What questions should I ask a mortgage lender in Carbondale ? 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 Carbondale. 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 Carbondale 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.
Lender's Mortgage Insurance Explained
So most mortgage brokers in Carbondale 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.
Is a USDA Loan Right For You?
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 Carbondale 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 Carbondale, 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.
NSH MortgageBlockedUnblockFollowFollowingMay 3, 2017USDA Home Loan: Is This Your Right Mortgage Choice?USDA Mortgages versus FHA which is better. NSH Mortgage has the wisdom and tools to help you with the financial benefits USDA Mortgage loans provides you. You decided finally to buy your first home so you must consider all that goes into this decision in finding your ideal home.You want to find the ideal home in a good neighborhood. It should fit your budget and possess the right amenities. Once you have found the property, you have another important decision to make how you will finance it.Today’s market offers several programs that makes buying your very first home much easier and there is no right loan choice for everyone. The correct loan is the one that suits your situation the best. Two extremely popular options amongst homebuyers are the USDA Rural Development loan and the FHA home loan.They are both low down payment loans, but beyond that, they are very different. You might be surprised at which one is the right choice for you.Four Ways USDA Or FHA Might Be BetterWhat if you could get a no down payment loan with comparable mortgage rates to FHA? And, what if that loan allows you to finance closing costs, even without ultra high credit scores? Is such a loan too good to be true?The loan actually does exist, and it is called the U.S. Department of Agriculture (USDA) Rural Development home loan. It is rising in popularity among first time home buyers. A USDA home loan is different from a traditional mortgage in several ways.But that does not make them inaccessible. In fact, some features of USDA make them more attainable compared to FHA.1. Zero Down Financing Plus MoreUSDA loans require no down payment and you may finance up to 100% of the property value, which, sometimes, is above the home’s purchase price. In these cases, the buyer can finance closing costs. Here is how it works, you make an offer on a home for $200,000.The lender’s official appraisal report states the home is worth $205,000. The buyer can open a loan for the full value and since the excess funds are applied to the closing costs such as the title report and loan origination fees. Excess funds can even be used to prepay property taxes and homeowner’s insurance.So, in the end, the buyer pays even less than no down payment. Home buyers typically pay something out of pocket, even if they put nothing down. Closing costs can add thousands of dollars to the necessary cash to close figure.Even most renters must put up a security deposit, plus a few months rent. But with USDA, there is a chance the buyer can walk into a home paying nothing from their own bank account. With FHA, the homebuyer must come up with a 3.5 percent down payment, plus closing costs.FHA has no guideline stating that the loan amount can exceed the purchase price. The only way to get a zero out of pocket loan with FHA is to get a down payment gift, plus additional gift funds or seller contributions for closing costs. USDA is more flexible, so buyers with little cash on hand should look into this option first.2. USDA’s Rural Location RequirementUSDA eligibility depends on the location of the home. You must purchase a property in a rural area as defined by the USDA. Based on U.S. census information from more than 15 years ago.So, many solidly suburban areas are still eligible. USDA publishes online maps with which buyers can check the eligibility of a certain address or geographical area. Buyers will find that some entire states are USDA eligible.Even highly populated states contain surprisingly vast USDA eligible areas. An estimated 97% of the American landscape is geographically eligible for a USDA loan. Still, some buyers might find that eligible areas are too far outside employment centers, and therefore choose a FHA loan, which comes with no geographical restrictions.3. USDA Income LimitsThe Rural Development loan was created to spur homeownership in rural areas, especially among home buyers who would not otherwise qualify. As such, USDA publishes income limits. Maximums are set at 115% of the median income for the county or area.That amounts to adequately non restrictive limits and the following are some examples of maximum annual incomes in various locales around the country.Denver, Colorado: $94,600Portland, Oregon: $84,550Philadelphia, Pennsylvania: $93,750Albany County, Wyoming: $85,700Not everyone will fall within USDA income limits. That is where FHA comes in the FHA loans comes with absolutely no income limits for its standard program.4. The Owner Occupied RuleYou do not have to be a first time home buyer for either FHA or USDA. However, for both loan types, you cannot own adequate housing within a reasonable distance of the home being purchased. For instance, if you own a three bedroom house, you cannot use FHA or USDA to buy another three bedroom house down the street.You must also plan to live in the home you buy. Rental and investment housing is not allowed under USDA or FHA. Both loans have the same goal: get individuals and families into their own homes.Neither loan permits activity that could be interpreted as a real estate investor building a portfolio.USDA And FHA Mortgage Insurance PremiumsSimilar to the Federal Housing Administration’s FHA mortgage, the USDA uses homeowner paid mortgage insurance premiums to keep the USDA home loan program viable for future home buyers. But USDA mortgage insurance premiums are cheaper than those of FHA, and have recently dropped even further. Beginning in October 1, 2016 USDA reduced its mortgage insurance premiums.The upfront mortgage insurance, which is financed onto your loan balance, dropped from 2.75% to one percent. Likewise, the monthly premium fell 15 basis points (0.15%) to just 0.35%. Compare USDA mortgage insurance to that of FHA and you will immediately see the significant savings.The FHA upfront mortgage insurance premium is 1.75 percent and the monthly fee is typically 0.85 percent of the loan balance, divided equally into 12 installments and included with each mortgage payment. The following table compares the upfront fees and monthly costs on a $250,000 mortgage loan after October 1, 2016.The mortgage insurance savings alone could be enough to push some FHA buyers to USDA, if the zero down payment feature was not reason enough.USDA Loans vs FHA: Ease Of QualifyingThere is no stated maximum loan size for the USDA loan programs. The amount you can borrow is limited by your household’s debt to income (DTI) ratio, the comparison between your monthly debt payments and gross income. Essentially, a homeowner who makes $6,000 per month and $2,000 in monthly debt payments has a DTI of 33%.The USDA typically limits debt to income ratios to 41%, except when the borrower has a credit score over 660, stable employment, or can show a demonstrated ability to save. These mortgage application strengths listed above are often called compensating factors and can play a big role in getting approved for any mortgage not just USDA. Both FHA and USDA mortgage options have pros and cons:No down payment: USDA loans only, FHA is 3.5 percentLocation freedom: FHA primarily, USDA is restrictedIncome limitation: USDA only, FHA has no capsMortgage Insurance Premiums: USDA is cheaperRebound buyers: FHA is more flexible after foreclosureUsually, home buyers that qualify for a USDA rural home loan should go in that direction. With comparable rates, lower mortgage insurance premiums and the opportunity for a 100 percent financing. USDA Rural Development loans make sense for many of today’s suburban home buyer.
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.
How To Choose A Mortgage Lender When Buying a Home
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.
If you are in the market, looking at properties and you want to see some high rental yield properties, then I’ve got 10 property listings that I’ve gone out and found for you guys.
You can see what high rental yield properties look like that are likely to generate a positive cash flow.
Did You Know – You Can Get Pre-Approved for a USDA Loan in Carbondale?
People are often overwhelmed by the many different types of loans available today. Are you contemplating buying a property? If you have an idea of what you are looking for and your desired price range, consider a USDA Loan.
USDA Loans are supported by the United States Department of Agriculture. In the past this type of loan was referred to as a "farmer's loan." However, contrary to what many people may think, this loan is not just for farmers. This Loan is only used for homes purchased in rural areas. Note that some homes are considered rural even when the population is 10,000 or less. In some cases home ins cities with a population of 10,000 to 25,000 are also eligible.
Benefits to USDA Loan applicants:
• No Down payment required
• 30-year Fixed Rate Mortgages (low rates)
• Loans may cover up to 100% of appraisal
Are you eligible for a USDA Loan?
• Must be U.S. citizen, or legally permitted resident
• Adjusted annual income less than limit established by United States Dept. of Agriculture
• Have average credit history (provides proof of repayments)
Why is a USDA Loan right for me?
• Provide an opportunity for individuals who do not have a high credit score, but show capability to make payments.
• No mortgage insurance payment each month
• No down payment which can save you money for home renovations and improvements.
Take advantage now of the benefits available for USDA Loans and finally settle into the dream home you have been looking for.
A "New" Loan Product USDA Loan Guarantees
A question I hear quite a bit about the USDA Loan looks at collections. It's pretty common to hear "I have a few old collections, are they going to keep me from being able to get the Rural USDA Program."
It's always a good idea to know what is on your credit report and so it could be a good idea to head on over to annual credit report dot com and pick up a free copy. Then you can be sure that all the info on it is correct, if it isn't you can dispute it immediately.
Anytime you see a collection on your credit report you'll want to let your USDA Home Loan Representative know about them right away because certain types of collections can have a damaging impact on if your lending agency can get clear title. Which basically means that individual collection could end up as a lien on the property. Normally, simply paying off an old collection before you close will be okay. Just be sure to speak with your loan officer before paying off any old negative credit items, because it could work against you.
And any lien on title is required to be paid off before the USDA Loan can fund.
Now the Rural USDA Program relies on the lender to provide good quality loans and the USDA requirements say that the LENDER must make a decision if an open collection account would need to be paid at closing or before closing. In the current mortgage market, these rules will be different from lender to lender and will also change as time goes on as tougher regulations hold the specific loan agent responsible for their loan determinations.
Any time there is a collection on the credit report, be sure to provide a written letter explaining the what caused the collection and that those problems have been eliminated.