If you’re purchasing a property, you want to secure the best mortgage possible.
However, you’ll need to do more than comparison shopping to find the best rate on a mortgage. Also, finding the best mortgage is about more than having the best credit score.
Several factors will determine the type of deals that you can find. These factors will affect the interest rate that you’ll pay on your loan. Still, you can save on interest by finding the best mortgage.
To learn more about how to get the best mortgage with RealFi, continue reading.
The Basics of Securing the Best Mortgage Rate
With the uncertainty of the coronavirus, you might wonder if now is a good time to apply for a mortgage. The answer is yes.
Still, there’s a lot at stake when you’re trying to secure a mortgage. Depending on a few things, mortgage rates can vary by several percentage points.
This interest rate variance can mean a much lower or higher monthly payment. A lower interest rate can mean a difference of tens of thousands of dollars over the lifetime of the loan.
For this reason, you’ll want to secure the best mortgage rate possible. You can accomplish this task by making sure that you’re well qualified for a loan.
When assessing borrowers, lenders consider a few key points. By addressing these points, you can increase your chances of securing a mortgage loan with good terms.
Lenders use a tiered pricing scheme when determining interest rates. In other words, they adjust mortgage rates based on various criteria. The primary information used to determine your rate is your current FICO score.
A lender will use your credit score to determine if you qualify for a loan. They’ll also use your credit score to determine your loan interest rate.
TIP: There’s an inverse relationship between your credit score and interest rates—the higher your credit score, the lower your interest rate. Conversely, the lower your score, the higher your interest rate. Ideally, you’ll want to have a credit score of 760 or higher.
The Importance of Income and Debt
A mortgage lender wants to know that borrowers have a steady income. For this reason, you’ll need to prove that you’ve maintained consistent employment. At the least, you’ll want to show continuous employment for the last two years.
Long periods of unemployment make it harder to qualify for a loan. Likewise, a history of declining earnings makes it harder for you to qualify.
Ideally, you will have had the same job for the last two years. Alternatively, you will have transitioned to a higher paying job during that same timeframe.
When it comes to self-employed individuals, lenders are more cautious. If you’re self-employed, you reap the rewards for taking more risk. Still, the same risk that allows you to earn more income makes it harder for you to secure a conventional loan.
If you’re self-employed, a lender will typically require you to document your business income using your tax returns. You’ll need to show your returns for the last two years.
Also, you’ll most likely need to provide an IRS form 4506. This form will allow the lender to secure IRS transcripts of your returns. The transcripts will verify that you’ve provided accurate income tax return information.
Money Matters: Sizing Up Your Debt
Lenders also consider your debt-to-income ratio. There are two kinds of debt-to-income ratios that your lender will assess—back-end debt and front-end debt. With a lower debt ratio, it’s possible that you can negotiate a lower interest rate.
Your back-end debt ratio is the amount of your total monthly minimum debt payments. The lender will divide your back-end debt by your monthly gross income.
Meanwhile, your front-end debt encompasses your housing costs. It excludes all other debt.
Typically, lenders prefer to loan funds to borrowers with a front-end debt ratio of no more than 28%. As far as back-end ratio, bankers prefer ratios of no higher than 36%.
In some cases, lenders will want a lower debt ratio rate. For example, imagine that you’re applying for an FHA loan. In that case, you might need a back-end debt ratio of 43% to qualify for a loan.
Still, a lender might prove flexible in this regard under certain circumstances. For example, a lender might let you exceed a desire debt ratio if all the other areas of your loan application are strong.
For this reason, it might prove prudent to shave some of your debt before applying for a mortgage.
Backing up Your Down Payment With Cash Reserves
With a conventional loan, you’ll usually need to make a 20% minimum down payment on the purchase price of the property. The down payment will allow you to acquire the best interest rate.
Lenders adjust mortgage prices based on risk factors. For example, a lender considers a borrower with a 5% down payment a higher risk than one with a 20% down payment. Accordingly, they’ll charge a higher interest rate for someone with a lower down payment.
However, there’s another reason why you may want to consider making the full 20% down payment. In most cases, you can avoid the need to purchase private mortgage insurance when you do so.
A lender will also assess your cash reserves. Your cash reserves are the number of monthly loan payments that you have saved in cash.
Any liquid funds that you have access to will typically count toward your cash reserves. For instance, a lender will consider your checking, savings, and money market funds as part of your cash reserves. However, you cannot use retirement funds that you cannot access to count toward your cash reserve balance.
Little to No Money Down Alternatives
Not everyone has the funds to make a down payment on a home. In this instance, an experienced loan originator can help you to secure a mortgage with little to no money.
If you have limited to no funds for a down payment, you might secure a loan through one of three programs—FHA Mortgages, VA Loans, or USDA Rural Housing Loans. Alternatively, you could apply for an FHA 203K mortgage to purchase a “fixer-upper”—more on this program in a moment.
The Federal Housing Administration backs FHA mortgages. An FHA mortgage is an avenue for borrowers with less-than-ideal credit. In many cases, people who thought they’d never qualify for a home loan can secure funding through this program.
Also, the FHA mortgage program allows you to receive all or part of the down payment as a gift from a relative. You can use the funds for the entire down payment and closing costs. In this way, you can secure a loan with as little as 3.5% down.
VA Loans and Loans for Rural Housing H3
The second program that might allow you to purchase a home with little or no money down is the VA Loan program. If you’re an active-duty member of the US military, you could qualify for 100% mortgage financing. The Department of Veterans Affairs insures the loan.
A VA Loan is a good option, even if you have poor credit. It’s also a true no money down mortgage.
The third no money down program is USDA rural housing loans. You might qualify for this kind of loan if you want to purchase a home in a rural area.
A USDA mortgage allows you to finance a home for up to 100% of the value of the property. The United States Department of Agriculture guarantees the mortgage.
Finding the Best Rates
When trying to secure the best mortgage loan, it can prove challenging to sort through all the available options. Here’s where a trustworthy mortgage originator comes into play. An experienced loan agent can help to make the process much easier.
You should also look for a loan originator with a reputation for honesty. Furthermore, you’ll want to find an agent with exceptional integrity.
It’s also important to find an originator that makes you feel welcome. Nearly any loan originator will accept your application.
However, if your loan isn’t easy to process, you’ll most likely never hear from them again. For this reason, you’ll want to find an originator that will work with you from start to finish to help you secure your mortgage, no matter what it takes.
Helping someone to secure a loan involves more than quoting an interest rate. A lot of work goes on behind the scenes.
For this reason, it’s also vital that you find a loan agent who will keep you informed about the process. You’ll also need to find an agent that’s willing to work long hours.
The right loan originator will provide great service, no matter the challenge. This is the kind of lender relationship you want, now—and for your future borrowing needs.
Fortunately, you’ve come to the right place to find just such an originator.
RealFi Funding Can Help You to Secure the Best Mortgage for Your Needs H3
RealFi Funding is one of the top 10 non-bank mortgage firms in the United States. We’ve helped borrowers just like you secure loans for more than 20 years.
Today, society increasingly revolves around technology. At RealFi Funding, however, we value people over algorithms.
We’ve built our company by becoming local experts in real estate lending. Also, we’re always up-to-date on current lending regulations.
More importantly, we can recommend a mortgage based on your unique financial situation and needs. We’re dedicated to helping you to meet your borrowing goals.
With RealFi Funding, you can rest assured that you’re receiving the most competitive rates on the market. However, we strive to provide service that goes beyond mortgage lending.
RealFi Funding understands that our biggest asset is people. Most originators are interested in short-term gains. Conversely, our mission is to provide long-term value.
In this spirit, we invest in technology and training continually. Resultantly, we provide an elevated level of service that’s sure to exceed your expectations. Moreover, we make the borrowing process easy.
With RealFi Funding, You Have Options
RealFi Funding can help you with several real estate funding options. For example, you may want a no money down loan if you don’t have funds for a down payment. If you’re a veteran, for instance, we can help you to secure a 100% no down payment VA loan.
We can also help you secure FHA Loan if you don’t have enough funds for a full 20% down payment. We can also help you with a conventional loan if you want to make a larger down payment to access better borrowing options.
Alternatively, you may want the lowest interest rate available. In that case, we can help you to access an ARM loan with an adjustable interest rate. In other cases, you may want a renovation loan if you’re going to buy a home that needs a bit of work.
If you need to borrow more than $425,000, we can help you secure a high balance loan. For rural buyers, we’re well experienced in assisting buyers in accessing USDA loans. Finally, if you’re 62 years of age or older, we can help you if you’re interested in a reverse mortgage.
At RealFi Funding, we can help you to find the loan that’s right for you. Your borrowing journey can start right here. Take a moment to use our free mortgage calculator to figure out how much mortgage you can afford.
Realfi Funding Loan Officer Spotlight H3
Our investment in people is what enables us to provide an exceptional level of service. Our branch manager John Joseph Zura is exemplary of our belief in people. He specializes in several areas, including:
• Conventional loans
• FHA loans
• Mortgage planning
• Purchase loans
• USDA loans
• VA loans
John has delivered exceptional service for more than 15 years. Over that time, he’s earned a reputation as an honest loan originator.
He services each and every loan with impeccable integrity. If you’re in Toms River, he’ll gladly take your walk-in appointment.
John takes pride in working with every borrow from start to finish—no matter how long the process takes. When working with Joseph, you’ll get up-to-date information about your loan every day.
Mortgages for Fixer-Uppers
In some instances, you might find the perfect home—yet, it needs a little TLC. In this case, you might consider an FHA 203K loan from RealFi Funding.
You may think that an FHA 203K loan is only for major rehabilitation. However, this belief is far from the truth.
You can use an FHA 203K loan for a wide range of projects. For example, you might apply the funds towards:
• Bathroom remodeling
• Room additions
You can use an FHA 203K loan for these and other projects.
An FHA 203K loan will help you to cover the costs of needed repairs. With an FHA 203K loan, you can make any home the perfect home.
We offer several FHA 203K loan products for projects that range from minor to major upgrades. With our renovation programs, it’s easy for you to improve a property by including renovation financing with the loan to purchase your dream home.
Get Help Buying Your First Home
RealFi Funding can also help you to access down payment assistance with one of two programs—HomeReady and HomePossible. These programs are a great way for you to buy your first home.
The programs could help you to purchase your first home with only 3% down. Also, they’ll give you access to flexible mortgage insurance options.
Our programs include a first-time homebuyer course. Our class will educate you about the entire buying process. It will also highlight how to qualify for our first-time homebuyer programs.
After completing the class, you’ll know how to roll 3% of the purchase price into closing costs. Most importantly, you’ll learn everything that you need to know to make the dream of owning your first home a reality.
Securing the Best Mortgage for Investment Property
If you want a loan for an investment property, the borrowing qualifications are a bit different. We offer several commercial real estate funding options. For example, you might want a loan for a non-owner-occupied residential property.
Alternatively, you might want to apply for a fix and flip loan. We can also provide you with access to refinance, bridge, and ground-up construction loans.
Also, you can purchase several kinds of properties using our commercial loan products. As an example, you might want to buy a one to four-family home.
Alternatively, you might want to purchase a condominium or single-family home. You can even use our commercial products to buy a townhouse intended for residential use.
One of the biggest differences between a residential and commercial loan is the loan size. A commercial loan typically ranges between $75,000 and $25 million. It’s also important to note that we only provide first lien position commercial loans.
With a commercial loan, you may also opt for an amortization payment. This loan includes an interest-only balloon payment that you’ll make when the loan matures.
Finally, there’s no prepayment penalty with our commercial loan products. Also, we can provide you with access to a real estate investment trust, if you prefer a hands-off approach to commercial investing.
The Fine Points of Securing the Best Mortgage
The borrowing environment is constantly changing. For this reason, there are a few things you want to make sure to ask your loan agent when searching for the best mortgage.
For example, you should always ask if you can buy discount points to reduce the interest rate. More importantly, you should ask if doing so makes sense under current market conditions. Buying extra points is usually a good idea if you plan to live in the property for a long time.
However, principal and interest payments aren’t the only cost of homeownership. Accordingly, there are a few other things you should discuss with your loan originator. These items include:
• Closing costs
• Origination fees
• Transaction fees
Furthermore, if there’s anything that you’re unsure of, you should discuss it with the real estate lending agent.
You’ll also want to review the fine print on any mortgage lending documents. The loan documents will provide you with important information. For example, they’ll provide you with the exact terms of your financing.
The document will also tell you who pays closing costs. Furthermore, they’ll tell you what’s not included with your home.
You’ll also need to review the lending document to determine if an inspection is required for you to receive your loan. Furthermore, you’ll want to review your loan document for important details such as the closing date and other important information.
Working With RealFi Funding
You’ll find it unquestionably pleasant to work with RealFi Funding loan agents. Our agents will provide you with constant communication and clear instructions throughout the entire process. More importantly, they’ll make the borrowing process seamless.
Over the years, your RealFi Funding loan agent will serve as an invaluable resource if you invest in multiple properties. No matter how many times you use our services, we’ll work hard to exceed your expectations every time.
RealFi Funding agents are always courteous. Furthermore, they always know what’s going on in the local real estate and borrowing market.
Furthermore, our agents are always available. They know how important communication is in providing a stress-free experience. What’s more, they’ll work diligently to resolve any issues that might arise.
Currently, mortgage rates are significantly low. If you’ve been considering applying for a mortgage, now is the time.
Trust RealFi Funding to Help You Find the Best Mortgage on the Market
Now you know more about how to get the best mortgage with RealFi Funding. We’re your source for the best mortgages available.
We’re experts in real estate credit strategy. What’s more, we’re redefining the mortgage process from the ground up with an innovative approach to technology and teamwork.
We’ve transformed the borrowing process from beginning to end. With RealFi Funding, you’ll enjoy a transparent borrowing process.
Get started securing the funds for your dream home or investment property today. Apply now to begin the process of finding the best mortgage for your needs.