RealFi -Best Mortgages In New York State
Did you know that, according to the New York State Department of Financial Services, 294,103 residential property
mortgages originated in the state of New York in 2019? This number was up from a total of 230,093 in 2018.
If you want to join many of the people who have a New York mortgage, you need to find a mortgage lender to help finance your new home.
However, you might not be sure where to start. With so many options available, it can be overwhelming to choose the right New York mortgage lender.
That’s why we’ve put together this article. In it, we’ll review how to choose the best mortgage lender in New York state for you.
Finally, you can get the loan you need to move into your new home. Read on to learn more.
Know About the Types of Lenders
When you’re looking for a mortgage lender in New York state, there are different types available to you. Depending on your financial needs and the size of your mortgage, one might be better for you than others:
The direct lender’s category includes credit unions, banks, online organizations, and other entities that will provide you your mortgage directly. This means you won’t have to look for rates on your own or pay a mortgage broker to find rates for you.
The benefits of going with a direct lender include that it’s a streamlined process, as they manage the loans they also offer.
You can speak directly to them about fees, terms, rates, down payments, and any mortgage loan questions you might have. As you visit different direct lenders, you can compare what they offer.
The risks of getting a loan from a direct lender include that the terms and rates can vary significantly. This might get confusing.
If you aren’t an expert in loans, this could mean that you could make a costly mistake if you don’t read the fine print.
If you choose to go with a direct lender, pay attention to detail as you review the different offers.
If you’re looking for a New York mortgage lender, another option to go with is a correspondent lender. When you work with this type of lender, they’ll fund the loan they provide you with. After the sale closes, they’ll sell it to a bigger lender in the secondary mortgage market.
A mortgage broker is a bit like a matchmaker. They’ll work with borrowers (you) and lenders to find the right match for the two. Mortgage brokers are professionals who are independent and licensed and are usually paid a percentage of the amount of the loan (1% to 2%, usually).
Depending on how they work, either the borrow or the lender will pay them.
Note that they don’t make any lending decisions or set origination fees or interest rates.
Portfolio lenders are usually savings and loan institutions, credit unions, and community banks. They will originate as well as fund the loan for your mortgage, but will do so using the bank deposits of their clients. They won’t resell the loan after the sale closes.
Wholesale lenders won’t interact with you because they don’t interact with borrowers. Instead, they work with third parties such as mortgage brokers, often offering their loans at discounted rates. Are you looking for a wholesale lender?
Then look for a mortgage broker who specializes in them. This can be especially useful if you’re looking for a discounted rate.
Finally, there are hard-money lenders. These are private investors (either a group or an individual) who will provide you with a short-term loan that’s secured by real estate. Hard-money lenders are interested in the value of your property.
This is quite different from traditional lenders, who need to know how easily you can repay the loan to decide whether the mortgage loan is right for you.
Note that hard-money lenders usually require you to pay them back in a short period, usually somewhere between one to five years.
Also, their interest rates, closing costs, and loan origination fees will be higher, sometimes as much as 10 points more than what you’d expect from a traditional lender.
Understand Credit Requirements
When it comes to how to choose a mortgage lender, it’s important to understand what their credit requirements are. Generally speaking, most lenders, they’ll only provide you with a loan if your debt-to-income ratio (or DTI) is below 43%.
However, some lenders will accept a DTI that’s below 50%. You may be thinking now: What about lenders that accept a DTI that’s even higher?
The problem with this is that the rates for these loans will be incredibly high. If you have weak credit, then search for lenders that accept a DTI of just under 50%.
If your credit is a bit better, you can go to lenders that require a lower DTI and that provide better rates.
If it turns out that there aren’t any lenders who will accept you with your current DTI, you’re better off improving your credit and waiting to apply for a loan once your credit score is higher and your DTI is lower.
You can get a free annual credit report from TransUnion, Equifax, and Experian. This is the first step to improving your credit.
If it isn’t good enough, start paying off your debts and don’t get any new loans or credit cards until you see some improvement.
Then you can return to lenders and see how their credit requirements compared to your credit score and DTI.
Know What You Can Afford
If a lender takes a look at your gross income, revolving debt, and outstanding loans, they might agree to provide you
with a mortgage loan. However, they aren’t looking at other costs, such as groceries, insurance, daycare, monthly bills, and gas.
When a lender comes through with a mortgage loan offer, you should take a look at how much you’ll end up paying for a month for the mortgage.
If the monthly amount and rates are such that you can barely scrape by paying that, you should look for a mortgage lender who can make your loan a bit more affordable.
At a certain point, it may be worth looking at homes with lower prices if all lenders offer mortgage loans that you can’t afford to pay off.
How Much Are They Asking for the Down Payment?
It’s also important to know how much you can afford to pay when it comes to the down payment of your new home—and how much lenders are asking for. Even though most people think this is usually 20%, this isn’t always the case.
There are many options out there that make it possible for you to get a conventional loan with a down payment that’s as little as 3%.
There are also government-insured loans that require low down payments of 3.5%, and others that don’t require you to pay a down payment at all.
If this is something you’re looking for, some options you should consider include USDA and FHA loans. If you’re a veteran, check out VA loans, too.
However, there is a caveat. When you pay less than 20% for your down payment, you might have to invest in mortgage insurance or pay more in interest because rates will be higher.
Once you know how much you can afford to pay in terms of your down payment, you can decide on different lenders based on what they expect you to pay.
Compare Terms and Rates
Once you have a list of different potential mortgage lenders, you should sit down and look at their terms and rates. If you don’t do this, you could end up losing a lot of potential money. By knowing what your options are, you can choose the best terms and rates for you.
You want to focus on differences when it comes to down payments, mortgage insurance, points, fees, and rates. And, of course, the loan offers itself.
If this all gets a bit confusing, it might be helpful to work with a mortgage broker. Even though you’ll be paying for their services, they’ll help you find a lender that’s the best match for you.
Looking for a New York Mortgage Lender?
Now that you know how to choose the best mortgage lender in New York state, you might be ready to start your search. If you want to make things easier, then you can reach out to RealFi. We’re experts when it comes to New York mortgage lending.
Whether you’re seeking to finance or refinance a mortgage, we can help anyone in New York state. We also offer personalized mortgage lending services. To learn more about this service, get started now.
Additional Articles of interest — How To Apply For First-Time Homebuyer Grants Buy a House? When Should You Take Out a Mortgage Mortgage Rates Are Low, but How Long Can It Last? How Soon After Purchasing My Home Can I Refinance? RealFi Offers Quick Close Non-Qualified Loans