Loans and Mortgages

Tips to Getting the Best Mortgage

Lenders and brokers are able to offer different prices for the same loans to different consumers, even if those consumers have the same loan qualifications. The most likely reason is that loan officers and brokers are sometimes permitted to keep some or all of the difference as extra compensation. The difference between the lowest available price for a loan product and a higher price the borrower agrees to pay is called an overage. When overages occur, they are built into the prices quoted to consumers. They occur in both fixed and variable-rate loans and can be in the form of points, fees or the interest rate. Whether quoted to you by a loan officer or a broker, the price of any loan may contain overages.

Always ask the lender or broker to write down all the costs associated with a loan and once you are informed, ask if the lender or broker will waive or reduce one or more of its fees or agree to a lower rate or fewer points. There’s no harm in asking lenders or brokers if they can give you better terms than the original ones they quoted. Once you are satisfied with the terms you have negotiated, get a written lock-in from the lender or broker. The lock-in should include the rate that you have agreed upon, the period the lock-in lasts and the number of points to be paid. Lock-ins can protect you from rate increases while your loan is being processed. However, if the rate falls, you may wind up with a higher rate.

When buying a home or commercial property, remember to shop around, compare costs and terms, and negotiate for the best deal. Remember that ‘Fair Lending’ is required by law. The Equal Credit Opportunity Act prohibits lenders from discriminating against credit applicants in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status and age. The Fair Housing Act prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status or national origin.

Under these laws, a consumer cannot be refused a loan based on any of these characteristics, be charged more for a loan or offered less favorable terms for the loan.

Don’t assume that credit problems or difficulties stemming from unique circumstances, such as illness or a temporary loss of income, will limit your loan choices. If your credit report contains accurate but negative information, but there are good reasons for trusting you to repay a loan, explain your situation to the lender or broker. If your credit problems cannot be explained, you will probably have to pay more than borrowers who have good credit histories. Don’t assume that the only way to get credit is to pay a high price. Ask how your past credit history affects the price of your loan and what you should do to get a better price. Always review your credit report for accuracy before applying for a loan.

At Superior Mortgage Company, Inc., we specialize in residential and commercial loans and provide the best products and services available.  Whether you are purchasing, refinancing or need a home equity loan, and even if you have credit problems, we can help. Contact us at 845-883-8200.

Read more...

Conventional vs. FHA vs. VA Loans and Mortgages

Looking for and obtaining a mortgage loan can be very challenging. Depending upon your specific needs, the process may be lengthy, confusing and ultimately disappointing. It’s imperative that you understand the differences between conventional, VA and FHA loans so you get the perfect one for you. All three loan types are issued by banks and other approved lenders.

When you apply for a home loan, you can apply for a government-backed loan such as a VA or FHA loan. Conventional loans are not insured or guaranteed by the federal government. This means that there are no guarantees for the lender if you do not repay the loan. Because of this, if you make less than a 20% down payment, you must pay for private mortgage insurance (PMI) with a conventional loan. In this way, if
you default on the loan, the mortgage insurance company ensures that the lender will be paid. Conventional loans are either conforming or non-conforming. Conventional conforming loans adhere to the rules set by Fannie Mae and Freddie Mac and are available to everyone. They are difficult to apply for because there is no government insurance so income and credit requirements are much stricter than for VA and FHA loans. Nonconforming loans also include jumbo loans, portfolio loans, and subprime loans.

An FHA loan is insured by the Federal Housing Administration (FHA). Because the loan is insured, you may qualify for a low down payment such as 3.5% of the purchase price. FHA loans have a maximum loan limit that depends on the average cost of housing in your area. As part of an FHA loan, you will pay a mortgage insurance premium (MIP) as part of the loan so that the FHA has the ability to pay the lender in the case of a loan default. Borrowers with a FICO score of less than 500 could be eligible for an FHA loan.

A VA loan is guaranteed by the Veteran’s Administration (VA). This loan is reserved for certain borrowers through VA-approved lenders so that lenders are guaranteed repayment in the case of loan default. To obtain a VA loan, you must be a current member of the US armed forces, a veteran, a reservist or national guard member, or be an eligible surviving spouse. VA mortgages are guaranteed with no money down and without the private mortgage insurance requirement. However, there is a funding fee which is a one-time charge between 1.25% and 3.3% of the loan amount.

At Superior Mortgage Company, Inc., we specialize in dozens of residential and commercial loans and provide the best products and services available. Our team can help you decide which loan fits your circumstances and answer any and all questions you may have about the process of obtaining a loan. Whether you want to purchase, refinance or take advantage of a home equity loan, we can help. Please contact us at 845-883-8200.

Read more...