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Shopping for the best mortgage lender for you has its challenges. You want to feel comfortable and confident when you are putting in an offer on your dream home, and that takes the assistance from a loan officer you can trust. This blog post provides things to think about when looking for home financing for purchasing a home in Seattle, Bellevue, Kirkland or greater Washington.
When you’re making such a significant investment like purchasing a home you want to make sure you are working with a lender you can trust. These days there are a lot of options from online lenders, brokers, banks, and more. And sifting through your choices can be intimidating.
There are a few steps that you can take to decide what lender is the right one for you. You’ll want to take a look at your finances and make improvements if need be, shop around to compare lenders’ offerings and decide if you prefer an online lender or an in-person lender to find the best home financing for you.
A crucial part of getting prepared for applying for home financing is getting to know your financial picture and improving it. Imagine your home loan application as a snapshot of your financial picture.
The snapshot will determine how much you are able to borrow and what interest rate you will pay over the life of the loan, so it’s important that it’s as positive as possible. A better financial picture may open you up to more loan programs and more lenders may want to work with you so you’ll have more options to choose from.
Start with your credit score. Your credit score plays a key role in determining the interest rate you receive on your mortgage. A lender sees you as less of a risk in paying back the loan if you have a higher credit score and will most likely be able to offer you a lower interest rate. If you qualify for a lower interest rate you could save thousands of dollars over the life of your home loan.
There are three credit bureaus that you can use to find your FICO credit score; those are Experian, TransUnion, and Equifax. Look over your credit report for accuracy and take action to make any needed corrections or improvements.
Improving your credit score is something that takes time so make sure you factor that into your timeline before applying for home financing if you need to. There are many websites out there that you can use to receive weekly updates on your credit score such as Credit Karma or Credit Sesame.
Next, determine a dollar range for what you are willing to spend on your monthly mortgage payment. Just because you are approved to borrow so much money, it doesn’t mean you have to borrow all of it.
A lender will look at your debt-to-income ratio. To calculate your debt-to-income ratio add up all of your monthly debts and divide that sum by your monthly income. A standard debt-to-income ratio is 43%. When calculating your debt-to-income ratio a lender doesn’t look at monthly expenses such as groceries, childcare, or your cell phone bill so this is why it’s good to determine what you’re comfortable spending each month.
Knowing your whole financial picture and making it the best it could be will open you up to more mortgage lenders and more mortgage products which will help you find the best mortgage fit possible.
You will have your mortgage for 15-30 years so it’s good to shop around and compare your options. Different lenders may offer different loan programs and products so researching or having an idea of what loan types are out there and their requirements is beneficial. The five most commonly used home loans are FHA, Conventional, Jumbo, VA, and USDA.
You’ll also want to compare rates and fees between different lenders that are involved in the homebuying process. Upfront costs could include appraisal and inspection fees. You could also expect to pay closing costs which include costs like title fees, loan origination fees, credit report fees, and document preparation fees.
Some lenders add these costs to your principal so paying back those fees are spread out over the life of the loan, which is why it’s important not to just look at your cash due at closing when selecting a lender.
When shopping for lenders be sure to ask what fees you will be charged, how much they will be, and if you will pay them outright or over the life of the loan so you can be prepared and choose a lender that you are most comfortable with.
Next, you’ll want to compare mortgage interest rates among the lenders you are interested in. Most lenders will be able to give you a rate quote before you apply for financing. When comparing lenders it’s important to compare costs at the same interest rate or the rates available with similar costs to get a solid apple to apple comparison. It’s important to know that the lowest rate may not be the best option if the costs are substantial.
Recouping these costs can often take years. Variances in the terms available between different lenders can add up to thousands of dollars upfront and tens of thousands over the life of the loan. Talking to just one lender your Realtor or friend referred you to could end up being an extremely costly mistake.
After you have chosen a lender to work with, be sure that you are comfortable with the Loan Officer that you are working with. Your Loan Officer should be knowledgeable about the Seattle, Bellevue, and greater Washington area.
Your Loan Officer should also know the ins and outs of home financing and be able to answer all of your questions throughout the process. A good Loan Officer will also ask you questions about your goals and finances, beyond what is included on your mortgage application so they get to know your goals and whole financial picture so they can make sure you are getting the best loan program for your situation.
If you find a Loan Officer that is pushy or giving you a bad feeling it’s often a good idea to look elsewhere.
These days, homebuyers are inundated with different ways to get home financing whether the lender is online or in-person so there is a lot to take into consideration when deciding which lender is the best for you. An online lender will most likely be able to offer you a lower rate than an in-person lender.
An online lender will assess your financial situation based on your loan application and offer the convenience of being able to apply for home financing and electronically sign your documents from anywhere at any time. When working with an online lender it is vital that you have an easy point of contact and you are not dialing in to a call center that can land you with a different person every time you call.
If you are not comfortable communicating via phone, email or online working with an in-person lender or a lender that offers the flexibility of meeting face to face or doing everything online may be your best option. For you working with an in-person Loan Officer may be unrealistic given your schedule, traffic, kids or just time to dedicate to obtaining a mortgage in general.
This is where multiple communication options and new technology making it easier to get the required documents signed and delivered can make the process much easier.
There you have it! When looking for the best mortgage lender for you in Seattle, Bellevue or Kirkland there is a lot to take into consideration. Make sure you are financially prepared so you are open to as many opportunities as possible, compare lenders’ rates and offers, and ultimately work with a lender that you trust and are comfortable with.
Borrowers should understand loan limits, which are dollar caps placed in a mortgage. For conforming loans, loan limits are caps 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.
Every county in the country is assigned its own loan limit to reflect the increase in home prices.
Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
At Sammamish Mortgage, we’ve helped countless borrowers across Washington, Oregon, Colorado, and Idaho since 1992. We offer a variety of mortgage programs for you to choose from, and looking forward to helping you get approved for the mortgage you need to buy a home in WA. Contact us today to get started!
Home buyers in Washington State tend to have a lot of questions when it comes to closing. We’ve answered some of these questions in previous blog posts. Today, we’ll talk about what home buyers can expect during the week.
Down payment percentages are based on the home price. So, a more expensive property will result in a larger upfront investment, with all other things being equal.