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It is important to work with a trusted lending team when you are buying a home and applying for a home loan. The team you choose will review and analyze your most personal financial information, and ultimately procure a loan that may be in your life for up to 30 years!
Take a deep breath. Like many complicated processes, the best way to start is at the beginning, and educate yourself on each step of the process. Make a checklist, and attack each item one at a time. Bite-sized tasks are more easily accomplished, and if feels great to mark tasks off your list! Usually online lenders even provide a checklist specific to their unique process.
Most people are accustomed to paying bills and managing finances online. Lending institutions are following that lead. Shopping for a loan online can save a lot of time, and reduce the hassles of travel, missed phone calls, or waiting to speak to a representative in person at their office. Written responses allow for ease of comparison between lenders’ fees and the interest rate they are offering you.
Start your search for a Seattle mortgage lender well before you plan on house hunting, and make sure you reach out to a few different lenders for their specific loan terms.
Are you a first-time homebuyer? Are you selling your house and using equity to upsize or downsize? Looking for a vacation home or Pied-à-terre? The answer to this question will determine your path.
There are different mortgage programs for each category. The purchase of a vacation or second home may have additional, more strict underwriting requirements.
You can access your credit report, without charge, one time per year at www.freecreditreport.com. Avoid applying for additional lines of credit, or unnecessarily checking your credit report, as this can lower your credit score.
Each person is unique. Make sure that credit card balances are well below their limits, and don’t leave any “phantom” or unused cards. Charge a tank of gas each month, or make some other small purchase, then pay off the card completely.
Do you have unpaid medical collections on your report? This is actually, quite common. Some lenders will you require that you pay them in full. A knowledgeable mortgage broker should be able to assist with this. Don’t have enough lines of credit?
Look into a pre-paid credit card through your bank. The three major credit reporting agencies are Equifax, Experian & Transunion. If there is an error on your credit report, the agencies are required to rectify the problem. Any change to your credit report can take at least 30 days, so cleaning off inconsistencies in advance of home shopping is beneficial. More about how to improve your credit score.
Not every review is accurate, but you should be able to get a good feel for the individual lender and their support staff. Is there a negative review that concerns you? Speak directly with your lender for an explanation.
More and more homebuyers are starting their search for a mortgage and a new home online. While buying a home without seeing it in person is a bad idea, completing a mortgage without visiting an actual office is becoming the norm. Comparing mortgage rates and fees is becoming easier and easier for a consumer as lenders openly post real-time rates.
As a consumer it is important you understand the difference between a lender posting static best-case scenario rates vs. a lender posting real rates based on key information entered by the consumer. Working with a lender that is transparent with their rates helps ensure they are competitive and eliminates big surprises when it comes time to lock a rate. Sammamish Mortgage has been a leader in rate transparency and has posted online rates for over 10 years. You can access current rates through our Interest Rate Quote tool 24/7.
Talk to friends, family or your Realtor. Have they had a good experience with a specific lender? Can they share what worked well and what they would improve? Keep in mind that everyone has a unique financial situation and individual personalities.
Is this person returning messages or emails in a timely manner? Do they have knowledgeable team members and assistants? Are they completely answering your questions? Any answers will be memorialized in writing, and you can go back and review as often as you like. All lenders are required to be licensed through their State’s department of financial regulations. Really want to dig deep? You can verify that they are currently in good standing and have no formal suspensions or complaints. In the state of Washington, check https://dfi.wa.gov/consumers/verify-license
Ideally, you will be able to scan your financial documents and save them on your computer in a PDF file. Most lenders have a secure portal available online where you can download your files and monitor the underwriting progress in real-time. Locate and scan: your 2 most recent tax returns; most recent 401(k) or investment statement; 2 months of pay stubs, and 3 months of your bank statements, FOR ALL ACCOUNTS under your name.
Underwriters will review your spending habits, as well as your deposit history. Be prepared to explain any withdrawals or deposits that may seem out of the ordinary. Scan updated paperwork as it becomes available so that you are ready to submit the documents when asked. A secure portal on your lender’s website ensures the utmost privacy and reduces the need to duplicate document requests due to lost or misplaced paperwork.
Years ago, a buyer would be required to make a down payment of 20% of the purchase price of the home in order to qualify. Many lenders today will approve a loan with 3% or 5% down payment. This flexibility allows homeowners to hold on to their liquid funds, and perhaps have a cushion in times of emergency. Interest rates may vary depending on the amount of down payment available. In some situations, a lender may require personal mortgage insurance (PMI) for lower down payment loans.
Your lender should provide these fees in writing, along with an estimate of other anticipated fees. As you will have these items in writing, it should make it fairly easy to compare with other possible lenders. Most fees are paid on the day of closing, but some lenders require items such as appraisal or credit report fees to be paid shortly after initial application and approval.
In addition to lender fees, generally a buyer can anticipate paying title insurance, attorney fees (in some states) and, on occasion, local transfer tax. When purchasing in an area with a homeowner’s association, be sure to add that monthly or quarterly fee to your budget. Standard mortgage payments include principal, interest, and PMI (where applicable). Your association fee will be paid separately to your management company.
While there are many online lenders it is important to choose a company that gives you the support and service that you will be needed during this challenging process. Look for online mortgage lenders with an established presence and reputation like Sammamish Mortgage online lender in Seattle.
Online lending has made the home buying process less time consuming and more convenient. The ability to submit documents online and personally track the loan process removes a lot of anxiety and guesswork from the process. Most lenders indicate that this system reduces the time to closing day by up to 2 weeks. Most importantly, it allows verifiable information and the ability to compare programs, fees & interest rates offered by each company.
If you take out a home loan that is higher than a certain limit, your mortgage will be considered a “jumbo loan.” That’s because of loan limits, which are dollar limits placed on mortgages. For conforming loans, loan limits are capos that are placed on loans that Freddie Mac and Fannie Mae will purchase or guarantee. For FHA loans, loan limits are dollar caps on loans that the FHA backs.
VA loan limits have been eliminated. But some borrowers may still be subject to them if they currently have a couple of VA loans or have defaulted on one in the past.
Loan limits are assigned to every county in the country and usually increase at the start of every year to reflect the growth in home prices.
Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
Sammamish Mortgage is a local lending firm serving Seattle and its amazing neighborhoods, including Queen Anne, Fremont, Magnolia, and Green Lake. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have any questions or are ready to apply for a home loan.
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