Frequently Asked Mortgage Questions
Good credit starts at 700 but maxes out around 760, depending on which lender you go with. If you are considering an FHA mortgage then good credit starts at 660. Credit score operate in increments of 20pt brackets so a 660 will be viewed as the same score all the way up to a 679. A 740 all the way up to 759 and so on.
There are two ways to start the process, either by filling out the application online and then speaking to the loan officer with any questions you may have or the other way around. Speaking to the loan officer (to make sure you like/trust them) and then filling out the application. The application can be done over the phone or online, whichever is easiest for you. The process itself only take ~15 minutes and is intended to get a general idea of what you would like to accomplish and, more importantly, able to accomplish. It will ask for personal/sensitive data like your full name, DOB, current address and your SSN so make sure you have done your research and checked them out online. A great way to look someone up is to stay local and keep the keywords outstanding. For example, you could search: best mortgage broker in Tacoma. That is a highly competitive position on google and will likely lead you only to reputable & local loan officers in your area.
There are three main points you should consider when it comes to qualifying for a mortgage. The industry refers to it as the 3 C's. Credit, Collateral and Capacity. Your credit score is an indicator of your likelihood to make things work, even when money is tight, so the higher the better. If you believe you have a score in the upper 600 range, you are looking good. Collateral has to do with your down payment. Around Seattle there are two major options, one is with Fannie Mae/Freddie Mac and called "Conventional Financing" wile the other is Gennie Mae and called "FHA Financing". Conventional requires a minimum of 3% if you have moderate to low income (under 100k/yr) or 5% down for those over the income limits. FHA only requires 3.5% for their down payment and does not have income limitations. For people with low down payments, FHA is by far the most common method of purchasing a home. Lastly Capacity has to do with your ability to repay the loan. The lender calculates this ability with a term called Debt to Income or DTI which is a ratio of your gross income vs. how much you owe in credit, auto, student loan and personal loan debts. The DTI ratio calculates only the minimum payments on these debts and is not concerned with anything that does not show up on a credit report like, cell phones, auto insurance, water bills, etc.
Seattle Jumbo loans start at anything above $726,525. Because of the high price point for Seattle, the median purchase price in 2018 has hovered right around $550,000. The thing to note about loan limits is they have to do with the amount you are borrowing, not buying. For example; you are purchasing a home for $825,000 but have a $100,000 down payment. This would put your loan amount into the conforming high-balance limit because you are only borrowing $725,000.
Getting pre approved for a home loan is a lot easier than you may think. There are only two steps and if you are a list oriented person, the process is a breeze.
First you should find the loan officer you want to work with, once you have had a chance to speak to a couple and have weighed the pros/cons of each you can move onto step two, the application.
Most applications can be completed online or, if you prefer, over the phone during the first step. Filling out the online paperwork should take less than 15 minutes and it will only ask questions you’re sure to know the answers to, make sure to supply the documentation the loan office lists out for you in the phone call/follow up email so they can thoroughly review your qualifications.
Pro-tip; if you are issued a pre approval or pre qualification letter and you have not supplied your supporting mortgage documentation, you need to be wary of your loan officers commitment to you, they have not done their job thoroughly enough for you to shop for your home confidently.
Once you have completed these simple two steps your pre approval can be issued, typically on the same day!
What is the average fee for a mortgage broker?
Mortgage broker fees can vary widely and can be shown in a way that some would say are 'hidden' so make sure to ask your loan officer about ALL of the fees their office charges. A couple major fees that you will see are: loan officer origination charges, processing fees, credit report fee and underwriting fee. If the loan officer responds to you with, the fees are paid by the lender, this is not them dodging the question. In most cases, the Loan Origination fee is paid to the loan officer directly by the lender, however the processing, credit and underwriting fees can still be added to your total out of pocket costs as they are typically not considered a mortgage broker fee.
Down payment assistance can come in many forms. If it is part of the lender's portfolio of products or you are looking for a local program provided by the state or county then you can expect to pay more in interest rate as well as more restrictive loan terms. One of the major down payment assistance programs in the Tacoma area is actually a loan that requires you to pay it off when you sell the house or refinance. Given that there is a higher rate, more restrictive terms AND you have to pay it back makes the 'free down payment option' something that should only be considered as a last resort.
Your pre approval is a snapshot of your ability to repay a loan. As long as your finances don't change, including credit score your home loan pre approval can be easily extended. Major factors that encumber your pre approval, post issuing are: opening new credit like getting a new car, co-signing on a loan for someone and changing jobs. If you are buying a house, do not do any of these things.
Most lenders are willing to go down to a credit score as low as a 640. Please keep in mind your free credit scores like Credit Karma use a more generous scoring model than the mortgage lender. If your score say 640 on a free site, chances are your score is actually in the 500's.
Down payment assistance can come in many forms. If it is part of the lender's portfolio of products or you are looking for a local program provided by the state or county then you can expect to pay more in interest rate as well as more restrictive loan terms. One of the major down payment assistance programs in the Tacoma Washington area is actually a loan that requires you to pay it off when you sell the house or refinance. Given that there is a higher rate, more restrictive terms AND you have to pay it back makes the 'free down payment option' something that should only be considered as a last resort.
The best mortgage lenders in Tacoma are those that originate and process your file, by themselves, from start to finish.
The reason this matters is; a 'dropped ball' or 'falling between the cracks' is most likely to happen when your file is handed off to another person. When you work with a loan officer that processes their own files the chances of something causing an issue last minute are greatly diminished. You can check this for yourself with a quick google search; "best mortgage broker in Tacoma" call a few at the top (that are not ads) and ask if they process their own files. Then go to Yelp and look for the loan officers who have less than a 4 star rating and ask the same question. The answer is almost 100% identical. The people who process their own files have a higher customer satisfaction rating than those who use a second person to process their clients financing.
Mortgage brokers, especially local and small are going to be your best bet for a great rate/fee combination.
If the person you are working with has multiple layers of management, processors, major marketing and a large brick and mortar set up to house it all, you are the one who pays for it. Go with local and keep it small. If you can find someone who has a ton of experience, great reviews and is a one stop shop, chances are their going to offer you something so competitive even the credit unions wont be able to compete.
Lending With a Purpose
Lending With a Purpose is more than a tagline; it’s what drives us to be our best. At SMB we understand each mortgage we provide helps a family locally but also has the ability to provide sustainable, salubrious economic opportunity to those most in need.
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