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How To Find A Good Mortgage

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Shop Around For A Cheaper Loan

Mortgages : How to Find a Good Mortgage Lender

A mortgage should never be ‘set and forget’. Regularly shopping around for the best available loan can have real financial pay-offs. The ACCC has found that simply renegotiating with your lender to pay the same interest rate as a new borrower can save you up to $850 a year for an average-sized loan, and even more for some borrowers. Switching banks can save you tens of thousands of dollars over the life of the loan.

Mortgage Payment Protection Insurance

Sometimes called accident, sickness and unemployment insurance , MPPI is supposed to cover your payments if you have an accident, become ill, or you’re made redundant.

You can get limited help from the Government in these circumstances but, at best, it will only cover your interest. So it’s sensible to consider, before you take out a mortgage, how you would manage to meet your repayments if these events happened.

MPPI isn’t a bad policy but it can be quite pricey and has been mis-sold in the past to people who couldn’t actually claim on it. This can happen because the insurer doesn’t carry out any checks when you first apply, only when you go to make a claim.

Since the onset of coronavirus, many providers have actually withdrawn the unemployment part of MPPI. This means that anyone taking out a new policy will struggle to be covered in the event of redundancy. Existing customers won’t be affected by this.

If you suspect that your job might be at risk in future, try your best to get a guarantee that the MPPI would pay out.

What to ask before taking out MPPI

If you do decide to take out an MPPI policy, check carefully:

  • That it will pay out if you claim
  • When it will pay
  • How much it’ll pay and for how long

Ensure you understand all the terms and conditions before signing on the dotted line.

There’s no harm in getting a quote from your broker for MPPI, but make sure that you compare with other policies to see if it’s a good deal.

How To Find A Good Mortgage For Purchasing Property

By | Submitted On July 06, 2009

A Mortgage has become an eminent part of purchasing property. As a borrower after approval of mortgage loan you are responsible to repay the debt along with the interest every month and failure to do so will not just add penalty but can also have an effect on your house ownership in many ways. Therefore when you take a mortgage loan you must remember that you are not just entering into a big commitment but also the money involved is quite huge. Hence it is important to find a good mortgage lender.

For this you must shop widely for all credit lenders and banks and see which credit plan setting makes you relaxed. It is better to broaden your search and analyze all offers available. Find out benefits the lenders offers along with the mortgage. After all spending so much money as interest definitely entitles you as an important client of the credit lender or the bank. After studying all the aspects of the loan offer narrow down your search to the banks and credit lenders that you find apt to your requirements.

Another option is hiring a real estate agent. Every Realtor has his own in-house loan officer. But for business purpose many real estate agent carry their own list of preferred loan officers other than the in-house agents too. In return for their referrals these real estate agents make a small percentage. You can always talk to the loan officers they direct you to but it is better to see all other options before taking the decision.

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I’ve Heard Some Brokers Do Cashback How Do I Get This

It’s worth asking what commission your broker’s getting for arranging the mortgage. This should be stated on the last page of the mortgage illustration too it’s likely to be between 0.35% and 0.5% of the mortgage value. So on a £100,000 mortgage, the commission or ‘proc’ fee they get will be between £350 and £500.

It’s worth asking if they’re prepared to rebate any of their commission as cashback to you when the mortgage completes, especially if you’re paying a fee for their services as well.

You’re more likely to be able to strike a deal on larger mortgages , but the broker’s well within their rights to say no, whatever the final income they get from arranging your mortgage.

Build Your Credit Score And Know Your History

How to Find a Good Loan Officer

When you apply for a housing loan, mortgage lenders will check your financial history and credit score. A low rating and bad financial payment history greatly affect mortgage rates. If your standing is good, you will have better chances of negotiating a fair rate with potential mortgage lenders.

Review your credit score make sure it is accurate and error-free. There are three trusted leading credit bureaus that can give you reliable reports: TransUnion, Equifax, and Experian.

Next, get your financial status in shape. Pay off debts that have high-interest and lower levels of debt as soon as possible. Doing this will make your income-to-debt ratio significantly better. Paying off recurring loans and credit cards will also free up more of your budget freeing up more money to pay mortgage loans.

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What Is A Good Mortgage Rate

You know what goes into calculating your rate, but what’s the magic number? How low does your interest rate have to be to qualify as good?

Unfortunately, the answer isn’t necessarily all that straightforward. After reviewing all the factors that influence them, youll see that interest rates are complicated. Good is usually a relative term when it comes to rates, so let’s look at a few ways to level-set.

Whats A Good Mortgage Rate Today

Mortgage rates change all the time. So a good mortgage rate could look drastically different from one day to the next.

Throughout the first half of 2021, the best mortgage rates have been in the high-2% range. And a good mortgage rate has been around 3% to 3.25%.

Of course, these numbers vary a lot from one borrower to the next, as we explain below.

Top-tier borrowers could see mortgage rates in the 2.5-3% range at the same time lower-credit borrowers are seeing rates in the high-3% to 4% range.

In addition, looking forward in 2021, interest rates seem likely to increase. So a good mortgage rate later this year could be substantially higher than what it is today.

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How Do I Compare Mortgage Rates Between Lenders

You can apply for prequalification with multiple lenders. A lender takes a general look at your finances and gives you an estimate of the rate you’ll pay.

If you’re farther along in the homebuying process, you have the option to apply for preapproval with several lenders, not just one company. Your mortgage rate is locked in for a set amount of time when you are preapproved. By receiving letters from more than one lender, you can compare personalized rates.

Applying for preapproval requires a hard credit pull. Try to apply with multiple lenders within a few weeks, because lumping all of your hard credit pulls into the same chunk of time will hurt your credit score less.

How To Find The Best Mortgage Rate For You

How to Find a Good Mortgage Broker or Lender

Different lenders will look at your financial circumstances in different ways.

For example, a lender that specializes in FHA loans will rarely raise an eyebrow if your credit score is in the 580620 range. But one that caters to super-prime borrowers likely wont give you the time of day.

Ideally, you want a mortgage lender that is used to dealing with people who are financially similar to you. And the best way to find your ideal lender is by comparing loan offers.

Heres how to do that.

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Best Mortgage Lenders Of September 2021

Most Customizable PlanBest Online for Military MembersBest for First-Time HomebuyersBest for Fast Closing Time
Quicken Loans

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

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Minimum Down Payment

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable, FHA, VA, USDA

Purchase, Jumbo, Refinance, Fixed, Adjustable

A mortgage is likely the largest loan youll ever take out in your life. Youll be paying it for years, which makes getting a lower interest rate essential. Comparing loan terms such as mortgage rates, fees and closing time are steps that every home buying customer should take before settling on a lender.

The best mortgage lenders tend to offer different loan programs for consumers with different types of credit. They should also have a streamlined mortgage pre-qualification and application process and as clean a record as possible with regulating agencies.

Shorten Your Loan Term

You can save a lot of money if you shorten your term from 30 to 15 years. Even if you shorten to a term like 27 years, you can get a lower interest rate in addition to paying off your mortgage sooner because investors dont have to project inflation as far out.

Although your monthly payment will be higher, you could potentially save tens of thousands in interest over the life of the loan. Not only will your interest rate be lower, but youre also benefiting from the fact that you pay more toward your mortgage balance faster than you would on a traditional 30-year loan.

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Check Their Ownership Structure

Ask your broker who owns them. In many cases, they’re owned or part-owned by big banks. In fact, seven out of every ten loans arranged by brokers come from bank-owned aggregators .

These commercial ties can distort the quality of advice and incentivise brokers to sell you loans that flow straight back to the bank that owns the brokerage.

Take Aussie Home Loans for example. They’re owned by the Commonwealth Bank , and they funnel two in every five loans back to CBA. They often do this under the guise of ‘white-label loans’. White label loans are branded with a different name, obscuring the fact that they’re actually from a big bank.

Be wary if a broker claims to provide ‘special access’ to the banks that own them

Be wary if a broker claims to provide ‘special access’ to the banks that own them. This may simply be a tactic to sell you into a loan from that bank. A good broker won’t be influenced by their ownership structure and will recommend a wide range of loans from across the market.

Historical Canada Mortgage Rates

How to Find a Good Loan Officer

Looking at historical mortgage rates is a good way to understand which types of mortgage attract higher rates. They also make it easier to understand whether weâre currently in a low or higher rate environment, relatively speaking.

Here are some of Canadaâs mortgage rates for different types of mortgage over the past five years.

2016

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What Are Your Fees

Mortgage brokers earn money in a number of ways. As independent contractors, each broker you speak to may have a different set of circumstances. Youll want to find out how yours is paid in order to see if he or she has a bias toward a certain lender.

For example, if a lender pays your broker for each mortgage he or she brokers, that might be a red flag. You could be steered to a certain lender even if it may not be the ideal fit for you. Yes, it saves you from paying the broker yourself, but the trade-off may be higher long-term mortgage payments than if you went with an alternative.

Alternatively, many brokers are paid by homebuyers. This payment, known as the origination fee, is generally around 1.00% of the loan amount, though this can vary wildly. For example, if your loan was for $275,000, the fee would be $2,750. Brokers work on commissions, not salaries, so the higher the loan amount, the more they stand to earn. That means unscrupulous brokers may steer you toward a higher mortgage amount in order to boost their earnings.

How To Find Personalized Mortgage Rates

You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. When researching home mortgage rates, think about your goals and current financial situation. A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect your mortgage interest rate. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. Besides the interest rate, other factors including closing costs, fees, discount points and taxes might also impact the cost of your house. Make sure to comparison shop with multiple lenders — including credit unions and online lenders in addition to local and national banks — in order to get a mortgage that’s best for you.

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Narrow Your Search To Mortgage Consultants That Don’t Get Paid On Commission

A commission-based mortgage lender will primarily be motivated by closing your mortgage, whether or not the terms of the mortgage are in your best interest. By avoiding a lender who is paid on commission only, you wont have to worry that your mortgage lender is locking you into a huge financial commitment in order to make their own mortgage payment for the month. Interest rates change daily and vary based on your financial situation. So, you want to be sure your loan officer or consultant takes the time to get you to know your current finances, as well as your outlook and goals.

With so much money on the line, it is tremendously important to make sure that your mortgage lender will be looking out for you instead of their own bank account.

Improve Your Credit Score

Finding a good Mortgage Loan Officer

If youre looking for a home right now, getting your finances in great shape may be tough. So try to think ahead maybe even postpone house-hunting until you can clean your financial house.

In general, the better your credit, the better the interest rate lenders will offer you. So, do what you can to improve your credit score by paying off credit card balances and other personal debts, to the extent you can.

Even a 20-point difference in your score could move your rate up or down more than 0.25%. On a $250,000 home, one-quarter of a point might mean an extra $12,000 or more paid in interest over the life of the loanan extra $33 a month.

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Key Questions To Ask A Mortgage Lender

Before you select a lender and complete your mortgage application, here are some questions to ask:

  • How long do you expect the process to take?
  • Will you be my main contact throughout the process, or will someone else take over when it goes to underwriting? How will we keep in touch?
  • Which steps will take place online and which will occur in person ?
  • How long of an interest rate lock do you recommend? If the closing doesnt take place before that date through no fault of my own, will I have to pay for an extension?

If youre working with a mortgage broker, you should ask these two questions:

  • How many lender quotes did you review and why did you select this lender and rate as the best?
  • What fees and commissions will you charge and who will pay for themme, the lender or both of us?

How Can I Find My Current Mortgage Interest Rate

If youre a first-time homebuyer, your interest rate will be determined by your lender. As we mentioned earlier, the mortgage interest rate youre offered depends on your credit score, loan-to-value ratio and the state of the economy. Usually, first-time homebuyers shop around to see what interest rates are available at different lenders.

If youre a current homeowner, youve either been paying a fixed or adjustable-rate mortgage. A fixed-rate mortgage stays the same as time goes on, while an adjustable-rate mortgage remains the same for an introductory period, then goes up or down depending on the current index. In some instances, it may make sense to refinance your mortgage if refinancing may lower your interest rate.

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Make A Down Payment Of At Least 20% To Avoid Pmi

Some lenders and types of loans allow you to buy a home with a small down payment. But if you put less than 20% down on a property, youll need to buy private mortgage insurance.

Commonly referred to as PMI, private mortgage insurance protects your lender if you fail to make your mortgage payments. Typically, youll pay a monthly PMI premium as part of your regular mortgage payment until you qualify to drop the insurance.

PMI monthly premiums range between $30 to $70 for every $100,000 you borrow, according to Freddie Mac. So if you want to buy a $250,000 house, put 10% down and finance the rest , your monthly PMI payment would be at least $60, but could end up north of $140.

Because PMI represents an additional cost, saving up to make a 20% down payment can help you save money down the road.

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