In this post, USDALoanInfoPA wants to talk about hiring a really good loan officer or Mortgage Lender in Pennsylvania and the importance of doing that, especially when searching for a USDA Loan in Pennsylvania.
We want to give you a real-life scenario that happened to a buyer who was searching for a mortgage lender in Pennsylvania this week. This should serve as a sample to really drive home the point on how important it is to hire and make sure you get a really good loan officer.
USDALoanInfoPA believes that you should search for an honest mortgage lender, no matter where your house buying adventure takes you.
To get started with our Mortgage Lender example, we find ourselves taking a buyer call with what happened. One of our officers had just got back from vacation and found out that there was a problem with the USDA Loan in Pennsylvania. The lender that the prospect had hired actually made an error which delayed three days of the process!
Chastin J. MilesBlockedUnblockFollowFollowingDec 22, 2015Before you start searching for a home, the first questions you need to ask is “How Much Can I Afford?” Unless you plan on paying all cash for your home, this is not a question you can answer on your own. You will need the assistance of a mortgage loan officer. A mortgage loan officer will be the one to qualify you for a home loan or commonly referred to as a mortgage.There a different mortgage programs available but they do all have different qualification requirements and different terms. Your specific financial situation will determine the type of loan that would be best for you. One very common type of loan is a FHA loan. Recently, I interviewed one of my loan partners so that he could give us all a better understanding of the FHA loan. This is what he had to say:Chastin: What is an FHA loan?Daniel: An FHA loan is a federal housing administration loan. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments. It is designed to be an affordable alternative to help more people live the American dream of home ownership. FHA loans are popular with mortgage borrowers because of lower down payment requirements and less stringent lending standards.Chastin: What are the qualifications for an FHA loan?Daniel: Someone like me, a DIRECT LENDER can go right to the government guidelines with no investor overlays, with that being said it is required per FHA guidelines to have a 580 credit score minimum with established credit history. The higher your score, the better interest rate one will be approved for. Your DTI ratios have to be below 43% for scores under 620, and 57% for scores over 620. And of course the 3.5% down payment, which can be gifted from friends family etc.Chastin: What is “DTI” for first time home buyers?Daniel: Ah yes, debt-to-income ratio. It is the mathematical equation of your monthly debt obligation associated with your CREDIT REPORT and other LIABILITIES (child support, alimony are good examples and it does not include utility bills or anything of that nature) divided by your monthly income. For example someone with a $300 car payment $50 in credit card minimum payments and $150 student loan payment, would have $500 in monthly obligations plus proposed housing payment divided by income for DTI ratio.Chastin: What is the minimum down payment required for FHA loan?Daniel: Minimum down payment is 3.5% of the borrowers own money or gift. It cannot come from seller concessions or selling party. All money needs to be sourced and verified. A good real estate agent like yourself can typically get closing costs covered by the listing party requiring the borrower to only come with the 3.5% to the tableChastin: What do you think personally of FHA loans?Daniel: My personal opinion- it is a great cheap alternative one can use to get into a new home. I think a lot of first time home buyers should utilize the 3.5% down payment keeping maximum liquidity in your financial situation, after all in DFW you break even on your investment into a home shortly after a year of ownership with the market appreciating so much. OR perhaps use FHA to build credit and equity into a home, as you better position yourself financially you can refinance into a conventional loan to drop the mortgage insurance required on FHA mortgages. It also is more lenient than pretty much every other mortgage product out there, which makes it easier to be approved for if you have financial struggles recently.There you have it, thats an FHA loan. I’m sure that didn’t answer all of your questions about it but it should have given you a pretty good basis. If you have other questions, stay tuned. We will be doing a video interview very shortly where we get into more detail about it.
The Mortgage Lender wasn’t using the builders lender so what happened is the Builder was charging them $300 per day for every day they did not close.
The prospective client was getting hit with a $900 bill the good thing is they had a really good loan officer with a really good company and they basically stepped up to the plate and paid that bill!
Here, you might be thinking to yourself well yeah of course they should and you’re absolutely right. They should but, we have been on the end where these lending companies not they’re just like ‘hey we’re sorry this stuff happens it’s not our fault we’ll get the loan done as quick as we can’.
There’s situations, especially in this market right here in Pennsylvania that we’re in – meaning we are in a seller’s market – where, if you don’t close on time and there’s a backup offer that’s better than yours on a pre-owned home.
If that happens, they might just cancel the contract and they let it expire and take the other offer.
If you’re working with a builder or if it’s on a relocation company, there’s a per diem every day if you don’t close and it could wind up into hundreds if not thousands of dollars.
If you’re searching for a Mortgage Lender in Pennsylvania, you need to make sure the lending company that you hire is:
-Understands the USDA Eligibility Guidelines
AND is someone who’s going to do the right thing. USDALoanInfoPA suggests that you always ask for references.
The best place to start is your real estate agent if they’ve been in the business a while they should have a really good relationship with a really good loan officer and mortgage lender company.
Mortgage Lenders in Pennsylvania: Here’s how to Apply for a USDA Loan
The USDA Home Loan Program is a government insured 100% program offered through the United States Department of Agriculture. This loan is available exclusively to USDA approved lenders. Most people living in rural areas qualify for USDA. Also, many people living in medium sized cities as well as those living on the outskirts of major metropolitan areas may also qualify. To find out if you qualify for a no down payment, or to learn more, use the contact form on the right side of the page.
USDA Home Loan Eligibility
The USDA program is the best option for those looking for a fixed rate, no money down mortgage with no mortgage insurance.
However, the USDA has restrictions on applicants' eligibility; most notably, income and location requirements. Use the resources below to see if you might qualified
To get answers for a specific question, or to begin the application process, use the contact form to the right.
Income Eligibility Calculator (new)
Income Requirement Details
Income Requirements by Location
General Eligibility Requirements
Guidelines Provided by the USDA
Top 6 Reasons you'll Love the USDA Home Loan
1. A True 100% No Money Down Loan
2. There are no Limits as to the Amount You Can Borrow
3. No Mortgage Insurance
4. No Credit Score Required
5. Seller Concessions Allowed
6. The Rural Areas Are Not Necessarily That Rural
If interest rates are low when you apply for your loan, the fixed rate variety will offer you the best value, and you can count on your loan payment staying the same year after year.
Can Collections Keep You From Getting A USDA Loan
What questions should I ask a mortgage broker?If you're dealing with a mortgage broker there's some questions that you should ask both onyour first meeting with the mortgage broker and throughout working with your mortgagebroker to make sure that you're getting the best service possible.
I'm going to go through10 different questions that you can ask your broker to make sure you're getting the loanthat you need and the service that you want.
The first question that I think everyone shouldask a mortgage broker is a pretty straightforward one.
And that's, "How much will it cost me?"Most mortgage brokers actually work for free.
So it doesn't actually cost you anything inorder to do it.
They get money because they are paid by the banks when you successfullyget a loan.
So they get a small commission of the loan that you apply for and if youget it.
So most mortgage brokers will work for free and it won't cost you anything.
However,there are some mortgage brokers out there who do require deposits or who do requireyou to pay.
So, it's important to ask, "How much will this cost me?" when assessing whichmortgage broker you want to go with.
Another question that you want to ask themortgage broker is simply, "How much do you earn in commission from me and from my loan?"This is less to understand exactly how much they make.
If you want to understand how muchmortgage brokers make, I've done an episode on that, which you can check out at onproperty.
And you can see what percentage of commissions they make and things like that.
But it's moreto understand whether or not they'll be willing to give you this information.
A transparentmortgage broker is someone that'd be willing to give you this information and you knowthat they have your best interest at heart.
If they skirt around this issue and they don'ttell you how much they earn.
Well then that would send out red flags for me because Ican't trust them to put my best interest at heart because there are some circumstanceswhere one loan will earn them more money than a loan that could potentially be better forme but not as good for them.
So, I'm just trying to establish whether or not this mortgagebroker is someone that I can trust.
And by asking them the big question, the money question,"How much will you earn from me?" That's a great way to understand whether or not youcan trust them.
So ask that question and see how they respond.
Question number three is, "Do you invest yourself?"Now, I don't think a mortgage broker has to be a property investor in order for them tobe able to get you a good loan and for them to help you successfully invest in property.
However, if they are interested in property, if they do invest themselves, then that isgoing to go a long way to help you because they understand what it's like to be in yourshoes.
They understand what you're trying to get out of this and they've done it themselvesso they can help you miss some of the pitfalls and things like that.
If they don't investthemselves, then I would want to ask them, "Have you worked with many people that investin property?" Because as mortgage brokers, some of them just work with people who arebuying their own home.
Some of them work with people who are doing particular investmentstrategies.
So, some might work with people who invest in positive cash flow propertyor who invest in rural areas, who invest using developments.
So I would want to find a mortgagebroker who either had that experience themselves or who had clients that they had got similardeals for 'cause that way I know that they can negotiate on my behalf and they can getthis deal across the line.
The next question will be, "What details doyou need from me?" It's one thing to call up a mortgage broker and just to get an estimateof your borrowing capacity but if you're going through pre-approval and stuff like that,then you're going to need to provide the mortgage broker with more in-depth details.
You mightneed pay slips; you might need proof of identity, all of that sort of stuff.
If you ask themupfront, "What details do you need from me?" And when you go to your meeting with themyou actually provide them with those details, well that just makes things so much easier.
Remember, a mortgage broker is only paid once the deal goes through and once you actuallyget financing.
So the easier you make it for them, the more likely you are going to getbetter service.
Which leads me to my next question is, "Howcan I make your life easier?" Or "What can I do as a client to make this go as smoothlyas possible?" You have the goal of getting financed for your property, the mortgage brokerhas a goal of you getting financed for your property and no one wants it to be difficult.
And so, if you can ask the mortgage broker, "Look, how can I work with you? How can Imake things easy for you?" They're the experts; they know what they're doing.
They can tellyou exactly what they need and then you can work hard to provide that for them so thatthey can get everything across the line as quickly as possible.
You know, I have customers,I deal with customers and even though I'm not a mortgage broker myself, I know thatwhen there's difficult customers that you don't want to deal with, it just makes lifeso much harder and you don't want to work hard for those people.
And when there's customerswho are really nice to you and who try really hard to help you provide them with the serviceyou provide, you will bend over backwards to do anything you can for those customersto get them across the line, to help them as much as possible.
So, be one of those customersthat the mortgage broker wants to bend over backwards to help you because you have theirinterest at heart as well.
You want to see them get paid.
You want to see them do aneasy mortgage so they get paid easily.
And so you can develop a relationship into thefuture.
So ask them, "How can I make your life easier?" Next question is, "Which lenders can I borrowthe most from?" Most people go into a mortgage broker looking for the cheapest interest ratepossible.
What is the cheapest interest rate I can get? And the fact of the matter is amortgage broker is likely to show you the banks that will lend you the amount of moneyyou need and will also have the cheapest interest rate as well.
However, they might not showyou banks that will lend you more money than you potentially need at the moment.
Now, it'simportant to ask, "Which lenders can I borrow the most from?" because this will help youto project into the future.
Maybe you don't need to know that for this loan right nowbut maybe, in the future, you might need to borrow money again and you know, or roughlymy borrowing capacity is this.
Or if you find out which lenders you can borrow more from,and you find that you can actually borrow an extra $300,000, well you might split upyour deposit and invest in two investment properties instead of just one.
And so askingthem, "Which lenders can I borrow the most from?" is a great question to ask to reallyunderstand your position.
Because, yes, interest rate is important but how much you can borrowis also important as well.
Another question to ask your mortgage brokeris, "Can I see a full list of my borrowing options?" Most mortgage brokers will provideyou with, usually, like a top three or sometimes only a top one.
"This is the one that I recommendfor you.
" And I always like to think, "Can I see a full list of my borrowing options?"Again, this is less to say you want to go through all of this in minute detail and see.
You're probably going to still choose from one of the top three ones.
But you just wantto see that they're giving you the full amount of information.
And most mortgage brokersare good people but there are some dodgy mortgage brokers out there who are just trying to getthe deal that gives them the biggest commission.
And so by asking to see a full list of whatyour borrowing options, you can then look at that and you can then assess, "Okay, wellwhich loan do I think is going to be best for me?" rather than just taking the recommendationof the mortgage broker who may or may not be thinking about themselves.
So, again, mostmortgage brokers are great people out there to help you but it's always a good idea toget a full list of your borrowing options that are available.
Next question to ask is, "Will this put amark against my credit file?" And so this is when you're trying to work out how muchyou're going to borrow and stuff like that.
When you go into a bank and you try and findout how much you can borrow, often, the bank will do a credit check and this puts a markagainst your credit file.
And what happens is if you have a lot of these marks againstyour credit file, even though it's nothing bad, this can actually stop you getting aloan.
So, talk to your mortgage broker and when you're looking at, "What can I borrow?"or your looking at getting pre-approval, just understand, "Will this put a mark againstmy credit file?" 'Cause it's not bad to have a couple or whatever.
But if you're gettinglots and lots of marks against your credit file, then that could be an issue.
So justmake sure and you know when a mark's being put against your credit file and when a markisn't being put against your credit file.
Second last question to ask is, "How sooncan I revalue or borrow again?" So if you're investing in a property to renovate it orto develop it or even if you're investing in a property that's potentially under marketvalue, you want to know how quickly can you revalue that property so you can get equityand then hopefully draw equity out of the property to go ahead and invest again.
Thereare a lot of lenders out there who don't allow you to revalue within a 12-month period.
So,speak to your mortgage broker about the lenders that will allow you to revalue faster.
Andbasically, this will give you an idea of how quickly you can revalue to consider goingagain.
You're also going to want to ask them, "After I invest in this property, how sooncan I borrow again or what do I need to do to put myself in a position to be able toborrow again and to purchase the next property?" Because hopefully, your goal isn't just topurchase one property but to grow your property portfolio and to achieve that financial freedomand that financial security that you're striving for.
And last question is, "Will my loans be cross-collateralised?"Now, I have heard a lot of stories about investors whose loans have been cross-collateralisedand it's cause major problems when they've gone and sold their property because the bankshave been able to take that money and pay off debt.
And basically, you want to avoidthis at all costs from what I hear.
And so, it's good to ask your mortgage broker, "Willmy loans be cross-collateralised in any way?" Generally going with the same lender for twoloans does it by default, even though it doesn't say they're cross-collateralised.
So, it'sjust something that you want to look at the fine print, you want to understand, "Are thesecross-collateralised?" And if they are, try and avoid it, try and get loans that aren'tgoing to be cross-collateralised.
So there you have some questions to ask yourmortgage broker next time you go and see a broker to find out how much you can borrowor get pre-approval or get financed for another property.
So I hope that has been helpful to you.
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So until next time, guys, stay positive.
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