How to talk to mortgage lenders

How to talk to mortgage lenders

Talking to Mortgage Lenders for Your First Time

It’s time to buy your first house, and you’ve never been more excited in all of your life. However, you’ve also never been more nervous – working with mortgage lenders in Cedar Rapids, Iowa has you scared silly, and you aren’t sure what you can do to calm yourself. Follow these simple steps below to talk to your lender reasonably and to walk away with a mortgage that you can afford.

Come Prepared

If you want to impress mortgage lenders near you the first time you talk with them, you need to come prepared. Don’t just walk into the meeting without understanding anything about your financial history. You should have proof of income, a list of your debts and the payments you make, as well as an idea about your credit score. This step is typically a great idea because it helps to ease the lender’s mind and impresses them with your abilities.

Just as importantly, this information gives you an idea of what to expect when you ask for money from the lender. These details will dictate the amount of money you receive, your interest rates on your payments, and how long your payment cycle will last. Though you may not be able to estimate an exact amount based on these figures, you should get a pretty good idea of what to expect based on these items.

If you aren’t sure what else you need to bring to a meeting, contact your lender and ask them what they want you to bring. Most of the time, these experts will fully understand what they want from you and will give you a detailed listing. Don’t think that this makes you look silly or unprepared: your lender would rather you ask about what you need rather than have you come with nothing and force them to reschedule your meeting.

Ask About Government Loans

If you’re worried about having to spend too much money on your home, you may want to consider asking your lender about the possibility of either government loans or government assistance. Federal and state departments often provide a myriad of help to people looking for a home, particularly if they’re a first-time buyer. Though you may not qualify, it never hurts to ask for help to see if you can get the assistance that you need.

For example, you may be able to find assistance programs from state housing finance agencies that will help you with your down payments. This step is a great one if you’re having a hard time coming up with the money that you need for your first payment. Just as importantly, these agencies can also help you pay closing costs if you’re struggling to stay financially-solvent during this process.

You may also want to seek out loans from governmental offices such as the FHA, the USDA, and even the VA. These departments often offer high-quality loans at reasonable rates to those who qualify. For example, veterans should always start their application process with the VA. Through this department, you can often get the best loans for your needs without having to pay an excessive amount of money or time with your mortgage lenders.

Get Multiple Quotes

As you start talking to mortgage lenders and other individuals about buying your first home, you need to make sure that you don’t just take the first quote that you can find. While you may be desperate to buy a new home, it is essential to take the time to do right by yourself and avoid diving headfirst into a potentially problematic situation that may end up costing you a lot of money. Instead, take the time to shop around a little and get multiple quotes.

As you ask for quotes, make sure that you pay attention to issues like origination fees, the annual percentage rate (APR), and any other element that may affect the quality of your loan. Don’t be afraid to let these individuals know that you are shopping around with different lenders. This step is a smart one because it will let them know that you’re getting different quotes – which may be lower – and can give them an insight into your buying process.

Just as importantly, they may be forced to cut you a better deal as a way of keeping your business. Rather than letting other individuals take over your loan, many lenders will reduce your interest rate a little and even offer coverage on items like closing costs and may even help a little with your down payment. However, pushing too hard may also backfire if the lender lets you walk away. A delicate balance is required to get the results that you deserve.

Try to Get Pre-Approval

Lastly, when you’re talking to mortgage lenders for the first time, you need to see if they have the ability to get you pre-approved before you start shopping for loans and houses. These professionals are intelligent and understand not only how to examine your credit history and other elements of your financial situation, but can also work hard to ensure that you are matched with the best possible loan situation.

For example, they can decide if your credit is strong enough to get you pre-approval and then write you a letter stating that you are a safe person to whom a lender can give money. This letter is also designed to help you stay on budget and provide sellers with proof that you are serious about buying. Most sellers will want a pre-approval letter from their buyers to ensure that they aren’t selling to someone who may not be the right choice for their home.

More importantly, though, these letters also let any lender who may work with you know that you are a good borrower. Most lenders are wary of people who have never bought a home before and want to make sure that you are safe. Thankfully, a pre-approval letter shouldn’t be too hard to get as long as you don’t have any credit issues and if you take care of any debts that you may owe, either to student loans, car dealers, or credit card companies.

Talk to Professionals

As you can see, working with the best mortgage lenders Cedar Rapids, Iowa has to offer isn’t hard as long as you are honest and know exactly what steps to take. So if you’re interested in a mortgage and want to work with experts that you can trust, please contact us at Hall Lending Group as soon as possible to learn more. Our experts are standing by to help you get the help that you need.

How to talk to mortgage lenders

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Assisting elderly parents with their finances can take time to sort through, but when your parents can’t pay their mortgage, they need help immediately. Pinpoint a specific reason as to why they can no longer make mortgage payments. Whether the circumstances are temporary or permanent will help you determine how best to help your parents with their mortgage payments. Engage your parents in finding a solution when possible.

Ask your parents what’s causing their inability to make their mortgage payments. Be polite and hear them out. Avoid making remarks that can stir emotions and destroy communication. Determine how many payments they have missed. Reassure your parents that you’ll help them work out out their financial problems.

Identify the loan number assigned to your parent’s mortgage. Contact the lender and explain your relationship. Ask the representative how many payments are past due and ask for the full amount required to bring the mortgage payments current. Write down payment amounts, late charges and due dates. Pay close attention to any instructions, such as paying by certified funds or a cashier’s check. Note the name of the person you speak to, the time, date, and confirm all information provided.

Review the information provided by the mortgage company with your parents. Ask them if they can source funds from savings or an investment or retirement account. Offer to help them make their payments if you can afford it.

Go over what caused your parents to fall behind on mortgage payments. Temporary situations, such as an illness, a scheduled work stoppage, or an unexpected large expense, may require only a one-time intervention. Request a temporary forbearance period and repayment plan from the mortgage company. Offer to send a partial payment, which shows good faith and makes a first step toward restoring your parents’ mortgage payments to a current status.

Identify circumstances that can’t be resolved and that keep your parents from taking care of their financial obligations. Ask your parents if they want to sell their home. Request a broker’s opinion of value from a local real estate broker.

Ask the mortgage lender for help if your parents can’t make their past due payments. A loan modification can reduce the mortgage rate and add delinquent principal to the end of the mortgage loan. Learn about relief programs offered through the mortgage company and explain them to your parents. Encourage them to participate in choosing a solution when possible.

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The Federal Savings Bank offers some helpful tips on how prospective mortgage applicants can prepare for their first conversation with a loan officer.

How to talk to mortgage lenders

Before going in to talk with a lender, consumers can request a credit report from one of the three main credit reporting bureaus to see what lenders will look for.

Past News Releases

  • California Home Sales Show Seasonal.
  • Mortgage Applications Fall -3.5%
  • Tips On How To Spot Water Damage.

Chicago, IL (PRWEB) February 11, 2015

The Federal Savings Bank, a Midwest-based lender, knows that first-time home buyers are often intimidated by the mortgage application process. However, with a little preparation, they can feel confident when they go in to meet with lenders for the first time.

The Federal Savings Bank advises first-time home buyers three way to prepare for their first conversation with a loan officer:

1. Gather all necessary documents
While mortgage lenders will probably list off the financial documents borrowers will need to be approved for a mortgage, buyers could be one step ahead by collecting the documents they need. These include proof of income and documents listing assets and outstanding debts. The Consumer Financial Protection Bureau said on February 7th that mortgage lenders may request information regarding checking account balances, federal income tax returns and debt.

2. Check their credit scores
When applying for a mortgage, lenders will evaluate first-time home buyers’ credit standings to determine whether to approve or reject these potential borrowers as well as come up with an interest rate for the loan. Before going in to talk with a lender, consumers can request a credit report from one of the three main credit reporting bureaus to see what lenders will look for. They will view credit scores and other factors that will influence a borrower’s credit standing like his or her debt balances.

3. Have questions in advance
First-time home buyers often have a ton of questions about applying for home loans and even owning a home. Mortgage lenders are a valuable resource to answer these questions and help borrowers understand how to improve their chances for mortgage approval. Write down a list of questions that deal with applying for a mortgage, making payments and more. Having questions beforehand will keep borrowers informed throughout the whole home buying process.

First-time home buyers who want to learn more about mortgages should contact The Federal Savings Bank, a veteran owned bank, with their questions.

How to talk to mortgage lenders

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In this article you’ll find a list of questions to ask:

When buying a home, selecting a mortgage lender is a big decision. Many home shoppers opt to use a lender that’s recommended by their real estate agent, but that doesn’t guarantee you’ll get the best rate, or that the lender will have experience in loans for your unique scenario. If you want to find the best loan for you, the Consumer Finance Protection Bureau recommends talking to at least three different lenders when shopping for a mortgage to compare loan options.

Of course you’ll want to compare official Loan Estimates to see which loan makes most sense for you and your family, but you’ll also want to interview your contending lenders to see if you’re comfortable working with them. Not sure exactly what to ask? We’ve compiled this list of questions to help you in your interview process.

About the Lender:

  • Are you licensed by the state?
  • Whom do you represent (e.g., a bank, broker, finance company)?
  • What are your loan programs? Do you offer VA loans (for example)?
  • What is the par rate (the actual rate for a particular loan) for a 30-year fixed loan?
  • Can you estimate and explain your fees?
  • Are you going to hold this loan or sell it?
  • How long have you been working as a mortgage professional?
  • Do you have experience with borrowers in a similar situation to me?

Additional Questions for Lenders:

  • Is there someone I can talk to whenever I need to?
  • How are you keeping my personal information secure?
  • Do you sell my information?

Looking for a local lender? Find one on Zillow How to talk to mortgage lenders

Additional Questions for Mortgage Brokers:

  • How do you get paid?
  • How much will you make on this loan?
  • Who are some of your top lenders (lenders who purchase the loan applications from the broker)?

About the Loan:

  • What is the interest rate you are offering, and how did you arrive at it?
  • How do I know this is the best rate?
  • How will the rate change over the life of the loan?
  • If an adjustable-rate mortgage (ARM), what is the worst-case scenario I could face when the rate resets?
  • Are you locking in my rate? For how long? What does the lock cost me?
  • Could you estimate closing costs for my loan?
  • Can you explain an annual percentage rates (APR), and what is it for this loan?
  • What am I paying in points?
  • What are my monthly payments?
  • Do I need to pay private mortgage insurance (PMI?)
  • Are there any prepayment penalties on this loan?
  • For a reverse mortgage, who will I be working with after closing?
  • Here’s my timeline. Are you certain you can get this done in time for closing?

Looking for a mortgage lender? Find a local lender on Zillow.


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How to talk to mortgage lenders

If you’re considering buying a home, one of the first things you should do is talk to a mortgage lender. You’ll be able to discuss the best mortgage options available for your circumstances and begin the pre-qualification process. As a way to streamline this process, be sure to have the following ready before you talk to your mortgage lender:

  • State Identification and Social Security number. Every mortgage lender will need to see state identification, such as a copy of your driver’s license, and your Social Security number to pull your credit report.
  • Verification of income. Depending on your employment situation, you’ll be required to present any or all of the following to your mortgage lender:
    • W-2 statements from the past two years
    • Recent pay stubs that show income as well as year-to-date income
    • Proof of any additional income used for loan qualification
    • Tax returns from the past two years

    If you’re self-employed, you may need to provide additional information to qualify for a mortgage – be sure to ask about your specific situation.

  • Verification of employment. Your lender will not only want to see copies of your paycheck stubs but will usually call your employer to verify employment and your current salary. If you’ve recently changed jobs, your lender may contact your previous employer as well. If you’re self-employed, you should prepare additional documentation about your business and income, such as financial statements and tax returns.
  • Copies of asset statements. Mortgage lenders will need to review your bank and investment account statements (usually for the past several months) to make sure you’ll have the funds available for a down payment and your closing costs – often with some cash remaining. If a relative or friend is planning to help you with the down payment, you’ll need a letter explaining that the money provided is a gift, not a loan.
  • Strong credit score. The higher your credit score, the more likely you’ll be able to lock in the lowest rate available from your lender – and save thousands of dollars over the life of the loan. Check out your credit score before you talk to your lender so you’ll have an idea of what to expect and can plan accordingly. Simply visit for your free credit score to get started.

Being prepared with the information you need is the best way to begin the mortgage buying process. At BancorpSouth, our mortgage lenders will help guide you through each step. If you have questions about any requested information, don’t hesitate to ask – make sure you understand why the information is needed as well.

How to talk to mortgage lenders

  • What Are The 5 Reasons You Need To Talk To Your Lender First?
  • Why Is Speaking With A Home Loan Lender Crucial In General?
  • What’s The Bottom Line?
  • Ready To Make A Home Purchase?

Whether you are shopping around for the perfect home or hoping to buy one in today’s competitive real estate market, you will need to talk with your lender first.

As you start to shop around for the perfect home, it is important that you contact your lender first. Homeownership is a big investment, and getting an early start on preparing your finances before you go shopping can save you money and headaches.

When you speak with your home loan lender sooner rather than later, you can negotiate the best possible terms and interest rates ahead of time. Even if you are just beginning to search for an available loan, understanding your options can help you determine which type of loan offers the best chance of meeting your financial goals.

Talking with your lender first also provides you the opportunity to explain any unique circumstances or needs you may have that may make it difficult for you to qualify for a standard loan, and that’s not all. Here are five more reasons why you need to talk to your lender from the onset.

What Are The 5 Reasons You Need To Talk To Your Lender First?

As you may have guessed, there are more than a few reasons why you should speak with your mortgage lender once you decide it is time to purchase a new home. But the top 5 reasons to speak with your lending institution or mortgage company before you do anything else are as follows:

1. Reveal Your True Home Buying Budget

Before committing to a house, you need to figure out how much you can afford. Talking to your home loan lender and getting preapproved will help make sure you’re looking in the right price range. Furthermore, you want to make sure that you are prepared for the additional costs that are associated with homeownership, which your lender can help you estimate before you go house hunting.

2. Receive a Referral to a Trusted Agent

A home loan lender you can trust is important, and it also comes in handy when you need to find a trustworthy real estate agent. Good lenders know good agents who are local to the market.

3. Gain a Competitive Advantage

Knowing what your financial limits are and being able to put in an offer with confidence can show that you are serious about buying the home. One of the best ways to be prepared is by getting pre-approved with a home loan lender as soon as possible.

4. Expedite the Home Buying Journey

The process of buying a house and applying for a mortgage takes some time to complete, even for experienced home buyers. But the good news is that once you’re approved by a lender; the whole homebuying process may only take two to four weeks. So if you are interested in speeding things up, then getting in touch with your lender or mortgage company as soon as possible definitely helps.

5. Control Your Financial Future

When you are looking to buy a house, you need honest advice from experts who can help you navigate the complex process of getting a mortgage. You want someone who will give you reliable guidance and understand your specific situation. The right mortgage lender will also reach out to you in the future if rates drop, and allow you to save money through a refinance.

Today’s Mortgage Rates Jun, 28, Tue, 2022

Why Is Speaking With A Home Loan Lender Crucial In General?

Your home loan lender is your ally, and if you want to buy a home or refinance your existing mortgage, it is important to speak with a lender as soon as possible. They are there to help you solve your problems, secure funding for your purchase, and make sure you stay in your home as long as possible.

Of course, there are multiple lenders/lending institutions to choose from if this is your first time purchasing a home. Nonetheless, even if you are a seasoned buyer, the key is to determine which lender will be best for your situation and goals. Contact a reputable lender, and don’t be afraid to ask lots of questions. Communicating with your Loan Officer (LO) regularly will ensure your home loan process goes as smoothly as possible.

What’s The Bottom Line?

Home mortgage lenders are professionals who help clients attain the loan funds they need to secure their dream home. But the truth is that many people don’t realize they need to speak with their mortgage lender first before making any personal finance decisions.

If you are contemplating a new home purchase in the near future, one of the most important aspects of financing your new home is to see if you can get preapproved for a mortgage in advance. Not only can your lender help you get approved for a home loan, but they can also give you a better sense of how much house you can afford, and inform you of the best loan terms and conditions that are available.

So, what are you waiting for? Begin the home buying and mortgage process today by contacting a knowledgeable lender or mortgage company. This will reveal what you can afford now, what possible programs are available to assist you in your purchase, what real estate agent to contact, and when or where you should start house hunting.

Get an Instant Mortgage Rate Quote Today

Ready To Make A Home Purchase?

Are you curious about mortgages or ready to jumpstart the homebuying process? If so, Sammamish Mortgage can help. We are an online mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We currently offer many mortgage programs, loan products, and financial services to buyers all over the Pacific Northwest and have been doing so since 1992. Contact or call us today with any questions you have about mortgages.

How to talk to mortgage lenders

How to talk to mortgage lenders

Most people miss a key step before going to open houses and finding a real estate agent: talking to a mortgage lender.

Not only does this help you better understand which loans are available to you, but it also makes you more attractive to sellers and real estate agents.

Here are five reasons you should talk to a mortgage lender before you begin the house-hunting process.

1. It sets realistic expectations

There’s nothing worse than finding your dream home, then realizing that it’s just outside your financial reach. Zero-percent down loans are available only if you qualify for a Department of Veterans Affairs or Department of Agriculture loan, and putting less money down can substantially increase your borrowing costs over time.

Plus, just getting an online quote isn’t the same thing as being preapproved. A preapproval letter proves to both real estate agents and sellers exactly what you can afford.

2. You can still shop around

Just because you’re preapproved for a loan doesn’t mean you have to stick with that lender. You can continue to apply for loans from other lenders — just be sure to collect your offers on the same day, since mortgage rates change every day.

To keep your credit score strong, do all of your loan shopping over a short period of time. Typically, your credit score gets dinged every time a company — like a lender — pulls your report. But if you apply with several lenders within, say, two weeks, all the inquiries will count as a single inquiry.

3. It helps catch sellers’ eyes

Coming in with a preapproved loan offer, whether you’re talking to a real estate agent or a potential seller, proves that you’re serious. You want to present yourself as hassle- and complication-free, especially in competitive real estate markets. You aren’t “just looking” and a seller can trust that you can actually sign the check.

4. You’ll finish the paperwork earlier

You’ll need a lot of paperwork to complete the loan, including tax returns and W-2s from the past two years, pay stubs for the last 30 days and recent bank statements. Starting the document-collection process earlier will make it easier when it’s time to finalize your loan, and it reduces the likelihood that the seller pulls out because of mortgage complications.

5. It helps you know what you’ll pay at closing

That the first check you write is going to be for more than just your down payment. After you apply for a mortgage, the lender will give you an idea of how much origination fees, title fees and appraisal fees will cost. While the seller often pays at least some of the closing costs, your share might still be as much as 3% to 6% of the loan amount.

Five pieces of advice LOs can share

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If you are like most mortgage professionals, you are getting calls about mortgage forbearance. The longer you have worked in the industry, the more calls you are getting.

Since the COVID-19 pandemic, I have had friends, neighbors, relatives and even Realtor referral partners ask about mortgage payment relief and the consequences of such relief.

What are you saying to those who ask you about forbearance? Have you suddenly become an expert on a topic that was rarely discussed in the last few years?

This is not my first time being deluged with calls about forbearance. I live and work in a part of New York that was severely impacted by Superstorm Sandy in 2012. Many in my circle reached out to me at that time about not being able to pay their mortgage. My best advice: Study the specific terms of your lender’s offer.

It sounds like a no-brainer, but I’ve spoken with people who did not follow that simple rule. Some found out they had deferred payments but had a balloon payment after three or four months. They were unable to catch up all at once and fell into a more serious financial difficulty.

A year after their forbearance, some clients found out they could no longer qualify for a mortgage. They could not refinance or buy a new property using a mortgage. Their credit history showed too many late payments on their mortgage. Some had more than one instance of “not paid as agreed.” They were surprised because they did not understand the specific terms of what was offered to them.

A few said they heard on the news that they didn’t need to make mortgage payments. They believed a state law or disaster area declaration would allow them to skip or not pay for a month or more. They stopped paying without communicating with anyone. Of course, their loan servicer didn’t give forbearance since they didn’t even know the borrower’s intentions.

Forbearance is one word, but it can mean many things. It could be a full moratorium on payments. It could be a reduced interest rate. It could be a reduced payment. It may mean a balloon payment. It may mean adding the principal and interest payment on to the back end of the loan.

It may impact one’s credit negatively or it may not. Keep in mind: There’s no such thing as a free lunch. Some are making it sound like this is a freebie. Let’s remember forbearance means “holding back” as in holding back a foreclosure. When someone defers a payment, it may mean they are paying extra interest on the deferment. This makes those missed payments more expensive.

Of course, balloon payments are problematic for most. A forbearance gives a borrower time to resolve their problem. In some cases, that means selling the home. In some cases, it means pulling money from other resources or getting help from family.

So, what advice do we give people when they call us and ask about forbearance?

  1. Forbearance is a way to avoid foreclosure. It is serious. If you can pay your mortgage, that is likely the very best option.
  2. The CARES Act covers two categories of loans. It covers loans that are federally owned and loans that are backed by federal agencies and entities. Find out if your loan falls in that category. About 38% of mortgage loans in the United States are not federally backed (according to the Urban Institute) and therefore do not qualify for this protection.
  3. Communicate with your loan servicer. Don’t stop paying without a formal agreement.
  4. Get the terms of the agreement in writing. Regardless of what is said on the phone, get your offer in writing. That is what counts.
  5. Understand your specific terms. There is no one size fits all. It doesn’t matter what you heard on the news or what your friend or neighbor got.

According to the Federal Reserve report on the Economic Well-Being of U.S. Households in 2018 survey, about 40% of Americans would have to borrow money when facing an unexpected expense of $400. Twelve percent would be unable to pay the expense by any means. The average mortgage payment in the United States is just over $1,500 per month according to the Census Bureau.

Right now, many people in the country are facing unexpected expenses or some type of income interruption. Many more will likely be facing this in the upcoming months as we enter the “new normal.”

Let’s be sure to give accurate and helpful advice with empathy and understanding.

by: Antonia Di Lorenzo
  • 06/02/2019
  • 0

How to talk to mortgage lenders

Under the ‘lend a hand’ deal, parents or other family members are required to put forward cash worth 10% of the loan. The money is kept in a savings account that pays 2.5% interest and is returned after three years as long as the mortgage repayments have been met.

However, the product is not available to brokers yet, making the discussion with clients more problematic.

We asked this week’s Marketwatch panel how easy it is going to be to liaise with clients and what the risks are.

How to talk to mortgage lendersMaxim Cohen, chief executive of The UK Adviser

Intergenerational lending is not a new concept. Families have always helped younger generations get on to the property ladder and make significant purchases, however, lenders are creating a new suite of products which allow families to support their children through different criteria.

Lloyds Bank’s newest product has grabbed headlines as it signals the start of 100 per cent mortgages again, which were last seen in 2006, although it is caveated with parents having to stump up 10 per cent per cent of the value, so technically it is not a 100 per cent loan.

This particular product ties up the 10 per cent parental contribution for three years although, interestingly, it is only required to be kept in a savings account, which will still pay 2.5 per cent interest during the saving term.

Financially, this type of product makes sense as parents and grandparents can share their money with their offspring now rather than after their death, meaning they face a lower inheritance tax bill.

There is a generational wealth gap in the UK, as those who bought their home 25 years ago have experienced a 20-fold increase in value.

The product from Lloyds Bank allows parents who have secured their children’s mortgage access to their money after three years, allowing them to continue to secure their own future, as well as that of their children’s.

We expect to see even more products which allow parents to support their children and fulfil their home-owning ambitions in the coming years. With every product that comes to market we will assess its viability before adding it to our panel and offering it to our clients.

How to talk to mortgage lendersJonathan Clark, mortgage partner at Chadney Bulgin

These are relatively complex products and ideally, both the applicants and the relatives providing the lump-sum would all need to be present at a face-to-face meeting in order to fully explain the potential pitfalls.

The biggest concern for me with house prices currently faltering would be the possible lack of an exit strategy after the initial three years. Lloyds says they will offer customer retention products, but if there is little or no equity in the property at the time, they could be at the mercy of the lender. It could also prove impossible to remortgage away, and customers to suffer a payment shock as a result.

There will always be risks associated with purchasing a house, but many younger people do not always recognise these, particularly as house prices have generally risen since the financial crisis and the spectre of negative-equity is a distant memory.

All risks would need to be explained thoroughly and the relevant protection products covered in detail where relevant.

Past-experience with similar products tells me that although they stimulate a lot of interest/press comment, take up levels are relatively low and most of these will be transacted directly with the lenders in branch, rather than by mortgage brokers.

This type of product will undoubtably be suitable for more financially astute first-time buyers and their parents. However, with such competitive 95% mortgages now being readily available from an increasing number of lenders, parents seemingly happy to assist with a deposit, as well as the current favourable stamp duty treatment, I believe that its likely to have only a very limited effect on the market.

How to talk to mortgage lendersMalcolm Fitchett, national business development director at Platinum Options

Having seen the Lloyds product of course any news that can potentially help first-time buyers enter the housing market and get the housing market moving can only be good news.

In my view, it is disappointing that this has been launched down the direct channel particularly when the majority of residential mortgage transactions come through the broker market.

It is a relatively easy product to discuss but many parents do not wish to tie up their savings for a minimum of three years and they have to be aware of the risks in the event of default on payments by the FTB which may not be under their control e.g. redundancy, sickness or divorce.

Many FTBs will welcome the potential assistance of entering the housing market. We find many FTBs save hard to get together at least a 5%-10% deposit which then opens up other options such as Help to Buy, schemes already available such as The Family Mortgage from the Family Building Society where there is greater flexibility by way of parental support from savings or a property charge or Joint Mortgage Sole Ownership whereby the parents can become party to the mortgage to assist affordability but the property conveys into the name of the FTBs only thus avoiding any additional stamp duty.

The 100% mortgage is a welcome return to the market but both the FTBs and parents will need to be fully aware of the implications and should seek independent legal advice before proceeding.

If you are in the market for a new house, one of the obvious concerns to cross your mind is whether you should first find a lender for a home loan or right away look for a real estate agent to show you the listings.

How to talk to mortgage lenders

How to talk to mortgage lenders

The 2020 Profile of Home Buyers and Sellers by the National Association of Realtors throws out some interesting numbers. In the digital age, it’s not surprising that 43 percent of all buyers start their search for a new home with an online search of listings. While another 18 percent contacted a real estate agent first, only 7 percent started with a lender. But the majority might not have it right this time. It can actually be to your benefit to find a lender for a home loan first. Let’s explore a few reasons why.

Talk to a Mortgage Lender Before You Contact a Real Estate Agent

Buying a house is a huge financial commitment, so getting your finances in order ahead of time is a no-brainer. It would be a shame to find the perfect house only to discover that you don’t have sufficient funds to purchase it.

Once you’ve calculated how much you can pay for a down payment, it’s time to figure out the best way to utilize that money. If you have a larger amount, you can decide of you’re going to make a greater down payment on a smaller property or if it’s to your benefit to go big. Smaller savings might make you an ideal candidate for a conventional loan that requires very little down payment. A lender can help you consider your unique situation and choose the right type of loan.

Armed with that information, you can apply to get pre-approved or pre-qualified for a mortgage. A pre-approval provides an accurate picture of how much you can afford, and you won’t have to work off just estimates. So when you approach a real estate agent, you’ll be able to tell them exactly what your budget is, making it easier for them to find something within your price range.

Here are some other reasons why finding a lender and getting pre-approved should be at the top of your checklist:

You Appear More Attractive to the Sellers

Both real estate agents and sellers are keen to speak to serious buyers. Once you’re pre-approved for a loan, they will be keener to speak with you. You won’t be just another prospect simply checking out open houses. Rather, you will come across as someone who has the potential to sign a check and close the deal. In fact, in certain markets, real estate agents refuse to take potential buyers for showings unless they can provide a pre-approval or pre-qualification letter.

Remember that real estate is competitive, and if you want to improve your chances of being considered a serious buyer, you need to speak to your lender and sort out the finances before you move ahead.

You Can Contact Other Lenders to See What They Have to Offer

Getting a pre-approval from one lender doesn’t mean you need to stick with them. You can still get quotes from other lend ers and opt for the one that offers you the best interest rate. Mortgage rates fluctuate daily, and depending on the market conditions, certain lenders may provide you with better terms than what you’ve already received.

You Can Accelerate the Paperwork

Applying for a home loan is a process. Every lender has a list of documents you need to submit before they can approve you for a mortgage, including tax returns, pay stubs, your most recent bank statements, and so on. Gathering these materials for the lender and securing your pre-approval before you start touring homes will save you important time later. In a tight housing market, taking the time to secure your pre-approval after the fact could cost you the home you have your eye on.

Plus, when you’re ready to get the actual loan, most of your paperwork will be taken care of, making it easier to sign and close the deal with your seller. As a result, you can speed up the closing process and get possession of your house sooner.

You Have Better Bargaining Power

Since sellers consider a buyer who is pre-approved or pre-qualified for a mortgage a more serious buyer, this gives you better negotiating power. You come across as someone who is not only genuinely interested in making a purchase, but also capable. A keen seller is more likely to adjust the price in negotiations when speaking to someone who is ready with the finances rather than a buyer who is simply browsing through available properties on the market.

There Are No Last-Minute Surprises

Getting your finances sorted and receiving a pre-approval for a mortgage means you won’t be caught unawares by the house’s selling price when you make an offer. You can shop within your budget so you’ll know if you’re making an offer on a home you can afford and whether or not you can counter offer if your initial offer isn’t accepted.

Additionally, speaking to a lender before you speak to a real estate agent can help if your credit score isn’t as high as you’d like it to be. Not only will you know the terms and interest rate at which the lender will extend a home loan, but you also get an opportunity to improve your credit score to get a better offer. It’s far easier to deal with such issues during the pre-approval process than when you’ve already found a home and are waiting to put in an offer.

Looking to Find a Home Loan Lender for a Pre-Approval or Pre-Qualification?

Buying a house is an exciting life step, and you can get closer to getting the keys to the home of your dreams with a little bit of financial planning and a great lender.

Solarity Credit Union knows that getting pre-qualified for a home loan is a crucial step when you’re house hunting. If you are ready to find a lender for a home loan , the team at Solarity Credit Union is here to answer any questions you may have. Their expert Home Loan Guides will advise you on your options for securing a great mortgage.

Getting your mortgage approved can be difficult. It’s a struggle to even meet the demands of the lenders. Lenders from all states including Alabama are reviewing every legal detail of the borrowers’ financial capacity including its generated income and even its spending habits. Borrowers who wish to apply for a mortgage had to get their finances straightened out well even before they apply for a mortgage. Most buyers already know the basic know-how of applying for a mortgage- improve their credit score, check if there are any errors that need to be corrected, and even avoid unnecessary spending during the application process. But here are some other tips and tricks on you can even convince them more to approve your application.

  1. Put all your expenses on a credit card and have it paid off in full for each consecutive months. This will give you extra time to pay your bills since it delays your payment by a month. Moreover, it also doesn’t let your lenders see what you’ve actually been spending your money. But make sure not to put those expenditures that cost extra if you pay it by a credit card.
  2. Enroll all your credit cards to a direct debit to avoid any missing payments. You may want to set the direct debit for the minimum if you can’t pay the balance off in full. You can make an extra payment as soon as you can afford it.
  3. Do not exceed any overdraft limit or go overdrawn. This would only cost your payments to return and may even charge you with return fees. On top of that, it will look like you’re not managing your bank accounts really well and may lead to your mortgage application getting rejected. It would still look like you don’t manage your money responsibly even if it looks like you have plenty of income.
  4. If your parents or any family member is helping you with the deposits, you have to ask them to create a letter stating that the amount was given as a gift and provide any proof or written evidence, such as bank statements, to prove the transfer. Any amount that was given as a gift or a loan will be affected by the affordability assessment.
  5. Don’t start making any offers on a real estate and then just go on a holiday. According to some experts in Mobile, applying for a mortgage can be very time- grueling because of the necessary documents and paperwork that are required for the transaction. Lenders may even request for even more information so being away for a few days can prolong the process.

Check Official USDA Loan Requirements

PRMI Contact Information and Policy Links

Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

PRMI NMLS 3094. PRMI is an Equal Housing Lender. This is not a commitment to lend. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification.

How to talk to mortgage lenders

As a new real estate agent just 12 months into my career in real estate, I am low on the totem pole at Keller Williams Realty Falls Church, Virginia. That means I pursue some leads that more established agents can’t be bothered with, such as uncertain first-time buyers.

This spring, Inman is obsessing over helping you to tune-up your listings business, with actionable insights, the best advice from top agents and hundreds of helpful stories from all over the world. Interested in sharing your advice and insights with us? Reach out to me at [email protected] .

Don’t forget that we’ll also be focusing on how agents and brokerages can all move Faster, Better, Together this July at Inman Connect San Francisco . Not got your ticket yet? Buy it here , and remember that Select members get a $100 discount. Thinking of bringing your team? There are special onsite perks and discounts when you buy those tickets together too. Just contact us to find out more.

As a new real estate agent just 12 months into my career in real estate, I am low on the totem pole at Keller Williams Realty Falls Church, Virginia. That means I pursue some leads that more established agents can’t be bothered with, such as uncertain first-time buyers.

In my short time in the business, I have learned that young people need someone to hold their hand and explain the process. The first home is the most difficult because it’s such a big purchase.

For many first-time buyers I work with, the only other thing they have ever bought in their life is a car. This is the first time they have bought something as big and expensive as a house.

The sheer size of the price tag and length of the mortgage puts them in shock — even though logically, they know that their mortgage payments may work out to be lower than their rent.

When they sell in five to seven years, they will be making more money, and they’ll have the option of renting their first purchase out or selling it and buying something else.

The big discussion I have with uncertain buyers these days is about interest rates. Sometimes they think they can wait before buying and save for a bigger home, but sometimes what you’re really saving for is higher interest rates.

I firmly believe that most first-time buyers — for whom every dollar counts — should act now before rates go up. Of course, conditions in my local market may be different than in yours.

Take a couple that I first started working with in November. The wife of the pair told me, “I think we’re looking to buy something.” But when we looked, they were disheartened by what they saw in their price range. They could not afford the places they liked and did not like the places they could afford.

So this couple decided to keep saving and renting until they had more money for a down payment. Last month, I reached out to them again to tell them about some single-family homes that had come onto the market. And now they expect to be out of their rental and into their first home by the end of April.

Here’s what they told me: “Our goal is to buy our first home, not our dream home. We feel like we are throwing our money away in rent. Interest rates have already gone up since we first started looking in November, and we want to lock in a rate before they go up much more.”

They are right, most observers expect rates to go up this year. I have read that in the past 40 years, we have seen the 30-year fixed mortgage interest rate hit a record high of 18.45 percent in October 1981 and a record low of 3.35 percent in December 2012.

Although no one expects the rates to hit the high teens in the near future, industry experts are confident that the rates will rise higher than the average 4.4 percent buyers have become accustomed to over the past decade.

As my mentor, Keller Williams Realty Falls Church agent Crystal Street, has pointed out, buyers who hope to achieve a lower monthly payment should buy sooner. For young buyers who are already financially stretched, having to pay as little as $100 more a month on their mortgage can be a deal breaker.

Here are a few of the ways I approach the issue of mortgage rates with first-time buyers.

1. Help buyers find the right mortgage broker

I counsel clients to find a lender who will work with — and for — them. I tell them, “Don’t settle for the first mortgage broker you find if you don’t find him/her helpful.”

A lender can help buyers by finding ways to reduce the down payment with a lender credit and a higher rate, or he or she can explain one’s options for obtaining a down payment as a gift, by pulling money from a retirement account, etc.

A lender should also help buyers understand the maximum home price that will fit their monthly payment goals.

2. Communicate often

Keep open communications with local lenders, and stay on top of interest rate changes. This is important in our environment of rising rates. I always want to know what my buyers are likely to be able to afford and what their home is going to cost them — on a monthly basis and over the lifetime of the loan.

3. Learn about first-time homebuyer programs

I ask a local, respected mortgage lender to keep me informed of the special programs for first-time homebuyers. For example, my state of Virginia offers programs that help buyers with down payments that allow them to afford to purchase.

4. Host seminars

Because interest rates are such an important topic right now, I’m working with the mortgage lender to do seminars at local companies where lots of young people work. They come, have lunch and learn. I organized similar events for years in my prior career in corporate sales, so this is natural for me.

5. Set expectations

For first-time buyers, I remember to tell them that, typically, their first mortgage payment is not due for 45 days after they close. They can count on saving that whole month of rent. This helps them to plan for staying cash-flow positive during the month they buy their home. Lots of times they can also get seller support for the closing cost.

6. Inform as you nurture

Because I know the monthly costs of both rents and loans for typical homes in my farm, and because I also have a pool of people from open houses who said they might be waiting for next year, I use the act of sharing this information as another reason to reach out. I also include it in my newsletter.

That’s how I talk with first-time buyers when it comes to mortgage interest rates. If you have your own observations and advice to share, I’d love to hear from you in the comments section below.

Heather Reis-Platter is a Realtor with Keller Williams Realty Falls Church / Novins Group in Falls Church, Virginia. Connect with her on LinkedIn or Facebook.

A lot of people are unaware how much a mortgage broker can help.

In this guide
  • What type of mortgage is best for me?
  • Why is this the best deal for me?
  • Will I be approved for this product with bad credit?
  • Are there any restrictions on this mortgage?
  • How much can I afford to borrow?
  • Do you cover the whole of the mortgage market?
  • Will you recommend another lender that’s not on your list?
  • How much do you earn in commission?
  • Can you show me a whole list of my mortgage options?
  • How much do you charge for your services?
  • When do you charge your fees?
  • What is included in the service you offer?
  • When will you be available?
  • Do you invest in property yourself?
  • Can you explain what this means?
We compare the following mortgage providers
Mortgage brokers

If you work with a mortgage broker, you can be completely confident you’re being recommended the best mortgage deal for your circumstances.

These individuals aren’t just responsible for hunting down the lowest rates. There’s much more they can do to ensure you get the most suitable deal for your circumstances.

Choosing the wrong product could cost you thousands of pounds over the course of a mortgage term, so it’s worth enlisting expert help with this decision. Learn more about how to choose a mortgage broker and the pros and cons.

What type of mortgage is best for me?

If you’re unsure about the differences between fixed-rate mortgages, discount mortgages or tracker mortgages, a mortgage broker can explain this to you and help you work out which option is likely to be the most suitable.They can explain the ins and outs of rarer mortgage types, such as offset mortgages or buy-to-sell mortgages and point you towards the lenders offering the best deals here.

A mortgage broker will also have detailed knowledge of the various schemes available to help first-time buyers onto the property market and will recommend these to you if you’re eligible.

Why is this the best deal for me?

An advantage of working with a mortgage broker is that they’re able to explain the ins and outs of the mortgage world to people who don’t understand it. This can give you the peace of mind of knowing you definitely got the best deal.

So, you shouldn’t be afraid to ask why one deal is better than the other. It’s part of a mortgage broker’s job to explain this to you.

Will I be approved for this product with bad credit?

Mortgage brokers have a detailed knowledge of lenders’ eligibility criteria, which can be very useful for applicants with bad credit. Instead of wasting your time (and further harming your credit score) by unsuccessfully applying to several lenders, you can have a mortgage broker recommend the lenders most likely to approve your application.

Are there any restrictions on this mortgage?

It’s important to know what you can and can’t do once the mortgage has been finalised. Can you port your mortgage? Can you take a payment holiday? Do you meet its eligibility criteria? These are all things a mortgage broker should explain to you.

How much can I afford to borrow?

Although many buyers are aware of the ballpark figure that’s suggested people can borrow for a mortgage (around four to five times your annual income), this will vary depending on your choice of lender and financial circumstances.A mortgage broker will have a more detailed view of the amount you can borrow from specific lenders.

They’ll also be able to talk you through the additional costs involved with buying a house, including the one-off fees associated with the mortgage.

Do you cover the whole of the mortgage market?

There are three main types of mortgage broker: Some are tied to specific lenders, some look at details from a limited list of lenders, while others claim to be “whole of market”. However, even some “whole of market” lenders don’t cover everything. Many of these will exclude lenders that only take direct applications. It’s important to ask whether the lenders truly cover the whole of the market or not.

Will you recommend another lender that’s not on your list?

If you’re not working with a ‘whole of market’ broker, you might not end up with the best deal.

That’s why it’s important to ask if the broker will recommend a better deal that it doesn’t have access to.

How much do you earn in commission?

If a mortgage broker works on a commission-basis, there’s a danger that they could end up recommending the best deal for their pockets, rather than yours.

For that reason, it’s important to know whether they earn commission, how that works and how much they’re set to earn from your recommendation.

Can you show me a whole list of my mortgage options?

Sometimes, a mortgage broker will reveal its #1 recommendation only, or maybe its top three.

To be sure you’re being offered the best deal for you, it’s worth asking for a complete list of the available options.

How much do you charge for your services?

Some mortgage brokers charge a fee or work on commission or a combination of both. It’s important to understand how their payment structure works.When you consider the amount of time and money you’ll save by choosing the right mortgage first time, it’s hard to argue against these fees.

When do you charge your fees?

Some mortgage brokers, you won’t have to pay a penny until the mortgage is finalized. Others might charge a fee at an earlier stage.

What is included in the service you offer?

It’s important to know what your broker will do, and what tasks you’ll still need to complete yourself.

Some brokers will handle all the admin, including chasing down lenders if there’s a delay, until the deal is done. Others will find the best deal for you, and maybe submit your application, but little else.

When will you be available?

You might want to be able to contact your broker at all hours, but this isn’t always possible?

Some work traditional office hours only. Many won’t be available during evenings and weekends.

Do you invest in property yourself?

This question might be particularly important for buy-to-let property investors. Many would prefer to work with an individual who also understands the ups and downs of property investing.

Can you explain what this means?

If a mortgage broker is using a lot of jargon, you have every right to ask them to explain themselves with more clarity.

A key advantage of using a mortgage broker is having the peace of mind of knowing you’re making the right move, so they should be happy to explain anything you don’t understand.

When you’re buying a home, it’s easy to only talk to the loan officer recommended by a friend or your realtor. You’re already spending so much of your spare time searching for the perfect home, why waste another moment on securing a loan–right?

Here’s why I recommend it: It can save you five figures (or more) on interest payments over the life of your loan. That is a lot of money that you shouldn’t be wasting. Get a few lender recommendations from people you trust, and then talk to all of them. You could also speak to a loan officer at your bank or credit union, as well.

Lenders Know You’re Weighing Other Options

Don’t feel guilty about pitting lenders against each other. They expect potential customers to do this. In fact, mortgage pre-approvals, which you need before bidding on a home, aren’t binding.

Neither are loan estimates, which you obtain once you’ve chosen a home. Loan estimates are detailed accounts of a mortgage’s terms. You can compare estimates from multiple lenders, and even negotiate the details. You have 10 business days to pick an estimate and let the winning lender know you’ve selected them.

A Tale of Two Home Loans

A small difference in interest rates can add up over time. Let’s say, for instance, a lender offered you a 30-year, fixed-rate mortgage of $100,000 at a 5 percent interest rate. Over the entire term of the loan, you’d pay $93,256 in interest.

Now, let’s say another lender offered you the same 30-year mortgage for $100,000, only the interest rate is 4.5 percent. It doesn’t seem like much, but you’ll end up spending $82,406 in interest — $10,850 less than the other loan. The principal and interest payment for the mortgage with a 4.5 percent rate also adds up to $30 less per month.

Protect Your Credit While You Shop Around

Getting a loan estimate involves credit inquiries from any lender you work with. Will talking to several lenders lower your credit score more than just talking to one? Not necessarily.

I recommend getting estimates within about two weeks of each other. This means that they’ll all count as one hard inquiry, limiting the damage to your credit to just a small, temporary dip.

The mortgage process is built in a way that makes it easy for you to comparison shop and negotiate. You comparison shop at the grocery store, why wouldn’t you make the effort when making one of the biggest purchases of your life?

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Reader question: “We are about to start the process of applying for a mortgage loan, so we’ve been reviewing the interest rates posted on various bank websites. How can we negotiate the mortgage rate offered by the bank or lender, after we apply for the loan?”

Yes, you can try to negotiate the interest rates presented by the lender. Whether or not you’ll be successful is a different story. Much will depend on your qualifications as a borrower. Generally speaking, well-qualified borrowers have more negotiating power than those who are marginally or poorly qualified for a home loan.

You can also use prepaid interest points to negotiate a lower mortgage rate from the bank. But we’re getting ahead of ourselves. Let’s start by talking about those all-important qualifications I mentioned above.

Well-Qualified Borrowers Have More Negotiating Power

Do you have a solid credit score and minimal debt? Can you afford to make a down payment in the 20% range? Is your income more than sufficient for the amount you want to borrow? If so, you are a well-qualified borrower. And you’ll have an easier time trying to negotiate the mortgage rate offered by your lender, bank or credit union.

These are ideal parameters for borrowers, as far as qualification criteria are concerned. If you fall within this range, you can negotiate almost everything during the mortgage process. If you fall below this standard, on the other hand, you’ll have less negotiating power.

Strong borrowers can pick and choose the best mortgage rates, fees and terms. Marginal borrowers have to take what they can get, and be thankful they can get approved at all. That’s a harsh reality of the lending world.

A Real-World Example: Lisa and Lee

This will make more sense if we use a real-world example. So let’s meet Lisa and Lee, two mortgage shoppers:

How to talk to mortgage lenders

Lisa has an excellent credit score of 810. She achieved this score by paying all of her bills on time in the past, and by using credit sparingly.

She has enough money in the bank to make a 20% down payment on a home.

Lisa’s total debt-to-income (DTI) ratio is around 18%, which is very good by current lending standards. She also has more than enough money in the bank for closing costs and her first few mortgage payments.

Lisa is a textbook example of a well-qualified borrower. She could qualify for a home loan through any number of lenders. This puts her in a good position when it comes to negotiating. She should be able to negotiate a good mortgage rate from her lender. If the lender doesn’t offer her a highly competitive rate, Lisa can take her business elsewhere.

Lee has a much lower credit score of 610. With some lenders, this will put him right on the line between qualified and unqualified.

How to talk to mortgage lenders

He can only afford a down payment of 3% to 5%, depending on the ultimate size of his loan.

Lee’s total debt-to-income ratio will end up being somewhere between 39% and 43%, once he takes on a mortgage loan. As far as cash reserves go, he can cover his closing costs but no more.

Lee is a marginally qualified borrower. Lenders will see him as a bigger risk, based on his credit score and debt ratio.

He won’t have much negotiating leverage. In fact, he will be lucky just to qualify for a loan. He certainly won’t be able to negotiate a competitive mortgage rate from the lender.

Here’s the main difference between these borrowers, in terms of negotiating power:

  • If Lisa isn’t satisfied with the interest rate offered by the first lender, she can apply elsewhere. The same goes for excessive mortgage fees. Lenders prefer borrowers like Lisa. She is an ideal candidate for a home loan, with a lower risk profile than most borrowers. As a result, she’s in a better position to negotiate the mortgage rate and fees.
  • Lee, on the other hand, will be lucky to “squeak by” and qualify for a loan. If three out of four lenders turn him down, he won’t have very much negotiating power with the fourth. He is not in a position to negotiate a lower mortgage rate.

In the mortgage world, this is known as risk-based pricing. Lenders use credit scores and other factors to determine the level of risk brought on by individual borrowers.

In the scenario above, Lee will be viewed as a riskier borrower than Lisa, due to his financial profile and credit history. They will charge him a higher interest rate as a result, and he probably won’t be able to negotiate the mortgage rate downward. He doesn’t have a leg to stand on.

But there’s another way to reduce your interest rate. It involves the use of mortgage points, or “discount” points. And even marginally qualified borrowers like Lee can use this strategy.

Using Discount Points to Negotiate a Lower Mortgage Rate

Want to negotiate a lower mortgage rate from your lender? Try paying points at closing. Borrowers can use this strategy to “buy down” the mortgage rate assigned to their loans, thereby paying less interest over time.

Definition: A discount point is one of two types of mortgage points (origination points are the other). A point is equal to one percent of the amount being borrowed. Example: One point on a $300,000 home loan equals $3,000. Two points on the same size loan would equal $6,000. Discount points are a form of prepaid interest. You can pay them at closing to secure a lower mortgage rate on your loan. It’s like paying some of the interest up front, to avoid paying it over the long term.

There is an inverse relationship between mortgage rates and discount points. Borrowers can secure a lower rate by paying more discount points at closing.

The amount of interest reduction will vary from one lender to the next. Generally speaking, one discount point will lower the mortgage rate by 0.25%.

Example: If a lender offers a rate of 5% with no points, the borrower might choose to pay one point at closing to reduce the rate to 4.75%. Two points would bring it down to 4.5%. In this scenario, the borrower is using prepaid interest to negotiate a lower mortgage rate from the lender.

This strategy only works to your advantage when you keep the mortgage for a certain period of time. If you plan to stay in the home for many years without refinancing, discount points can save you money in the long run. In this scenario, you would save more in monthly payments (over the years) than the amount paid up front in discount points.

It’s a tradeoff. You’re paying more up front, and out of pocket, to secure a lower mortgage rate over the long term.

Disclaimer: This article explains how to negotiate the bank’s current mortgage rates, based on your qualifications as a borrower. It also shows how you can prepay interest with discount points, in order to lower your long-term interest rate. If you would like to learn more about any of the topics discussed in this article, use the search tool located at the top of this website. We have dozens of articles that cover other aspects of the mortgage process. So you’re bound to find something useful.

How to talk to mortgage lenders

Getting a mortgage loan is an involved process that requires a full examination of your financial background. You’ll likely have to answer countless questions and complete a mountain of documentation — and you’ll probably have your own questions to ask and comments to make.

Be careful about what you say to a mortgage lender, however, because it might just end up getting your application denied.

How to talk to mortgage lenders

1. Anything Untruthful

Lying to a mortgage lender can ruin your chance to get approved for a loan. “Lying, omitting or providing misleading information on a mortgage application is punishable as a felony. It’s treated as mortgage fraud and that’s bad,” said Dan Green, a 15-year veteran in the mortgage lending industry and founder of financial education website Growella.

“Mortgage lenders are required to perform verifications and reviews of key financial documents,” Green said. “They’ll very often uncover the items an applicant is trying to hide. That will get your loan denied in underwriting.”

Just be truthful and it could work out in your favor, said Green. “Mortgage lenders will work with you to overcome obstacles in your approval process. It’s what a good lender does. Be open and honest and let your loan officer go to work,” said Green.

How to talk to mortgage lenders

2. “How much can I borrow?”

Asking a mortgage lender how much you can borrow is a clear sign you haven’t done your homework, and it paints you as an uninformed consumer. Or worse, someone who doesn’t consider the financial impact of a large loan.

Borrowing the maximum limit offered could also cause you to entangle yourself in a financial trap, said Eric Roberge, certified financial planner and founder of the financial planning company Beyond Your Hammock. “Avoid borrowing more than you need to. Maxing out your budget now can limit what you can do down the road. What happens when you want to add to your family or start a business? You may find yourself cash-strapped due to that big home loan,” said Roberge.

Just because you qualify for a large loan doesn’t mean you should accept it. Ask yourself how much you should — not could — borrow to direct your focus on an amount that will comfortably fit your budget, said Kathy Cummings, senior vice president of homeownership solutions, Bank of America.

How to talk to mortgage lenders

How to talk to mortgage lenders

If you’re currently paying off a mortgage, there’s an interest rate cut waiting for you if you simply ask for it.

Negotiating with your bank for a cheaper home loan may seem like an intimidating task that only a financial expert could manage, but you’d be surprised at how easy it is. Simply put, anyone can talk their way into a cheaper home loan, they just have to know what to say.

Borrowers need to shop around and be prepared to walk away if their lender doesn’t offer them the discount they deserve.

RateCity tips to haggle for a cheaper home loan:

1. Find your current interest rate

Many people aren’t aware of their current interest rate, particularly if they’re paying a variable loan. Your first step to haggling for a better home loan rate is to work out your current one. It should appear on your bank statement, through online banking or your banking app.

2. Are you an ideal borrower?

If you’ve been paying back your mortgage for a while there are a few factors that should present you as an “ideal” borrower, meaning you are more likely to nab a lower rate.

More ideal borrower
  • If you live in the property
  • If you own 20 per cent or more of the property
  • If you are employed full time
  • If you are paying principal and interest
Less ideal borrower
  • If you are an investor paying for an investment property
  • If you have missed mortgage payments
  • If you are paying interest-only
  • If you still owe more than 80 per cent of the loan

If you tick one or more of the less ideal borrower traits, this doesn’t mean you won’t be able to haggle for a lower rate! It’s just worth keeping in mind that your bank may already be charging you a comparatively higher interest rate.

Also, there may be elements of your loan you can change to present yourself as an ideal borrower, and ultimately give yourself more bargaining power when you ask for a lower rate.

3. Research your own provider’s rates

Most home loan providers offer lower, more enticing rates for new customers. But why should new customers be rewarded with lower rates when you’ve shown loyalty to your home loan provider?

The best way to find these discounted rates is to check your bank’s website, check RateCity’s home loan tables or even call your bank pretending to be a new customer to learn what discount rate they offer.

Nick is currently paying the Westpac standard variable rate on the Rocket Repay Home Loan of 5.24 per cent. He logs on to the Westpac website and sees that they are offering a special offer for the Rocket Repay Home Loan of a discount of 60 basis points, reducing the interest rate to 4.64 per cent. However, Westpac states that “discounts do not apply to internal switches”, meaning this lower rate is for new customers only.

When you arm yourself with these lower rates from your provider and their competitors, you’ll have a much stronger argument when asking for a cheaper rate. After all, why should new customers pay lower rates on your home loan or similar products? If your bank is willing to let other customers pay a lower rate, they should be willing to let you do so too.

4. Research competitor rates

There is a wide range of Australian home loan providers who are willing to charge their customers lower interest rates, including your current provider. Before you call up your provider requesting a lower rate, it pays to do your research.

The average owner-occupier variable interest rate was 4.66 per cent (as at January 2018). If you’re paying a higher than average interest rate on your mortgage, it’s crucial you look outside of your provider.

Use RateCity’s home loan comparison tool to find the lowest rates offered across the market.

5. Present all your research

Once you have gathered all your research you should be ready to talk to your home loan provider.

Let them know you want a lower rate, because:

  • You are a reliable borrower for one or more reasons listed earlier, and a loyal customer of theirs.
  • Existing borrowers are paying lower rates (provide examples) and you don’t think it’s fair that loyal customers aren’t being treated the same.
  • Their competitors charge a lower rate for a similar loan types, and that you’re not afraid to refinance.

Keep in mind…

Some home loan providers need you more than you need them. They profit from the fact that most Australians are too scared to ask for a lower rate, and they’re always more likely to offer you one instead of letting you walk away.

6. Call their bluff

News Corp personal finance writer, Sophie Elsworth, is an expert at haggling for a cheaper home loan. She emphasises the importance of knowing your worth as a customer, and not being afraid to call their bluff if needs be.

Mortgage customers. If you are getting nowhere with your bank on dropping your interest rate here’s a trick…ask for a mortgage discharge form. It often results in some serious action. Banks don’t want you to jump ship. They need you more than you need them. #interestrates

Asking for a mortgage discharge form is a great way to show you mean business. And at the end of the day, if your home loan provider is still not willing to offer you a lower rate you should be prepared to refinance; if this is a financially viable option for you.

Check out this guide for tips on what to ask your mortgage lender!

How to talk to mortgage lenders

How to talk to mortgage lenders

Talking to Your Mortgage Lender

Buying a home is one of the biggest purchases we make in our lifetimes. Most of us don’t pay all cash upfront. Instead, we put some cash upfront (the down payment) and take out a special type of loan called a mortgage to make the purchase possible.

When you go through the mortgage pre-approval process, you complete an application that asks you about your finances and the price of the home you would like to purchase. You may also have your credit score checked with a “hard pull” that will appear on your credit report afterwards.

The mortgage lender will perform a preliminary review of your application and accompanying financial documentation, and can issue a letter stating that you are “pre-approved” for a loan of a certain amount. This is called a pre-approval letter, and it can be very valuable to you as you shop for homes and make offers. The lender will then ask for more documentation from you, perform a more thorough review, and finalize your loan amount during the closing period.

Questions to ask your loan officer:

  1. What are the different types of mortgages you offer?
  2. For someone in my scenario, what are the best options?
  3. How can I increase my mortgage pre-approval?
  4. How does my mortgage pre-approval impact my purchase price?
  5. What if the appraised value is less than the sales price?
  6. What are closing costs?
  7. Do you offer lender credits and/or incentives for working with you?
  8. Will I be penalized for making a payment exceeding the monthly mortgage amount?

There’s no such thing as a silly question when it comes to your finances. The most important thing is that you feel fully informed and confident in the mortgage that you get.

Should I shop around?

One thing to keep in mind: applying for a mortgage pre-approval does typically impact your credit. If you are interested in applying for multiple mortgage pre-approvals, consider doing so in a short window of time, as it may mitigate the impact on your credit. We recommend discussing your financial situation with each lending institution before completing the formal pre-approval process.

If you’re struggling to pay your mortgage, you must take action quickly to stop yourself from falling into debt.

Coronavirus – if you can’t pay your mortgage

If you get into debt and your lender thinks you’re not dealing with the problem, they will take action through the courts. This could lead to you losing your home.

There may be ways you can cut down your mortgage costs to stop you falling into debt.

If you’ve already fallen behind with your payments, there may be things you can do to stop from falling further behind and to clear the debt.

To find out more about how you can cut down your mortgage costs or clear what you owe on your payments, see more information on how to deal with your mortgage problems.

Once you’ve worked out how you want to deal with the problem, you will need to contact your lender as soon as possible and tell them what you’d like to do.

On this page, we tell you:

You’ll need to come to an agreement with your mortgage lender. If you can’t come to an agreement or you can’t pay back what you owe, your lender will take you to court and you may lose your home.

If you’re in this position, you should get help from an experienced debt adviser straight away. You should also get help if you’ve started getting letters from your mortgage lender threatening court action.

You can get debt advice from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

Who to contact

The telephone number and address of your mortgage lender should be on your most recent mortgage statement or any other letter you’ve received from them.

If your mortgage is with a high street bank or building society, you could also speak to the mortgage adviser in your local branch. Your mortgage lender may also have a website with information about how to contact them.

What you should say

Once you’ve worked out who to contact, you need to write to your mortgage lender.

You will need to work out how you’re going to deal with the problem first and then put the details in writing. Don’t expect your mortgage lender to suggest how you should deal with the problem as they might not be fully aware of your circumstances. You need to come up with a plan which suits you.

For example, you might be struggling to pay your mortgage at the moment because you’ve lost your job, or are off work sick. But you expect things to get easier shortly because:

  • you’re going back to work
  • you’re going to get benefits
  • you’re getting a pay out from a Mortgage Payment Protection Insurance policy or a loan.

If your mortgage lender knows your circumstances, they might be prepared to give you extra time to pay up.

In the letter to your mortgage lender you should clearly set out how you intend to pay back what you owe.

Your letter should also:

  • give the background to the problem
  • give the reasons why the mortgage payments debt has built up
  • say that you previously had a good payment record, if this is true
  • if appropriate, say how many years it will take to clear the debt, compared to the remaining term of the mortgage
  • whether there is any equity in the property. If you have equity in your property, this means that it’s worth more than what you owe on your mortgage.

If you’re offering to pay back extra each month

If you’re offering to pay back extra each month, this should be based on how much you can afford to pay. To work out how much you can afford, you will need to look at your budget.

You should be sure that you’re offering to pay back an amount you can realistically stick to and that it will clear the debt within the period of the mortgage.

Include an income and expenditure sheet with the letter to your lender which shows how you have worked this out.

You can use our online budgeting tool to help you work out your budget. This lets you print off a financial statement of your income and expenditure which you can show to your lender.

Try and persuade your mortgage lender that accepting an offer worked out in this way is in both of your interests, because you are more likely to keep to it.

You could also suggest to your lender that they accept these arrangements for a certain period of time, after which they can review the situation to see how well it has been working.

You may want to get the help of an experienced debt adviser to help you deal with your mortgage lender.

You can get help from your local Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Your mortgage lender doesn’t want to help

If the person you’re dealing with at the mortgage company is not being helpful, it’s worth trying to deal with someone who has more responsibility, for example, a supervisor or manager.

You should start to make regular payments to your mortgage lender, however small. Even if you can’t reach an agreement with your lender about how to pay off the debt, it may help your case if you are taken to court later on.

If you argue your case in court, the judge may allow you to stay in your property as long as you keep to an agreement to pay. If you’re in this situation, get help from an expert debt adviser.

For more information about what happens when your mortgage lender takes you to court, see What happens when your mortgage lender takes you to court.

You can get expert debt advice from your local Citizens Advice Bureau. To search for details of your nearest CAB, including those which can give advice by email, click on nearest CAB.

There are rules about how your mortgage lender should treat you if you get into difficulties paying your mortgage. The rules say that your mortgage lender must treat you fairly and give you a reasonable chance to make arrangements to pay off the arrears, if you are able to.

More information about dealing with mortgage problems

For more information about how to deal with your mortgage problems, see the following pages:

Applying for a mortgage loan — especially for the first time — can be a stressful experience. Buying a home will be one of the largest and most important financial decisions most consumers make in their lifetimes. Working with an experienced mortgage professional can help alleviate much of that stress and ensure that the loan-application process is successful.

Industry insiders recommend that you consider meeting with a mortgage broker even before you start looking for a new home to determine in advance how much money you can likely qualify to borrow. This part of the process is called “prequalification” and can save a lot of time and trouble by ensuring that you’re looking for a property comfortably within your price range.

Whatever stage of the home-buying process you are in, most mortgage professionals want you to bring certain financial documents and statements to your first meeting to get your loan application processed as quickly and smoothly as possible. If you don’t have all of the documents listed, bring as many as you have available and your broker will let you know what else is needed to complete your application.

First, your mortgage broker needs to certify your identity so be sure to bring either your driver’s license, passport or government-issued photo ID. If you already have found a home and have a purchase contract, be sure to bring that with you to the first meeting, too.

The financial documents most brokers want to see at a first meeting include copies of your two most recent pay stubs, copies of your federal tax returns with all schedules for the last two years and copies of your W-2 forms for the last two years. If you are a first-time homebuyer, plan on bringing the last three years of any income and tax records.

If you are self-employed or own your own business, your mortgage professional will need copies of your federal tax returns with all schedules for the last two years as well as a year-to-date profit and loss statement for your business. If your firm is an incorporated entity, bring a copy of corporate tax returns for the last two years. If you are a limited partner bring a copy of your K-1 filings for the last two years. And if you’re a general partner in a firm, bring your 1065s and K-1 filings for the last two years.

Members of the U.S. military or veterans should bring a statement of service if currently on active duty as well as authorization to live off base (if applicable). If you have been discharged, bring your certificate of release or discharge from active duty and bring DD Form 214, generally referred to as DD 214.

Your mortgage professional will also want to see all of your bank statements going back two or three months for each financial institution in which you maintain checking and/or savings accounts. Also bring copies of current statements for all individual retirement accounts, 401(k), stocks, bonds and any other retirement or investment accounts in your name. Your mortgage broker may also want to see your credit card bills for the past few billing periods and information on any other consumer debt you carry such as car loans or lease agreements.

If you are currently renting your home, bring your lease agreement going back 12 months (three years for first-time time buyers). If you are paying off student loans, bring copies of any student loan deferment letters/agreements. And if you were in a bankruptcy proceeding discharged in the last seven years, bring that paperwork, too.

Be sure to take your time and carefully fill out the application as completely and accurately as possible. Not disclosing any credit or financial problems upfront or holding back requested documents from your mortgage professional could delay the process and potentially prevent your loan application from being approved.

Finally, industry insiders and experts recommend bringing an open mind when you meet with a mortgage professional for the first time. For instance, you may be considering paying a 10% deposit on the price of your new home instead of the more standard 20% so that you have more cash and savings on hand when you move in. But anything less than a 20% down payment will likely cause the lender to require you to take out a private mortgage insurance policy, also known as PMI, for a certain period of time.

A couple should always advise their mortgage lender if they have decided to divorce, according to Jeff Knight, director of propositions at Castle Trust.

In fact, Mr Knight says that legally if a couple are joint mortgagors they both remain jointly and severally responsible for the mortgage debt unless they agree otherwise with the mortgage lender and the agreement is properly documented.

He says: “This is irrespective of which partner remains in the marital home.”

Ronan Marrion, mortgage adviser at Cornwall-based Worldwide Financial Planning, and Tom Riley, head of product at Nationwide, say what a couple need to tell the lender depends upon the terms of the divorce and their own personal circumstances.

Mr Marrion says: “It may be that neither one of the married couple can afford to take on the mortgage in their own right so they agree to keep the existing mortgage in place until they sell.

“On the other hand maybe one person would like to buy the other out or remove themselves from the mortgage/title deeds of the property. At this stage it is probably best to speak with a financial adviser to assess what options may be available with other lenders.”

If one of the couple wants to be removed from the mortgage policy, Mr Riley says they will need to follow the lender’s change of borrower or internal remortgage process, depending on whether additional borrowing is required by the remaining resident to buy out the other partner.

Information about the individual who wants to take the mortgage on in their sole name will be requested by the lender to make sure they comply with lending policy and underwriting criteria such as credit scoring, payment history and affordability, Mr Riley adds.

“If they choose to sell the property, then once the mortgage is repaid [the lender] ceases to be involved.”

In this article

  • Your Financial Rights
  • Making a Formal Complaint
  • Federal Deposit Insurance Corporation
  • Comptroller of the Currency
  • Office of Thrift Supervision
  • Federal Trade Commission
  • The Federal Reserve Board
  • National Credit Union Administration
  • State charted Credit Union
  • Department of Veterans’ Affairs

Complaints about your mortgage lender or broker often concern your interest rate, prepayment penalties, fraud, deception, or other matters about your home.

Taking these steps can help troubleshoot the problem and get results more quickly:

  1. Documenting the problem clearly (emails, paperwork, and dates of the issues)
  2. Trying to resolve the issue directly with your bank or broker
  3. Working with the manager if your agent cannot help
  4. Contacting an attorney to discuss your legal options
  5. Making a formal complaint about a financial institution to various government agencies

If you are unsuccessful in problem-solving with your bank, contact an attorney to discuss your legal options. They may advise you to make a formal complaint.

Your Financial Rights

There are a variety of federal and state laws protecting consumers’ financial rights that an attorney can explain to you.

For instance, lenders and brokers are required to provide certain disclosures to borrowers about rates, fees, and other terms and conditions of lending. If a lender or broker has violated any of the applicable laws, there will be certain legal remedies available to you.

Making a Formal Complaint

You can make a complaint about a financial institution to various government agencies. Below is information about how you can submit a complaint to the appropriate agency.

Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) handles complaints about FDIC insured state banks, which are not members of the Federal Reserve System. You can submit a complaint about your financial institution.

You can also contact the FDIC Regional Offices – Division of Compliance and Consumer Affairs for regional phone numbers and addresses.

Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is a bureau of the U.S. Department of the Treasury. The OCC handles complaints about National Banks. (Usually, these are banks that have “National” in their name or “N.A.” after their names.)

You can submit a complaint by completing the OCC Online Customer Complaint Form.

You can also contact the OCC by mail, phone, or fax.

Office of Thrift Supervision

The Office of Thrift Supervision previously handled complaints about Federal savings and loans and Federal savings banks. In July 2011, it merged with the Office of the Comptroller.

You can submit a complaint about your financial institution by completing a Consumer Complaint Form on

Federal Trade Commission

The Federal Trade Commission handles complaints concerning most non-bank lenders, such as mortgage and finance companies and state credit unions. You can submit your complaint through the FTC’s Online Complaint Assistant.

(Note: The FTC Online Complaint Assistant is sort of a one-stop-shop for a variety of complaints collected by the FTC. This includes complaints about non-financial companies, business practices, identity theft, and episodes of violence in the media. Don’t get confused if you see questions related to these topics when using the Online Complaint Assistant. Just answer yes/no when going through the process so that your complaint can be directed to the right place.)

The Federal Reserve Board

The Federal Reserve Board handles complaints and regulates state-chartered banks and trusts. The agency also administers Truth-in-Lending, Equal Credit Opportunity Act, and the Fair Credit Reporting Act.

You can submit your complaint by completing the Federal Reserve Board Online Complaint Form.

You can also download the form and submit it to the Federal Reserve Board by mail or fax.

National Credit Union Administration

The National Credit Union Administration handles complaints about National Credit Unions. For Federal Credit Union (a credit union with the word “federal” contained in its name or any credit union in Delaware, South Dakota, Wyoming, or Washington, DC), NCUA is the regulator.

You can file a formal complaint by using the NCUA form or contact them by website, mail, or phone.

State charted Credit Union

Some credit unions are probably regulated by a state supervisory authority where the credit union’s main branch is located. These credit unions usually:

  • Do not have the word “federal” as part of its name
  • Are not located in Delaware, South Dakota, Wyoming or Washington, DC

Are you unsure if your credit union is state or federal? Use the Find a Credit Union tool to search by name and look up the credit union’s charter number. Federal credit unions have charter numbers under 60000, state-chartered credit unions have charter numbers greater than 60000.

Department of Veterans’ Affairs

The Department of Veterans’ Affairs (VA) handles complaints about loans guaranteed by the VA. Contact the VA Regional Loan Center by clicking here.


Whether you are looking to purchase your first home, move home or thinking about remortgaging to Handelsbanken, we can help find a mortgage that makes the process smooth and straightforward from start to finish.

We take time to understand your needs, goals and overall financial position to help find a solution to suit you. We can then help you throughout the entire process. You get a direct line to your dedicated account manager, who keeps you up to date, is proactive and makes sure everything is in order at each stage of the process. Key decisions are made within the branch by staff rather than a central computer, so you can be confident that your individual circumstances are taken into account.

What you’ll get with a Handelsbanken mortgage:

  • All aspects of the application are handled locally at the branch, speeding up the process
  • Trusted local valuers with whom we have long term relationships
  • Expert advice from qualified, experienced bankers with local knowledge

We can consider mortgages including:

  • Mortgages into retirement
  • Income from multiple sources, including directorships
  • Rental income
  • Additional security considered

Meeting your mortgage needs

We know that moving house can be stressful, so we aim to make the mortgage process as easy and efficient as possible for you.

As soon as you have found the home you love, speak to your account manager, who will work with you to identify the mortgage that suits your needs and that is affordable. They will keep you updated at each stage of the process, letting you know what is required, if any further information is needed, and what happens next in a timely manner.

Building a new house from scratch can be daunting, but we can make dream homes a reality.

We know that one size does not fit all, so whether you want to renovate your home or are building a new property, you benefit from direct access to your own account manager, and the backing of the branch team who will do their best to make sure everything runs smoothly.

We aim to give you sound advice from beginning to end, to provide you with timely and clear decisions, and we will keep you up to date. We take the time to understand your own requirements and circumstances, and we work to provide a residential development lending solution that suits you.

Each local branch has an understanding of the local market and has built up relationships with trusted local surveyors and solicitors to help provide you with expert guidance and make the process smoother.

  • Beneficial interest rate of one or two years
  • Loan is drawn down in instalments in line with a build contract
  • Loan may include an initial instalment to assist with the purchase of land
  • Ability to apply for a standard residential mortgage interest rate once project is complete
  • Overall development mortgage agreement provided against an independent valuation of project end value

How to talk to mortgage lenders

Taking on a mortgage might be the single most important financial decision a person makes, and accordingly, it may also be one of the most complicated. Simply understanding the type of mortgage loan that is right for your situation can be confusing at best.

In this article, we’ll wade through industry terminology to boil each option down to its essence, so you can better know which may be right for you and your home buying situation. We’ll also review some of the terms you might hear bandied about – Conforming, Conventional – to understand how they fit into the bigger picture.


First, let’s talk about loans that are classified as ‘conforming.’ A conforming loan is one that  meets certain standards set by the Federal Housing Finance Agencies, Fannie Mae and Freddie Mac. While banks and mortgage brokers may originate, close, and sell a conforming mortgage to a consumer, they do not always keep it on their books. Instead, Fannie Mae and Freddie Mac often buy the mortgages from the lender.  This process allows the lender to free-up funds to make more loans to other consumers.

Steps to take before getting a home loan

Deciding to buy a home ranks among the biggest decisions a person can make, which is why it’s wise to go into the process with eyes wide open to your unique financial situation. Doing so will help ensure that before pen hits paper on the loan application, the approval that will get you the house of your dreams is in the proverbial bag.

There are a few steps anyone looking to get a home loan – aka mortgage – can take before application in order to be sure that they are best positioned for approval.

In order for a lender to sell a loan to Fannie Mae and Freddie Mac, it has to be conforming, meaning the bank cannot loan the consumer more than $453,100 (this conforming loan limit is periodically adjusted).

Borrowers who apply for conforming loans typically are offered better interest rates and lower fees.


The most common type of non-conforming loan is a jumbo loan. This type of loan exceeds the threshold set by Fannie Mae and Freddie Mac and because of its size, can be a riskier proposition for the lender. On these loans, borrowers typically pay a higher interest rate, and the lender may ask for a larger down payment.

BBVA Compass offers both jumbo loans, and the Professional Mortgage Loan program, built especially for medical residents, practicing physicians, attorneys, oral surgeons, dentists or CPAs. The Professional Mortgage Loan offers loan amounts of up to $1,750,000 with low down-payment and no Private Mortgage Insurance (PMI) requirement.


Understanding affordability when buying a home

When it comes to how much home you can afford, the answer is not always as cut and dried as the pre-qualification you receive from your lender, says BBVA Compass Director of Real Estate Originations Jose Pascual.

Pascual says that lenders do their best with what they’re given in order to pre-qualify customers for an affordable amount, but there are considerations outside their purview that borrowers should also consider.

A conventional mortgage loan is one that is offered by banks or mortgage companies, and not backed by the government. Because they are taking on more risk when the loan is not backed, banks and mortgage companies will usually ask for some sort of down payment in a conventional mortgage, and typically, if the down payment is less than 20 percent, the borrower pays PMI.

The exception to this loan at BBVA Compass is the Home Ownership Made Easy (HOME) loan program, which offers up to 100 percent loan-to-value with no down payment or PMI required.(1)

Government Insured (Non-Conventional)

In this category of loans, there are several, including an FHA loan, a VA loan and a USDA loan. Each of these loans are government insured, meaning the lender of the loan – typically a qualified bank or mortgage broker – is protected from loss by the government if the borrower defaults.

A FHA loan has down payments as low as 3.5 percent. To obtain a FHA loan, borrowers must pay mortgage insurance premiums and annual premiums upfront. FHA loans also limit borrowers to a certain amount. This type of loan tends to appeal to borrowers with less money for a downpayment, or may be credit challenged. These loans are offered by qualified lenders around the country, including BBVA Compass.

A VA loan is guaranteed by the Department of Veterans Affairs. These loans have no down payment requirement, though there may be other fees included in the loan. Available to U.S. Armed Forces veterans, VA loans are provided by qualified lenders across the country, like BBVA Compass.

USDA loans are built specifically for rural housing. Similar to VA loans, they require no down payment, but may include certain other fees. Qualified lenders fund these loans.

Fixed Loans

A fixed rate mortgage has an interest rate that stays the same for the duration of the loan. With fixed rate loans, your mortgage payment amount won’t change for the term of the loan. Fixed rate loans come in a variety of options, with the most common being 15-year and 30-year. Fixed rate loans can be conventional, unconventional, conforming or non-conforming.

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage, or ARM, has an interest rate that changes at the end of the initial loan term. For instance with a 5 year ARM, the first five years of the loan will have a single interest rate. After the initial period, the interest rate changes to variable and adjusts each year thereafter. The variable rate is based on federally set interest rates, and as such may be significantly higher than the initial term of the loan. These loans are most beneficial for those borrowers who plan to sell their house within the term of the loan, or pay it off quickly. ARMs can be conventional, unconventional, conforming or non-conforming.

To read more about BBVA Compass’ mortgage offerings, click here.

To speak with a mortgage services agent from BBVA Compass, click here.

1 Requires a $500 contribution toward the transaction from the borrower’s own funds.

Terms and Conditions apply to all mortgage loan products. Approval required. NMLS ID 402936

If you need help finding a buy to let mortgage or remortgage then our experts can help. They have access to the whole buy to let market place which means that you dont miss out on getting the best deals. Our brokers are independent which means they can help you find and secure any mortgage from the entire range of products available.

How to talk to mortgage lenders

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How to talk to mortgage lenders

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What to look for in a Buy to Let mortgage broker

How to talk to mortgage lenders

The role of the mortgage broker is to find the best deal that matches your needs

Looking for someone to help you arrange a buy to let mortgage in order to purchase a rental property? If you are not experienced in navigating through the thorny world of mortgages, and don’t know what any of the terms mean for you, or how they can be best applied to your situation, then you need a sensible mortgage broker who can deal with your buy to let requirements as well as researching banks and offering you advice about the right teams for you. With a broker acting as your guide, you will be able to find banks and building societies who can offer you the deals you need.

Are you new to Buy to Let? A broker can help you

If you are a beginner to the world of buy to let, then you may have started taking steps towards buying a property without fully understanding how a buy to let mortgage will work. If you employ a mortgage broker, they can help you through the first months of being a landlord, including negotiating with banks, with the estate agents, and with financial officials, in order to get you the best deal for your mortgage. They won’t be able to help you complete planning permission or fire safety tests, but they can show you which mortgage will work best for you, allowing you to concentrate on making the rest of the process as smooth as possible. When a beginner is looking for a broker, they should be looking for someone with experience in the field, and who is willing to help them through the process from the first step until the mortgage is completed. They might also offer you advice about what type of lender to ignore. If they are able to offer you advice about the process, and what to expect from a buy to let mortgage, then you should certainly ask them to search for a bank or building society that could help you.

What will the broker do?

If you have decided to use a mortgage broker, then you will need to look at the specific services that they are able to offer you. For buy to let mortgages, you should try to find a broker with specialities in this subject. They should be willing to talk to you about what you need from your mortgage, and also about the options you have regarding deposit, fixed rates, and tracker terms for your mortgage. Discuss the type of financial arrangement you want, and let them offer you advice about what you need to do. Some brokers will even advise you to wait and save up a larger deposit in order to get the best deals, while others will work with you in the present to guarantee that you can buy the home you want for the money you have right now. You need to be able to look at the broker’s work, and find out why they have chosen the company that they have.

Your dreams of buying your perfect home can often be curtailed by a lender’s tight purse strings. If you are struggling to borrow as much money as you would like read on for tips on how you can make yourself more attractive to lenders and increase your chances of getting a bigger loan.

How Banks Decide How Much to Lend

When a lender is assessing how much cash to lend you they look at a number of things including affordability (how much they think you can afford to repay), existing debts, your credit rating and your income. For access to your credit rating and report, use our totally free credit report service. In order to maximise the amount you can borrow you need to minimise anything that might be a red flag for a lender and make sure your finances are in the best possible shape. Follow the tips in this guide to get your finances in shape and looking their best.

8 Ways to Boost Your Borrowing Power

Pay off debts

When assessing your mortgage application lenders look at how much money you owe already. In general, the more debt you have, the less you’ll be able to borrow. If you have savings use them to pay off existing debts. Not only will this be cost effective (as interest rates charged on borrowing are generally more than you earn from a savings account) but it will make you more attractive to lenders. Just remember to keep some savings aside for an emergency.

Close accounts

Mortgage lenders also look at how much access to credit you already have. If you have lots of credit cards or a big overdraft facility, they’ll be less keen to lend. If you’ve got a credit facility you don’t need, close the account or ask for the limit to be reduced.

Improve your credit rating

The better your credit rating, the more keen lenders will be to lend to you. There are a number of ways to improve your credit record including being on the electoral roll, paying utility bills on time and having a landline telephone. Find out more with our guide to improving your credit rating or by registering for our free credit report.

Organise your accounts

If you’re self-employed, lenders will want to see evidence of your accounts and income for at least the past two years. The more money you make the better, so although you might want to (legally) keep your income to a minimum for tax purposes, remember the more you earn the greater the amount you can borrow. Fine out more with our guide to getting a mortgage if you’re self-employed.

Get a pay rise

Mortgage lenders look at your income when deciding how much to lend you – the more you earn the better. So, bite the bullet and ask your boss for a pay-rise. You can find top tips on how to get a pay rise here.

Shop around

Different lenders have different attitudes to how much they’ll lend, so it’s important to shop around. A broker with access to the whole mortgage market can advise you on which lenders are best to approach in your particular circumstances. You can find a list of brokers here. You can also find out which lenders you would be best suited for by checking your credit score and borrowing power.

Spend less

As well as looking at your income, lenders also assess “affordability” and analyse how you spend your money. They look at childcare costs, bills, living expenses and lifestyle choices such as holidays. So if you want to borrow more, reduce your outgoings wherever possible. Use this budget planner to get a clear idea of where your money goes, so you can make cut backs.

Extend the loan term

A typical mortgage term is about 25 years but you can lower your monthly repayments by opting for a longer term – most lenders will consider up to 35 years. This can boost your borrowing power as it makes payments more affordable, but bear in mind the longer the mortgage term, the more interest you’ll pay overall.

Using Other People to Boost Your Mortgage

If the tips above haven’t increased your potential home loan enough there are more substantial measures you can take to dramatically boost your borrowing power. Joining forces with other people can significantly increase your mortgage and there are a number of ways you can do it:

Get a Guarantor

Asking a parent to guarantee your mortgage can boost your borrowing power. However, it will mean the lender checks out your parent’s financial situation too and they could be held liable for the debt if you default on repayments. You can find out more about guarantor mortgages in our guide to buying with your parents.

Get a Joint Mortgage

Buying with a partner can boost your borrowing power as both your salaries will be taken into account. If you’re single, buying jointly with a friend or having your parents named on the mortgage can boost your borrowing power.

Use Your Family’s Savings

Some lenders offer family offset mortgages which allow parents (and other family members) to help their children on to the property ladder. With this type of deal the family member puts the cash into a linked savings account and it acts as a deposit, therefore lowering the monthly mortgage payments as interest is only charged on the remaining balance. Crucially, although the family member retains ownership of the money, they won’t have instant access to it, so should only hand over cash they don’t need in the near future. These can help boost the amount you can borrow as your families savings might massively increase your deposit. Find out more in our guide to buying with your parents.

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