One of the most overwhelming and challenging parts of purchasing a home is getting a mortgage. According to a Washington Post survey, 42% said they found the mortgage experience “stressful”, and 32% percent found it “complicated”. This is a general consensus for buyers and lenders alike.
From my experiences, oftentimes when you begin the conversation about buying a home with someone a general response is either related to a lack of funds for a down payment or bad credit. When it comes to credit and credit scores there seems to be a common misconception that you must have a credit score of 680 – 700 to obtain a mortgage loan. That couldn’t be further from the truth! In today’s real estate market there are programs readily available to assist low- to moderate income buyers with little to no down payment and a low credit score. Yes, it is true that the higher your credit score is the more favorable the interest rate and the lower your monthly mortgage payment. Still, you can obtain a mortgage with a credit score as low as 580 at about a 5.5% interest rate.
A 20% down payment is the standard for a conventional home loan. By paying a 20% down payment you eliminate paying private mortgage insurance or PMI. Waiting however might be of determinate to a lot of people because by waiting you risk missing the opportunity of taking advantage of the low interest rates available in todays market. In addition, there are numerous down-payment assistance programs available to consumers that can either pay the majority if not all of your closing costs and fees. It is therefore in the best interest of everyone that is considering buying a home to speak with a mortgage broker or loan officer at a bank to educate your self on what options there are out there for you.
Lender vs. Broker
As a good rule of thumb, you should meet with at least 1 loan officer at a bank and 1 mortgage broker. A loan officer at a bank typically has product information specific to that bank whereas a mortgage broker shops for mortgages from banks and other lending institutions locally and nationally to find the best rates available. In addition, you should work with someone that is understanding of your financial situation and is knowledgeable of the various programs available. And just know that if one says ‘No” the other might just say “Yes” so don’t give up or rely just on one banker and/or one mortgage broker.