When Do I Talk To My Mortgage Professional

When Do I Talk To My Mortgage Professional

The process of buying a home can be a challenging and confusing search. Years ago, people would walk in to the local real estate office, or look in the newspaper and go to see some houses. Somewhere in there they would go to their local bank and talk to someone about getting a mortgage. Sometimes they would even find the house they wanted to buy and then try to sell their current home. Sellers would wait. Banks were faster. 
Those days are gone. 
Successfully obtaining a mortgage can be like attending your first high school dance - solo.
Who do you talk to? Where do you stand? What do you need to have? When do you start?
There are no absolute answers that work for all buyers. There are as many different types of mortgages as types of buyers. Just as in finding the right realtor to work with, so too you must find the right mortgage professional. This can be a long and intimate process and one should work with whom they feel comfortable. Just like in shoes, everyone finds their own fit.
Buyers use their own banks sometimes and other times use mortgage bankers. If you have sterling credit and the enough money to make a large down payment, you will probably be able to use any bank you want and get a decent deal.
For the rest of us, we may need to use a not "conventional" mortgage product to get the home we want.
Often when starting out, especially in the high priced NYC area, people will buy a home with 3.5% down. That is 3.5% of the purchase price of the home. This is usually an FHA mortgage, meaning that the federal government is providing mortgage insurance to the bank in case of default on the buyer's part. It is believed to be more likely for default to occur if the homeowner does not have a lot of equity in the home. (Equity = the difference between how much the home can be sold for and how much is owed). Because of this, low down payment loans usually require either MIP -mortgage insurance premium, or PMI - private mortgage insurance, to offset the risk of default. People who have served in the Armed Forces may have an option for a VA loan. These can be mortgages with 0% down payment.  
VA home loans link 
A conventional mortgage is a mortgage that is not a government program. 
There are many types available and interest rate, down payment amount and term (length of time the money is borrowed) are all things to be discussed with your banker as you select the type of mortgage you want.
Your mortgage person and your realtor should be in communication about how and what you can buy and also what you are comfortable buying. There are always costs apart from the mortgage that go along with home ownership. Some of those are homeowner's insurance (required to be purchased and kept in force by all lending institutions) and property taxes. It is possible to have both of these costs escrowed (the annual cost divided over 12 months and held bank that holds your mortgage) and this can be very helpful for new home owners. 
Because taxes, types of mortgages, amount of down payments and other kinds of special programs that a buyer might be eligible for are so varied, it is important for a buyer to be armed with this information before they begin the search for their home.
In fact, most realtors will not show property to individuals who have not been prequalified by a mortgage banker. Realtors have a responsibility to open homes only for those who are able to buy them and this reason alone is enough to require a prequalification.
Another reason to have a prequalification and a good rapport with realtor, buyer and banker is that as the hunt for the home is narrowing, the communication between all parties can facilitate the decisions.
Want to buy a house? Consult with a mortgage banker. Your realtor can recommend some bankers, your banker can recommend a realtor or you can self select and hope they work well together. 
Once you know what you can buy and what you are willing to buy (not always the same thing) the hunt can begin!! 

Mary Kingsley Headshot
Phone: 917-292-5378
Dated: November 8th 2013
Views: 5,697
About Mary: I have a long background in public service. I am a Registered Nurse with a BA and an MPS in Health C...

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