What questions should I ask a mortgage lender in St. Marys ? If you’re dealing with a mortgage broker there’s some questions that you should ask both on your first meeting with the mortgage broker and throughout working with your mortgage broker to make sure that you’re getting the best service possible.
USDALoanInfoPA is going to go through 10 different questions that you can ask your mortgage lender in St. Marys. Be aware that your USDA Loan or Mortgage broker will be getting the loan that you need and the service that you want.
The first question that I think everyone should ask a mortgage broker is a pretty straightforward one.
How Much Will a Mortgage Broker Cost?
Most mortgage lenders in St. Marys actually work for free.
So it doesn’t actually cost you anything in order to do it.
They get money because they are paid by the banks when you successfully get a loan.
So they get a small commission of the loan that you apply for and if you get it.
Mortgages in 2019
So most mortgage brokers in St. Marys 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 require you to pay.
So, it’s important to ask, “How much will this cost me?” when assessing which mortgage broker you want to go with.
How much do Mortgage Lenders earn in commission from me and from my loan?
This is less to understand exactly how much they make.
You can see what percentage of commissions they make and things like that by visiting USDALoanInfo.
But it’s more to understand whether or not they’ll be willing to give you this information.
A transparent mortgage broker is someone that’d be willing to give you this information and you know that they have your best interest at heart.
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If they skirt around this issue and they don’t tell you how much they earn.
Well then that would send out red flags for me because I can’t trust them to put my best interest at heart because there are some circumstances where one loan will earn them more money than a loan that could potentially be better for me but not as good for them.
So, I’m just trying to establish whether or not this mortgage broker in St. Marys 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 you can trust the mortgage lender.
So ask that question and see how they respond.
Do Mortgage Lenders Invest Themselves?
Now, I don’t think a mortgage broker has to be a property investor in order for them to be able to get you a good loan and for them to help you successfully invest in property.
However, if they are interested in property in St. Marys, if they do invest themselves, then that is going to go a long way to help you because they understand what it’s like to be in your shoes.
They understand what you’re trying to get out of this and they’ve done it themselves so they can help you miss some of the pitfalls and things like that.
If they don’t invest themselves, then I would want to ask them, “Have you worked with many people that invest in property?” Because as mortgage brokers, some of them just work with people who are buying their own home.
How To Choose A Mortgage Lender
Some of the mortgage lender folk who work with people who are doing particular investment strategies.
So, some might work with people who invest in positive cash flow property or who invest in rural areas, who invest using developments.
In 2015 there are several types of different mortgage loans that are available. How do you wade through them to find out which one will be the best option for you? One way is to learn about the pros and cons for each type and then narrow the field from there. To that end, we will discuss a few of them and their pros and cons.
Fixed Mortgages vs. Adjustable Rate Mortgages
When you are looking at taking out a mortgage then you first need to decide whether you want one that has a fixed rate or one that has a rate that is adjustable. Every single type of mortgage will be either one or the other. Incidentally, you might also have a mortgage that combines the two. Here is a quick breakdown of the differences.
- Fixed Rate loans will have an interest rate that will remain the same for the duration of the loan. Due to this, your monthly payment will remain the same until the loan is completely repaid.
- Adjustable Rate loans have a rate of interest that can and will fluctuate. In many cases you will have a fixed rate of interest for the first year and then will change on a yearly basis. Loans that have this first 'fixed' period are the hybrid loans.
Loans of both types do have their pros and cons just as all things do. A pro for adjustable rate loans is that the interest rate that they begin with is often lower than that of a fixed rate loan. However, the interest rates in the future will vary and this can turn into a con quickly. The monthly payments on an adjustable rate mortgage can and often do rise exponentially the longer they are carried. Alternatively, a pro for the fixed rate loan is that your monthly payment amount will never change. However, due to that the rate of interest is generally higher.
Jumbo Loans or Conforming Loans
Aside from the basic types of loans there is another thing that must be considered. That is the actual size of the loan that you need. The amount of money that you are requesting will put your loan into one of two categories: jumbo loans or conforming loans. What is the difference?
- Jumbo Loans will be for an amount of money that exceeds the limits for conforming loans that are set forth by the Freddie Mac and Fannie Mae organizations. The lender of these types of loans will have a higher amount of risk than that which is experienced with a conforming loan. However, borrowers for this type of loan must have a credit history that is impeccable and must also come up with a substantial down payment as compared to what is necessary for a conforming loan. Additionally, interest rates for jumbo loans are typically higher when compared to the rates associated with a conforming loan.
- Conforming Loans are those that meet the parameters set forth by the Freddie Mac and Fannie Mae organizations. Typically these guidelines have to do with the size of the loan. Both Freddie Mac and Fannie Mae are entities that are controlled by the government. They both sell and purchase securities that are backed mortgages. In plain English, they buy the loans from various lenders where they are generated and then they sell those loans to various Wall Street investors. Conforming loans will be those that fall within their regulated size limits as well as those conforming to their other criteria.
Now that you have this information, making the decision as to which type you need should be a little easier.
So I would want to find a mortgage broker who either had that experience themselves or who had clients that they had got similar deals for ’cause that way I know that they can negotiate on my behalf and they can get this deal across the line.
What details do Lenders need from me?
It’s one thing to call up a mortgage broker and just to get an estimate of 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 might need pay slips; you might need proof of identity, all of that sort of stuff.
If you ask them up front, “What details do you need from me?” And when you go to your meeting with them you actually provide them with those details, well that just makes things so much easier.
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Remember, a mortgage lender is only paid once the deal goes through and once you actually get financing.
So the easier you make it for them, the more likely you are going to get better service.
What can I do as a client to make this go as smoothly as possible?
You have the goal of getting financed for your property, the mortgage lender has 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 I make things easy for you?” They’re the experts; they know what they’re doing.
They can tell you exactly what they need and then you can work hard to provide that for them so that they 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 that when there’s difficult customers that you don’t want to deal with, it just makes life so much harder and you don’t want to work hard for those people.
And when there’s customers who are really nice to you and who try really hard to help you provide them with the service you provide, you will bend over backwards to do anything you can for those customers to get them across the line, to help them as much as possible.
So, be one of those customers that the mortgage broker wants to bend over backwards to help you because you have their interest at heart as well.
You want to see them get paid.
You want to see them do an easy mortgage so they get paid easily.
And so you can develop a relationship into the future.
Which lenders can I borrow the most from?
Most people go into a mortgage broker looking for the cheapest interest rate possible.
What is the cheapest interest rate I can get? And the fact of the matter is a mortgage broker is likely to show you the banks that will lend you the amount of money you need and will also have the cheapest interest rate as well.
However, they might not showy ou banks that will lend you more money than you potentially need at the moment.
Now, it’s important to ask, “Which lenders can I borrow the most from?” because this will help you to project into the future.
Maybe you don’t need to know that for this loan right now but maybe, in the future, you might need to borrow money again and you know, or roughly my 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 up your deposit and invest in two investment properties instead of just one.
And so asking them, “Which lenders can I borrow the most from?” is a great question to ask to really understand your position.
Because, yes, interest rate is important but how much you can borrow is also important as well.
Can I see a full list of my borrowing options?
Most mortgage brokers will provide you with, usually, like a top three or sometimes only a top one.
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 want to see that they’re giving you the full amount of information.
And most mortgage brokers are good people but there are some dodgy mortgage brokers out there who are just trying to get the deal that gives them the biggest commission.
And so by asking to see a full list of what your borrowing options, you can then look at that and you can then assess, “Okay, well which loan do I think is going to be best for me?” rather than just taking the recommendation of the mortgage broker who may or may not be thinking about themselves.
So, again, most mortgage brokers are great people out there to help you but it’s always a good idea to get a full list of your borrowing options that are available.
Will this put a mark against my credit file?
And so this is when you’re trying to work out how much you’re going to borrow and stuff like that.
When you go into a bank and you try and find out how much you can borrow, often, the bank will do a credit check and this puts a mark against your credit file.
And what happens is if you have a lot of these marks against your credit file, even though it’s nothing bad, this can actually stop you getting a loan.
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 against my credit file?” ‘Cause it’s not bad to have a couple or whatever.
But if you’re getting lots and lots of marks against your credit file, then that could be an issue.
So just make sure and you know when a mark’s being put against your credit file and when a mark isn’t being put against your credit file.
How soon can I revalue or borrow again?
So if you’re investing in a property to renovate it or to develop it or even if you’re investing in a property that’s potentially under market value, you want to know how quickly can you revalue that property so you can get equity and then hopefully draw equity out of the property to go ahead and invest again.
There are 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.
And basically, this will give you an idea of how quickly you can revalue to consider going again.
You’re also going to want to ask them, “After I invest in this property, how soon can I borrow again or what do I need to do to put myself in a position to be able to borrow again and to purchase the next property?” Because hopefully, your goal isn’t just to purchase one property but to grow your property portfolio and to achieve that financial freedom and that financial security that you’re striving for.
Will My Loans be ‘cross-collateralised’?
Now, I have heard a lot of stories about investors whose loans have been cross-collateralised and it’s cause major problems when they’ve gone and sold their property because the bank shave been able to take that money and pay off debt.
And basically, you want to avoid this at all costs from what I hear.
And so, it’s good to ask your mortgage broker, “Will my loans be cross-collateralised in any way?” Generally going with the same lender for two loans does it by default, even though it doesn’t say they’re cross-collateralised.
So, it’s just something that you want to look at the fine print, you want to understand, “Are these cross-collateralised?” And if they are, try and avoid it, try and get loans that aren’t going to be cross-collateralised.
So there you have some questions to ask your mortgage broker next time you go and see a broker to find out how much you can borrow or get pre-approval or get financed for another property.
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There are many institutions that loan money to home buyers. Commercial banks, private lenders, credit unions, mortgage bank companies, insurance companies and pension funds. It can get confusing as things are always changing in the mortgage industry.
Policies, interest rates, mortgage programs, where the funds come from, and investors are all changing and can affect where, from who, and the type of mortgage you will get to purchase the property you have chosen. Certain entities may offer you better rates depending on your credit history, debt, income, and expenses. It is a good idea to shop many different resources so you can get the best deal possible.
The mortgage market is comprised of a primary and secondary market. These two markets work together to give money to a borrower and offer returns on investments to investors.
The primary market occurs on the retail end, meaning a mortgage lender sells directly to the consumer. You may use the services of a broker or loan officer in order to have this transaction run smoothly. This is the place where mortgages are originated and the money is given directly to the borrower. In the primary market, mortgage lenders make there money on processing fees. There are often many fees associated with getting a mortgage that the buyer is responsible for.
Because there can be many fees as charged by the mortgage lender, it is important to know exactly where your money is being spent. You should ask for an itemized report for every fee. Unfortunately there dishonest mortgage lenders and they will make up charges and fees that really don't have any effort or actual action behind them. This is how some borrowers can get scammed, and often they may not even know it!
The secondary market manages mortgages that have already been originated in the primary market. What occurs here is the mortgage lenders package many mortgages together and sell the notes to investors. Mortgage lenders replenish their cash reserves that can be used towards the origination of more mortgages. The investors make money off of the interest that is charged on the mortgages.
There are both private and public investors that buy these notes. Public investors include Fannie Mae, Ginnie Mae and Fannie Mac that are all government supported. Private investors may include banks, thrift institutions and other individual private investors.
The mortgage lender really has a circular pattern, originating loans, selling them to investors and then using that money from the sales to issue more loans.
Many times, you do not even know that your mortgage is going to be sold into the secondary market. However, the mortgage lender should always notify you of this transaction if the mortgage is sold to someone else. If you have questions about this process, you can ask your mortgage lender as to what his or her process is.
So when you purchase a mortgage, then you are working in the primary market. The secondary market is for mortgages that have already been originated by the mortgage lender and they are being bought and sold as investments for either private or public investors. This mortgage process keeps money flowing through the industry and makes more money available to the public to continue property.
How To Choose A Mortgage Lender
How's it going everyone? Matt Leighton, welcome back to another video.
In this episode, we are talking mortgages,lending.
I'm here with Rich Conlon from Atlantic CoastMortgage.
Say what's up Rich.
Hi, Rich Conlon, Atlantic Coast Mortgage.
Born and raised in Vienna, Virginia.
Love the area.
Still live in the area.
Just here to help out with my man Matt andhelp answer any questions.
Awesome, whenever someone has a mortgage questionfurther than "What is the rate?", I just tell them to talk to Rich.
I know a little bit about mortgages.
Buttoday we're talking about the top mistake people are making when they're applying fora loan.
You see all these loan commercials.
It's funny, when we get the primer, one-sheeterson the list of things NOT to do.
One of them is like, "Don't go and buy a boat".
Don't buy a new car.
I'm thinking to myself, nobody in the historyof loans has ever gone under contract and then bought a boat the day after.
I'm sure it has happened.
But it obviously is not the number one mistakepeople are making when they're trying to buy a home.
That's where Rich comes in.
Rich, you're on the spot here.
What is the number one thing people are doing,that they shouldn't be doing when they're applying for a loan with you guys? It's simple, it's before you even get to contract.
It's just waiting until the last minute toget pre-approved.
We understand circumstances sometimes that'sjust how it is.
The big thing is, after meeting your agent,talking about price ranges and goals, the next step, it can't hurt to just reach outto a lender or two or three and start identifying what you can actually qualify for.
That's the best thing.
The earlier the better.
Main reason is that it allows time to findany potential pitfalls that can come back in the underwriting process a week beforeclosing.
Last minute surprises are the worst.
Nobody wants that.
Getting pre-approved early is always better.
It allows time to figure out if there areany extra hoops to jump through.
That just gives you better piece of mind.
When you're out with your agent.
Definitively what you can and can't qualifyfor.
In addition, we always like to provide youwith estimates on homes that you're going to go see so when you're looking at them,the wheels are turning.
What are my payments going to be like? There's a ton of benefits to getting preapprovedearly, rather than waiting for the last minute.
And it is beneficial from the very beginningall the way to settlement.
It will make your transaction much more transparent,seamless, and less stressful.
It takes a village.
And it just helps when everything is linedup.
Yeah certainly execution is the number onething.
You can look online at how to apply for amortgage, what pitfalls to avoid, how to do this, how to do that.
At the end of the day, actually going out,going on your lender's website and getting preapproved.
You know when I'm working with buyers, I alwaysask two very important questions.
Number one: are you already working with areal estate agent.
I've not asked that in the past and it's comeback to bite me, believe it or not.
Well, it's very easy to believe actually.
And number two, are you pre-approved witha local lender? If you are looking for homes and you are notpre-qualified, you are not a serious buyer.
You are wasting your time.
You might say "well, I'll just get a letteronce I write a contract, it's fine".
Well, my buyers already have that letter andthey will beat you to the punch and get their offer in before you.
Nobody likes to get bad news.
You don't want to waste your time fallingin love with something that you ultimately don't qualify for.
We find that our clients 99% of the time arepre-approved early just makes your guy's time much more efficient and you know what youcan qualify for.
All of your processes are so streamlined justto a T that if you do them, you will get qualified, you will have your letter.
The reason you screw up is you go off astray,you don't return calls, you don't return emails.
We're a referral-based company so communicationis key.
Delivery, setting expectations and obviosulymeeting those expectations.
Pre-approvals we can do in as little as 24-hoursand especially in this market.
Spring time, summer time, that's what it takes.
That's how we like to operate.
And communicating to you and your agent sowe can all move quickly.
Awesome, there you have it from Rich Conlon,Atlantic Coast Mortgage here in Northern Virginia.
If you have any questions about the top mistakeor any mortgage and lending related questions, I'll list Rich's information in the descriptionbelow.
Thank you very much for watching.
Until next time, create a productive day.