Friday, October 25, 2013

Shopping for a Loan through Reputable Mortgage Companies

    Many of today’s potential homebuyers believe that the lending standards to obtain a mortgage remain too tight, since the collapse of the economy years ago. However, there are many mortgage opportunities for individuals, even those without perfect credit. Mortgage companies offer a variety of options without the need to jump through hoops just to obtain a loan.

    Even so, purchasing a home can be a very complicated process. However, by following certain steps, obtaining a loan through mortgage companies is quite possible.

Starting Out

    For nearly everyone, buying a home is likely the biggest single purchase they will ever make during their lifetime. The only way that many potential homeowners can afford to buy a house is by taking out a long-term mortgage, using the property that is being purchased as collateral.

    Shopping for the best home is essential to the process. However, before you can begin shopping its best to pre-qualify for a mortgage so that you understand exactly how much home you can buy based on your financial constraints. Purchasing a home can be successful and manageable if select a home that fits your specific needs at a price you can afford.

Loan Options

    Mortgage companies offer a variety of loans for the homeowner. Available financing options include:

  • Fixed Rate Mortgages – A fixed rate offers a monthly mortgage payment in an amount that never changes over the course of the loan. Standard fixed rate mortgages are usually offered for a length of the term that lasts 15 years or 30 years.
  • Adjustable Rate Mortgages – An ARM (adjustable rate mortgage) will adjust with current market interest rates. A beginning ARM with a low-rate could quickly become a high monthly payment if market interest rates escalate dramatically.
  • Subprime Mortgages

    Many potential homebuyers turned to subprime mortgages when experiencing credit problems. While “no-income verification” loans were once available everywhere, many subprime mortgages still have extensive qualification processes to ensure you can afford the monthly payment.

Other Available Mortgages

There are other options available for securing a mortgage, including a balloon payment, jumbo loan, assumable loans, two step loans, short-term construction loans, and even seller financing.

Securing the Loan

    Securing the loan through mortgage companies usually involves a tremendous amount of paperwork. In fact, the lender will need a complete credit history detailing all the past payment performance to determine your current financial status. In addition, the lender will need your current and previous employment records along with a detailed list of your financial assets and liabilities.

    The information you provide to the mortgage company will help to determine exactly how much money you can afford to pay every month for your mortgage, and the interest rate. The information will help determine whether you qualify for a fixed mortgage rate, an adjustable rate, or will need to apply for a sub-prime mortgage.

    The mortgage company will pull your credit reports from one or more of the credit report agencies and base a lot of their decision-making on your FICO score. The higher the score, the lower interest rate you will pay, and the easier it will be to qualify for a loan.

Closing the Deal

    Once all the information has been accumulated, and the determination on interest rates and loan amount available, your loan will need to be approved by the underwriter. This part of the process includes a home appraisal to determine the actual value of the house based on the asking price. Many problems during the appraisal process can slowdown the approval for the loan.

    Once the approval has been made on the loan, all the information is turned over to a local title agency all the monies in escrow and the transfer of the title. The title agency ensures that the lineage of ownership is intact, and that all the legal documents necessary for the transaction are handled properly.

    Shopping prices between mortgage companies is essential to ensure you are getting the best interest rate and terms on the loan. Interest rates and fees charged by lenders vary greatly between companies. In addition, each company offer different terms to the loans they provide. You should seek out the mortgage company that offers the best service with the lowest rate and fees, like Affiliated Bank and Mortgage, for example.