mortgage process? If yes, you need to contact professionals from Lighthouse Lending right away! Our experts have years of experience working in the field and can properly guide you through the home buying process. Call us today at 919-523-2505, and we will answer any questions you might have related to mortgages.
