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Mortgage Lending 101

We asked Mortgage Consultant Lindsey Faust, with Paragon Bank in Oxford, to share some tips about taking the proper steps to qualify for a mortgage as well as offer some suggested questions you might want to ask your lender. Here’s what she had to say:

  • A typical purchase from application to closing could take 30-60 days. (A 30-day closing means: the borrower has brought all income and asset documentation, has promptly returned all signed disclosures, the title work and appraisal were done in a timely manner, there are no issues, etc)

  • Do not take out any new loans prior to or during a mortgage application. New credit pulls can and will affect your credit score. If your score is on the line, then it could mean a higher interest rate on your mortgage.

  • When comparing the rates of two different mortgage companies, make sure to find out if the lender is charging Mortgage Pointson a loan to get you a lower interest rate. By charging points up front, the lender is buying down your rate. This means more out-of-pocket expenses on the front end.

  • If you do not have 20% to put down on your purchase (plus points and fees), expect to pay Mortgage Insurance.MI protects the lender, if you stop making mortgage payments. MI rates are very similar from one lender to the next. Some loans allow you to drop MI when you have paid your loan down to a certain percentage of value. Some programs require you to keep MI for the life of the loan (or refinance to have it removed). This is something to consider in this lower (but rising) interest rate environment.

  • Every purchase/refinance is different. Every borrower has different plans/goals for their lives and property. That’s why it is important to consult someone knowledgeable and caring enough to consider the whole picture when making the decision to take out a mortgage or refinance.

  • Always ask questions, if presented with 2 different rates from 2 different lenders, make sure to find out why the rates differ. Make sure you are comparing 2 like things. What product did you put me in? What’s the closing costs? Did you include points? If I’m required to have MI on my loan, can I request for it to be removed at some point during the loan? How much will I have to come up with out of pocket?

Feel free to reach out to Lindsey if you have any additional questions about this process – she would love to help you get the house or condo you want in Oxford!

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