Purchasing A Home In Texas: What Credit Score Do You Need?

The Ideal Credit Score That Allows You To Buy A Texas House

Part II

What’s The Minimum Score Unlikely To Affect My Mortgage Eligibility?

Corpus Christi texas classic home bought with assistance paymentsIf you are not a veteran who automatically qualifies for a home loan from Veteran Affairs, a credit score of at least 500 is a must. The same minimum is required in order for you to qualify for a 10% down-payment for a loan through the Federal Housing Administration.

If you don’t meet those requirements, it’s not the end of you. You can get a parent, spouse, or friend with better credit to cosign for your loan. This could help better your chances of approval for a traditional mortgage. If that’s not the case, follow suit and work to improve your credit score before proceeding to apply for a mortgage.

What Credit Score Do Lenders Check?

Almost 90% of lenders use your FICO Score. For your information, this is the credit score that’s most widely used. Though, depending on the type of loan, different versions of the FICO Score are used.

The following scores are likely to be in your lender’s checklist when you are applying for a mortgage loan:

  • FICO Score 2 based on Experian data
  • FICO Score 5 based on Equifax data
  • FICO Score 4 based on TransUnion data

What’s the Interest Rate You Are Likely To Get With Your Credit Score?

For simplicity, credit scores are broken down into categories. This helps you get to know the quality of your creditworthiness and steps you’ll move to boost it.

  • Poor – 300 to 579. With a poor credit score, it’s unlikely for you to get mortgage approval. But things may work out for you if you have a cosigner or an underwriter willing to accept you. With these terms, if you’re lucky to find a lender, be ready to cover high-interest rates on your loan.
  • Fair – 580 to 669. Though you’ll qualify for a loan with a fair score, your interest rates will probably remain high, a bit higher than with a good or very good score.
  • Good – 670 to 739. This is an awesome score that’s unlikely to affect your interest rate that much. Your rates are likely to range within 0.25% to 0.5% with such a score.
  • Very good – 740 and higher. Get the lowest interest rates and the best payment terms in the market with this score.

Is It Necessary To Check For Credit Report & Score Before Searching For Houses?

Sure thing. Having a rough idea of your credit score is vital for your home buying process.

With knowledge on your credit report and score you’ll be able to:

  • Make corrections of inaccurate information in your report before applying.
  • Make a prediction of whether you’ll get approved or not, and approximate your interest rate.
  • Find out the areas to improve your creditworthiness before buying.

How Can You Improve Your Score Before Applying For A Mortgage?

There are tactics that are likely to work for you in order to improve your credit and enjoy low-interest rates and the best terms when you apply for a mortgage. Let’s review them:

  • Accumulate savings for a large down payment
  • Keep a close eye on your credit report.
  • Ensure to pay your bills at the right time
  • Look for the services of credit repair experts
  • Hold off on other credit.
  • Reduce your credit utilization ratio.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the first article in this series.

Purchasing A Home In Texas: What Credit Score Do You Need?

The Ideal Credit Score That Allows You To Buy A Texas House

Part I

If you’re not well conversant with the real estate industry and beginning to think of purchasing a home, it’s good you know that your credit score can affect your ability to get a mortgage. Though it doesn’t mean the world, a good credit score is vital. It boosts interest rates and improves loan terms. However, it doesn’t mean that you need perfect credit in order to own a home. There’s much still hope.

Knowing everything, in terms of the impact your score has on your mortgage rate, you’ll be able to grow your credit in advance before you proceed to own a home.

How Does Your Credit Score Affect Your Mortgage Rate?

Fort Worth texas brick home bought with assistance paymentsLet’s face it! Before a lender settles on a decision of approving you for a mortgage, he/she must consider your credit score. Moreover, they put into consideration your accumulated savings, debt-to-income ratio, and the amount of money you readily have available to give as a down payment.

Your scores go beyond determining whether you’re eligible for a mortgage. The interest rates and payment terms you get are largely influenced by your score. A credit score ranging anywhere from 650 to 699 – which is below average – means lenders may bring in risk-based pricing while stating details regarding your mortgage.

In order to cancel out the perceived risk of having to deal with a borrower whose credit score is low, a lender may take the step of increasing the mortgage rate. What does this mean? It means a credit score of 650 is likely to get a higher interest rate than a credit score of 720. This could cost you a fortune more throughout the life of your mortgage.

What’s The Required Credit Score To Buy A House?

It’s estimated that with a score of 660 you’ll probably qualify for a home loan. Though it’s not certain. On the other hand, scores of 660 and below, means you have to deal with a high-interest rate and poor loan terms.

With a minimum credit score of 580, you qualify for an FHA loan. 3.5% of your purchase amount goes to the down payment. However, you’ll be good to go in case of an underwriter intervention. The underwriter assumes the financial risk, and may only require you to carry minimal debt and prove to have a significant amount of savings.

At the moment, the average American’s credit score is 695. That’s relatively high. In case you desire top-level rates, focus on reaching a credit score of about 740 before even thinking of how you can apply for a mortgage.

  • With a credit score of 620 or higher, you’ll comfortably work with conventional mortgages.
  • A credit score of 640 or higher is needed for USDA loans.
  • No minimum credit score is necessary for Veteran Affairs loans.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.

Knowing How To Choose A Capable Texas Mortgage Lender

Tips To Find A Competent Mortgage Lender Suitable For Your Need In Texas

Part 2

2. Seek Recommendations From People You Know

Start by asking your family members, friends, and agent for recommendations.

A good mortgage lender entails more than the terms they offer, and no one knows better how a particular lender operates than their previous clients. Ask your family and friends to provide recommendations (both for and against) mortgage lenders. By seeking recommendations, not only will you have some mortgage lenders to consider, but you will also get an insight into what to expect from a particular lender in terms of refinancing options, communication, and more.

In case you’ve identified a reliable real estate agent, then they could have some good recommendations. They work with different clients on a daily basis who are, in turn, working with different mortgage lenders. Hence, they are able to deduce which mortgage lenders the clients most satisfied with.

Decide whether a mortgage lender is suitable for you.

If you want help sorting through all the available options, then a mortgage lender is an expert who can help you choose the best mortgage lender for you. Obviously, the trade-off is that there is a fee you have to pay. While most mortgage brokers have access to mortgage products that provide adequate savings to offset this cost, you aren’t guaranteed that it will work out this way. Considering the amount of time that you have to commit to researching mortgage lenders and comparing them, letting a mortgage broker do all this for you might be the best option.

3. Communicate With Lenders For Pre-approval

Seek pre-approval and compare the numbers.

Though getting mortgage pre-approvals might sound like doing something official, it is, in fact, part of the comparison shopping process – Just to be clear, pre-approval isn’t the same as pre-qualification, which you may have already done. Pre-qualification provides a ballpark figure of the price of a home you can afford. Narrow down to your top three options and apply for pre-approval to all of them. Meticulous comparison shopping is crucial as even the slightest difference in interest rate percentage point can save you thousands of dollars over the long-term period of your loan.

With that in mind, applying with three lenders normally enables you to find out how much you can afford under the numerous terms that you will qualify for.

The pre-approval letters you get serve two functions. The first and most important one is that you’ll begin your house hunting with confidence and you will be able to present an offer on a particular house you like with the support of a mortgage lender. Secondly, you get to check out all the terms a lender is ready to offer you. With these terms, you will be able to choose the best offer.

Understand APR versus interest rate.

When comparing mortgage terms, there are two terms that people often confuse and they are annual percentage rate (APR) and the interest rate. It is easy to assume that comparing the interest rates between different loans is a fair comparison, however, it isn’t. A low-interest rate mortgage can have hidden fees that make it more expensive in the long-term than a high-interest rate mortgage. The APR manages all that. Compare different APRs and you will be able to make a more accurate comparison.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the first article in this series.

Knowing How To Choose A Capable Texas Mortgage Lender

Tips To Find A Competent Mortgage Lender Suitable For Your Need In Texas

Part 1

Finding the right mortgage lenders has and will always be crucial for home buyers. Chances are that your mortgage lender will be enabling you to make the most significant investment of your life. In addition, your mortgage lender will be a part of your life for many years to come or even decades.

The following is a brief guide on how to find the best mortgage lender for you:

1. Find Out The Available Mortgage Options

Decide whether you want a hands-on lender or an online lender.

houston home bought with an FHA mortgage loan moderate incomeWhen you are finally ready to apply for a mortgage, you will have plenty of options. Credit unions, national banks, local banks, and mortgage lending institutions are some of the common options. Depending on your needs, any of them could double as your best mortgage lender. In case you are looking for a very hands-on experience, where you will be able to just walk into an individual’s office and ask questions, then a credit union or a local bank might be your best option. If you aren’t a big fan of the hands-on experience and just want the online experience, then there are online mortgage lenders who got you covered. It is smart to research a number of vendors in each category in order to find out which one provides the terms and services that are favorable to your needs.

Research mortgage types.

There are various kinds of mortgages, and you want to ensure that you choose a mortgage lender that offers the type of mortgage that best suits your needs. The following are some of the different kinds of mortgages:

  • Adjustable-rate Mortgages: After an early period of a low-interest rate – normally 3, 5, 7, or 10 years, the rate will adjust with the market. This makes payments unpredictable for the remaining period of the loan. However, this type of mortgage could be the most ideal option if you are planning on selling before the completion of the initial period.
  • Fixed-rate Mortgages: For this type of loan, the interest rate remains the same even for the entire period of the loan. This means that you will be able to predict your mortgage payments.
  • Conventional Loan: As the name suggests, this is a traditional loan. It can either be an adjustable rate or fixed -rate. The terms of this loan are based on your credit score, financial history, and down payment.
  • Government-backed Loans: VA, USDA, and FHA are some of the programs that are supported by the government. Generally, they are fixed-rate and need lower credit scores and lower down payments. However, each has specific requirements such as purchasing in a rural area, being a veteran, or passing income requirements.
  • Jumbo: This is a type of loan that surpasses the amount stipulated by the Federal Housing Finance Agency. These loans are normally used to purchased luxury homes or homes in markets that are highly competitive. Their requirements are different from those of smaller loans, for instance, they have a large down payment and require very high credit scores.

Check out customer reviews and company information.

Check out online customer reviews and carefully look through the company’s website to find out more about it. Narrow down to the mortgage lenders that offer the kinds of mortgages that you are looking for, provide the kind of customer service that you are yearning for, and have overall positive reviews.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the next article in this series.

Complete Guide When You’re Preparing For A Mortgage In Texas

Get Ready For A Texas Home Loan With These 10 Useful Tips

Part 2

6. Financing The Home Purchase

You will need to do some homework on the types of financing available to you, 30 or 15 years, fixed or adjustable mortgage, when looking to purchase a new home before choosing one that best suits your situation. A mortgage with a fixed rate is your best option if you want a guarantee and security that payments will remain the same over the life of the mortgage. A mortgage with an adjustable-rate, on the other hand, is a better fit for those who think that rates will fluctuate over the course of the mortgage and desire some wiggle room.

7. Your Options Increase As Your Down Payment Grows

While still being realistic as highlighted above, it is important to point out that the terms of the deal you get improve as you increase your down payment. As the years go by, in the world of mortgages, zero down payment offers are disappearing. You can be assured of making lower monthly payments if you start by making a higher deposit.

8. Penalties For Pre-payment

Some lenders may penalize borrowers for paying off their mortgage early; be sure to find out this first before taking up a mortgage. When borrowers receive a huge amount of money, it is common for them to increase their mortgage payments to ensure that the mortgage is paid up earlier. However, you should first find out whether paying your mortgage earlier will actually come with a penalty.

9. Make Mortgage Applications In A Strategic Way

Your credit rating is temporarily lowered by the hard inquiry made by lenders whenever you make a loan or mortgage application. You might end up lowering your credit score significantly by making numerous applications to a variety of lenders over an extended period. However, making a number of applications over a two week period is only treated as one inquiry; and thus won’t do much harm to your credit score.

10. You Might Have To Wait Longer To Own Your Own Home

While the prevailing rates may appear to be a once in a lifetime occurrence, it just might not be possible for everyone to get a mortgage at this time. However, you should not abandon your dreams just because you fall into this group. You should remember that the mortgage crisis came about as a result of borrowers biting off more than they can chew, and as the economy is still fluctuating, things could still change in your favor. The importance of proper timing cannot be further emphasized when it comes to huge investments such as buying a home.

Meet The Texas Mortgage Pros

Committed to offering all clients the best level of service when it comes to all their mortgage requirements, the team at Texas Mortgage Pros is made up of mortgage professionals distributed all over the state of Texas. From Houston, Dallas, Tomball, Spring, and Austin to The Woodlands, San Antonio, and Dallas, Texas we also offer numerous loan programs and the lowest rates. To ensure that you get a mortgage that is perfectly suited to your situation, meeting your specific expectations, our seasoned mortgage professionals will work closely with you. Our team of experts has what it takes to help you find the right loan at the best possible rate, whether you are refinancing an existing loan, or buying your first or dream home.

To ensure that we continue serving our customers for the foreseeable future, we aim to cultivate a long-lasting relationship with each one. We maintain the privacy of your information; a promise that the larger service providers cannot keep. Across the lending arena, our brand is widely trusted.

You can use any of the interactive features on our website or call us anytime to speak to a seasoned mortgage expert directly. We hope to work with you soon! Click here to go to the first article in this series.

Complete Guide When You’re Preparing For A Mortgage In Texas

Get Ready For A Texas Home Loan With These 10 Useful Tips

Part 1

Are you looking to purchase a property after checking your credit? Be one step ahead of the game by reading through the following tips before you go in to see your mortgage broker.

1. Check Your Credit

You should start by checking your credit report as that is also the first thing that most lenders usually do after being approached by borrowers. That point where you are actively trying to demonstrate that you are creditworthy to lenders, so as to increase the likelihood of getting the best deal, is also the best time for you to regularly track your credit. You not only want to ensure that no one is harming your credit score by illegally accessing you’re your credit but also want to ensure that your score is where you want it to and your credit report has no mistakes in it.

2. Prepare Accordingly

You will have a clearer idea of your credit status after consistently monitoring your credit report. Be sure to get any errors or concerns cleared up as soon as possible by consulting the three credit reference bureaus. Keeping tabs on your score over an extended period of time will also demonstrate how your score might be affected if your debt to credit ratio is very high. Immediately investigate common signs of identity theft such as any addresses or accounts included in your credit report that are not yours or you did not open.

3. Do Some Research

While the word research strikes fear into most people’s minds, we included, this time you won’t be reading up on the periodic table or mathematical theorems, as the stakes are much higher now. You have to do everything you can to get the best possible deal as you will not just be acquiring a new home you will also be making a lifelong investment. Before you agree to anything or sign any documents, comprehensively research brokers, rates, and loans. You are bound to be rewarded with a better deal if you get the tedious work done at this early stage.

4. Keep Your Expectations Realistic

You need to keep your feet on the ground regardless of how much you might want to get a new house. All your calculations should be based on the rate you can actually afford and not the rate you are hoping to get; for instance, if you can only be able to afford a five percent deposit avoid pegging your hopes on a lower rate that requires a higher deposit, such as twenty percent.

5. Step Into The Shoes Of Lenders

A borrower’s credit rating is representative of how confident lenders are of being repaid after providing them with borrowed funds; a lender’s decisions regarding the loan amount and rate to be charged are based on the credit rating. Simply put, you are more likely to get the rate and loan amount you want with a higher credit rating.

You can use any of the interactive features on our website or call us anytime to speak to a seasoned mortgage expert directly. We hope to work with you soon! Click here to go to the next article in this series.

Why Your Mortgage Lender Need So Much Information?

Certain Requirements For Your Home Loan Lender Protection In Texas

You might be wondering why lenders ask for so much personal information.

The truth is, lenders aren’t actually nosy. They are only looking to get all of the information they need for a protected or Qualified Mortgage.

The Consumer Financial Protection Bureau (CFPB) came up with what is known as a Qualified Mortgage (QM). This is a category specified for loans that place protections for lenders from being forced to purchase back a loan if the person borrowing defaults on his/her payments. In order to qualify for this, the lenders have to abide by the guidelines set forth by the CFPB in order to determine eligibility.

Lenders are looking to protect themselves during this type of process. Because of this, whenever possible, a lot of lenders look to make a home loan eligible for a Qualified Mortgage.

In order to grant one, they must prove that they followed all of the guidelines set forth by the CFPB when handing out a mortgage to a prospective home-buyer. By getting this information including proof of a buyer’s ability to pack back the loan, the more they will be protected. This is why lenders typically ask a lot of questions and dig into details.

What Are The Qualified Mortgage Rules?

Along with the eligibility requirements which are strict, they also come with other rules including:

  1. Mortgages are not to have terms for a loan exceeding 30 years.
  2. Mortgages are not to involve any type of condition or negative amortization that can increase the amount the borrower owes.
  3. They cannot have balloon payments included nor can they have larger payments that only go towards the interest of the loan.
  4. They must have specific limits on the debt to income ratio of the borrower and they must have limits on the total amount of upfront points and various fees the buyer is subject to.

Which Documents Should You Expect Your Lender To Ask You For?

You are likely to be required to provide the various documents that follow:

  1. Financial statements from your accounts for the previous two months
  2. The last two years worth of tax returns
  3. A detailed list of your assets
  4. A gift letter sent from whoever gave you any money that helped cover either or both of the down-payment and the respective closing costs
  5. Your full credit report
  6. Any recent pay stubs you have
  7. A real photo ID

What Type Of Questions Should You Expect?

Below, we will go over some of the questions you can expect to impact your financial standing:

  1. Have you ever been divorced? If so, what were the terms of the divorce?
  2. Have you ever been directly involved in any type of lawsuit?
  3. Have you ever sold a property through a short sale?
  4. How long have you held your current job?

The Texas Mortgage Pros

Our team at Texas Mortgage Pros consists of all kinds of mortgage professionals scattered all over the great state of Texas. We are fully committed to providing each and every single one of our clients with the best quality of service to handle any mortgage needs you might have. We offer a combination of the lowest rates and multiple loan programs respective to the availability in your area including Dallas, Austin, Houston, Woodlands, San Antonio, Spring, and Tomball, Texas. No matter if you are a first-time buyer, purchasing a home you always dreamed of, or you are refinancing a previous loan agreement, we have a team of highly trained and experienced professional loan officers to help assist you to identify the correct loan program at the best rate for you and your family.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today! 

Things To Consider When Finding A Capable Mortgage Lender In Texas

5 Tips To Help You Pick A Diligent Texas Mortgage Lender

Picking the right mortgage lender is one of the most difficult decisions that you will likely be faced with when you are considering a mortgage. There is a huge range of mortgage lenders out there, all vying for your attention. A lender is willing to accept you is a good start, but doesn’t, alone, mean that it’s the best deal for you. Here are a few tips to help you pick the best mortgage lender.

1. Consider Whether You Need A Broker

For some people, working with a broker makes sense. It can save you time and hassle by doing a lot of the work for you, but there are a few drawbacks to working with a mortgage broker. Brokers earn money by being a go-between, facilitating communications between the borrower and the lender. A bad broker might set borrowers up with the lender that pays them the most, rather than the one that is the best deal for that individual. So, it’s important to research the brokers you are thinking of using.

2. Small Vs Large Lenders

Are you looking to borrow from a small lender or a larger one? Do you value customer service, or do you want a lower interest rate? Small lenders tend to offer more personal service, while large lenders can often provide better value for money. Are you willing to accept being one of a huge list of customers, and dealing with a different person every time you need to pick up the phone?

3. Word Of Mouth As A Tool For Finding A Lender

You probably know a lot of people who own a house. Ask your friends, family, and co-workers about the lenders they used. It is easier to trust a broker, or a lender if you know people that have worked with them. You may get some advice that will help you to avoid a horror story too.

4. Your Estate Agent Is An Expert

Good estate agents can be a valuable resource, and won’t limit their recommendations to the lenders they work with in-house. A good loan officer will take an application that comes through an estate agent seriously. If your estate agent refers you to a lender, make sure the lender knows about the referral. Use the connection to break the ice, and to try to get a good deal on the closing costs.

5. Do Your Due Diligence

Even if a recommendation comes from a family member or an estate agent, it’s worth doing your own research and speaking to some clients that you don’t know. Look at online reviews, and be sure to bring up any questions you have with the lender during the initial consultation, so that you have peace of mind before going through with the deal.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today!

Hiring A Texas Mortgage Lender: What Are The Questions To Ask?

10 Important Questions To Ask Your Mortgage Broker Or Lender In Texas Part II

 

5. What Are All The Costs?

Mortgage lender fees also include third-party vendor fees such as credit reports, appraisals, pest inspection reports, title policy, taxes, recording fees, and escrow where applicable. The loan estimate should include an estimation of all these fees. Federal law requires that the broker or lender gives you a loan estimate when getting a mortgage loan. The lender should deliver the loan estimate when the loan application has been completed.

6. Is It Possible To Get A Loan Rate Lock?

Interest rates can change or fluctuate on a daily basis. If you believe that the interest rates are moving up, you should ask the lender if it’s possible to get the loan rate locked. A lender should charge zero to one point to lock the loan rate. Ask if the lender charges a fee for the service and whether the lock-in protects all the loan costs. Are they giving the loan lock-in writing and for how long will they lock the rate?

7. Are There Any Prepayment Penalties?

Some states don’t allow prepayment penalties. So, you need to ask about this. A prepayment penalty will allow the lender to collect an additional 6 months of unearned interest if you decide to pay off the loan early – ether by selling the property or through a refinance. If your state permits prepayment penalties, make sure you ask the lender how much it is. Get to know about the terms of the prepayment since some are in effect only during the first 2-5 years of the mortgage loan.

8. Will The Lender Approve The Loan In-house?

Make sure you get to know if the lender can handle its own underwriting or it’s assigned out. Underwriters will review the loan and issue certain conditions before rejecting/approving the mortgage. FHA and VA loans would take longer to process. But some lenders will automatically approve or disapprove a loan without sending it to the FHA or VA.

9. How Long Will You Take To Disburse The Loan?

The average time to process a loan is between 21 to 45 days. You should know about the closing date when writing a purchase contract. You should coordinate with the lender to get this date. Ask about the obstacles to closing the loan and how long the final application approval will take.

10. Do You Guarantee On-Time Closings?

Closing the transaction on time is important. Your lender should be able to give you a closing date with committing to the loan. You will have to face problems if the lender can’t disburse the loan on time. Ask about any increases in interest rates if the lock-in expires. What if you have to pay movers to reschedule? You need to ask all this from the lender before committing to the loan.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the first article in this series.

Hiring A Texas Mortgage Lender: What Are The Questions To Ask?

10 Important Questions To Ask Your Mortgage Broker Or Lender In Texas Part I

 

Are you planning to get a mortgage loan? If so, you need to ask the right questions from the mortgage broker or lender before committing to the loan. You need to know about the type of loan you are getting and whether it’s right for you. Not asking the right questions may lead to many problems after you get the loan. Unanticipated and hidden fees are a big issue with most mortgage loans. That’s why you need to continue to shop for the right mortgage broker or lender until you feel confident about the answers you are getting.

Having a solid relationship with the broker is important to get the best deal in town. You will get better assistance, advice, and accurate information from the broker the more he or she knows you. You shouldn’t hesitate to share your personal information with the broker or lender including permission to run your credit report to build a solid relationship with the broker. Here are 10 questions to ask the broker or lender before committing to the loan.

1. Which Type Of Mortgage Loan Is Best For You?

A good lender will want to know more about you and your goal before placing different loan options in front of you. You wouldn’t want a doctor to suggest surgery before knowing your medical condition and history. Likewise, the broker should gather sufficient information before offering the best type of loan for you. Ask the lender or broker to explain the pros and cons of adjustable-rate loans, fixed-rate loans, negative amortization loans, and interest-only loans. Check out how each option would fit in with your personal situation.

2. What Is The Annual Percentage Rate & Interest Rate?

The annual percentage rate (APR) of a mortgage loan is a complex calculation. It adds the interest rate and other related lender fees and divides the sum by the term of the loan. But all brokers don’t compute the APR correctly. On the other hand, you cannot accurately compute the APR rate for an adjustable loan. The APR won’t account for early payoffs either. Ask the lender about the adjustment frequency if the interest rate is adjustable. Also, don’t forget to ask about the highest rate or cap, the margin, index, and the maximum annual adjustment.

3. How Much Down Payment Is Needed?

The 20% down payment is not always mandatory. For example, if you are well-qualified for the loan, you can get away with a down payment of 3% for some types of loans. But there are pros and cons to a lower down payment. Make sure you ask the lender about all the options you have.

One disadvantage of a low down payment is you will have to pay for private mortgage insurance if you put less than 20% down. You will have to pay an increased monthly payment and more closing costs under such circumstances.

4. What Are The Origination Fees & Discount Points?

Each point will be equal to 1% of the loan amount. For example, two points on a $100,000 mortgage will cost you $2,000. The more points you pay, the lower your interest rate will be. Points are also tax-deductible. Most lenders have origination fees in addition to points. They are also known as lender fees. You should ask about lender fees when you are trying to get information on a lender’s or broker’s policy.

Contact our expert mortgage professionals, call us today, or use our interactive tools that are on offer on our site. We cant wait to meet you. Click here to go to the next article in this series.