Mortgages are considered one of the largest and most important types of loans you may take throughout your life. Because of the amount of money you are going to get, being approved for a mortgage with favorable terms is not always very simple. Before you think of the mortgage lender, you are going to consider your financial abilities for the debt repayment.
- Are you looking for a long term mortgage offering you more interest repayment and smaller monthly principal?
- Do you have a bad credit score and want to qualify for any conditions the financial institution offers?
- Or are you looking for a 0% down payment?
All of these options are available if you are eligible for a financial institution’s requirements. Now let’s see what institutions are the best mortgage lenders that fit best to your needs.
How to get the best mortgage deals?
Buying a house requires a great amount of time for researching the options and planning your finances. If you think being approved for mortgages is as easy as for a car loan or consumer loan, you are wrong. Lenders take into consideration more factors when calculating the probability of mortgage going default. Let’s see what can help you to get the best deal in the marketplace
A good credit score
Financial institutions mostly base their decision on the credit score of the borrower. That’s because your credit score illustrates your credit history. If you have a high credit score, the financial institution considers you a less risky client who will make the payments on time without going overdue and whose mortgage will most likely close.
So, make sure your credit score is good. In that case, the institution will charge you less interest considering you are a good planner of your finances. However, even if you do not have a good credit score, the lender may still approve your application by charging more annual percentage yield.
There is no law to regulate the price floor of down payment, and it depends on the financial institution’s policies.
For many, down payment is one of the most critical factors in the process of mortgage lending. Typically you will see the percentages vary from 3-5% from the value of the entire property.
Making a down payment will also reduce your principal amount right from the start, so you have to pay less in the future.
Note that financial institution will most likely evaluate whether you can make the down payment or not and base their decision based on this as well.
Get a Pre-Approval
Before searching for a mortgage lender, it would be beneficial for you to get a pre-approval. It will create an accurate and fair picture of how much you can afford and gives you an opportunity to shortlist the houses you can buy for yourself.
The process of getting a pre-approval is straightforward. It requires you to contact a lender (note that the lender may not be the one you have to consider in the future) and submit your supporting documents.
After the evaluation is done, they will send you the pre-approval, and you can see whether the terms and conditions of the offered mortgage are favorable for you.
As mortgages are long term and require higher than average cash flow, it is very important to show the financial institution that your earnings and employment are consistent.
When evaluating your finances, lenders take into consideration the permanent job of the borrower as a primary source of income. So, you should make sure that by the time you apply for a mortgage, you have consistency in both your job and monthly income.
How to choose a mortgage lender?
You may be surprised to see the number of financial institutions offering mortgage loans and the variation between their terms and conditions.
That is because each loan is designed in a way to accommodate potential borrowers’ financial needs. The first thing you need to do before considering the mortgage lender is to evaluate your financial health.
Whether you have a bad credit history or low monthly income, the terms of a mortgage loan may vary from each other significantly.
Consider that mortgage loans are long term and usually take you 15-30 years to pay off the debt.
Quicken loans are the largest loan originators in the U.S. by their volume. They offer a fast, online application process to save your time and satisfy your needs.
The method of applying for a Quicken mortgage loan is straightforward. When you enter the website, start by choosing what type of loan you need. Is it a mortgage refinancing loan or a home purchase loan? Quicken loan offers you the best deals for the mortgages capturing your needs.
The website asks you about whether you need a single-family or multi-family house, what is your credit score, whether you have taken mortgage before or not.
It also takes into consideration the amount of money you want to spend on buying the house and how much down payment you can make. Quicken Loans is very successful and has nationwide awareness as it has built the mortgage application so simple for the borrower.
It offers competitive rates as well, which makes them the best overall mortgage lender.
SoFi company, which is short for Social Finance, started as a student loan refinancing company and rapidly grew, offering many other financial services to capture trending market needs.
When submitting your application, the first thing you need to do is to pre-qualify for the mortgage. It will take you 2-3 minutes to get pre-qualified, which will not affect your credit score.
The next step is selecting your loan, which matches your financial goals and applying for it online. Just like getting loans from financial institutions, this application also takes about 30 days to finish and receive funds from SoFi.
If you have a low credit score and think it will be a barrier for getting a mortgage, you are wrong. New American Funding looks at every application separately before its approval or denial.
Many online lending websites are constructed in a way that if your credit score is below some point, the algorithm automatically denies the application.
Because New American Funding views at every request individually, the chances of approval are increased. Even though it is favorable for you to have at least 580 credit score, New American Funding highlights your savings and monthly income as essential variables in decision making.
Not only you will most likely get the credit with New American Funding, but you will also have the opportunity to increase your credit score.
Another famous online mortgage lending company is Lenda, which is now renamed to Reali. It offers secure and user-friendly pre-qualifications and estimates for refinancing through its website.
Reali also provides concierge service providing a personalized experience with a mortgage loan advisor to work with you since the start of the application until the closing.
The website gives you the opportunity to track the process of your request and be up to date. One of Reali’s competitive advantages is that it doesn’t have origination fees on your mortgage.
You can have 24/7 access to your loan and its progress as well as it is a transparent platform that automates the refinancing process.
The drawbacks of Reali is that it has limited access and currently operates only in some of the states.
The Vylla mortgage products include pretty much everything. You can get a conventional mortgage, a jumbo loan up to $3 million, mortgages from Federal House Administration (FHA mortgages), Department of Veteran Affairs (VA mortgages). Homebuyers have the opportunity to choose the maturity of loans being 15, 20 or 30 years.
They also have the requirement of a minimum credit score of 620 and a minimum down payment of 3%. Additional data for considering your application includes previous rental payments, bank statements, etc.
So, even if your credit score is lower than 620, you may still have a chance of getting approved if your other payments are made on time.
Alliant Credit Union offers mortgages which are advantageous for the first time home buyers. It offers both fixed and variable rate mortgages, and you can qualify for a down payment as low as 3%.
Think about it; if you apply for $250,000 mortgage the down payment you will need to make will be equal to $7,500. Another exciting feature offered by Alliant Credit Union is the calculator to see what’s the amount of mortgage your application will get approved for.
It also checks if you should get refinancing or not, compares mortgage terms for different maturity dates and adjustable-rate mortgages calculator.
The good thing is that there are no prepayment penalties with Alliant. If you are thinking of choosing between 15 or 30-year mortgages, there are different factors to consider. First of all, the shorter the loan term the less interest you will pay for the loan.
However, the principal repayment will be more substantial in case of the 15-year mortgage than on 30. Yet, if you choose a 30-year mortgage and make payments ahead of your repayment schedule, no penalties will be charged.
Therefore, you can repay your loan earlier with less accrued interest and principal amount.
The website is very user-friendly and allows you to learn about qualifying interest rates by inputting just a few details regarding the type of home you want and the estimated credit amount. Firstly, the website provides only a short overview of each type of loan they have.
The interesting fact about the website is that they think that no matter which type will be more favorable to you, it would be better to form a solid understanding of the types of products the company offers.
You can browse and see the types of loans they provide as well as the annual percentage yields. After which you can insert your personal information and see which kind of loan is more suitable for you.
SunTrust has an enormous role in the financial market of the U.S. At SunTrust, the team takes home mortgage applications individually and views each of them separately.
What they do is offering a suite of mortgages besides the government-backed loans, including significant amount mortgages and high-cost home financing.
The website offers mortgages for different target groups such as future doctors with their Doctor Loan program, advantages for first time home buyers or refinancing programs.
Like many other websites, SunTrust also has calculators for rates of your mortgages, whether it is worth refinancing and calculations of your monthly payments.
They want you to make the right decision concerning the type of mortgage you choose, and that is why SunTrust holds a discussion with you face-to-face or over the phone.
You are at the core of their mission to fulfill customers’ needs and wants, and they do their best to satisfy you.
Chase is one of the largest banks not only in the U.S. but worldwide. It offers various financial services to its users, among which are mortgages.
Unlike the other financial institutions and online platforms discussed above, Chase provides face to face interaction with mortgage loan specialist prior to lending your funds.
It is one of the largest banks in the U.S.; it has more than 5,300 branches and nearly half of the American households as their direct users of products like credit cards, deposits, and other banking services.
Even though it does not offer the most advantageous rates in the market, it is highly competitive. However, if you want to get excellent customer service and be informed about mortgage loans from the start, Chase is just the right option for you.
To get an approval from Chase, you’ll need to meet several requirements concerning your financial health.
Your minimum credit score should be 620, and you need to make a down payment of at least 3% of the approved funds.
As a mortgage lender, BNC National Bank aims to provide services combining both face-to-face communication with their skilled loan officers as well as advanced digitized tools. For those looking for buying a house, BNC National Bank offers conventional loans with fixed and adjustable rates up to $3.5 million.
To get such a huge amount, you should have a credit score of at least 620 and make a down payment of 3%.
The bank also considers other factors prior to the approval of your application. Such factors include your day to day expenses such as cell phone service expenses, utilities, etc. If you pay your daily expenses on time, the chances of being approved from BNC National Bank is relatively high.
Not everyone can qualify for a mortgage loan as they are the most significant and riskiest loans in the market. Even though nowadays, market offers are abundant and you can get a mortgage by having a low credit score as well, make sure you get your credit score in shape in the near future. If you have a low credit score, it means you are a risky customer for a financial institution, and they will charge you a higher interest rate compared to the one having a high credit score.
Make sure you accurately evaluate your financial needs and get pre-approved for the mortgage. It will give you an advantage of getting better terms when bidding against other buyers. You can also get pre-approval from different lenders after which compare rates and terms to see which one has more favorable conditions.
Another thing for you to consider is that mortgage, in a sense, requires an immediate cash flow in the form of a down payment. Most of the financial institutions are most likely to have the requirement of the down payment from 3-5%. Many of the discussed platforms and banks have an online mortgage payment calculator where you can see your cash flow for the next years of mortgage repayment.
Be aware that mortgage is probably the largest loan you will ever take, and it requires long term investment. Make sure you are aware of the terms of the mortgage loan and plan your future budget accordingly.
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