6 Questions to Ask Your Mortgage Broker

There are many reasons why you would want to work with a mortgage broker. First, a mortgage broker can process the mortgage application for you—saving you a lot of time and effort. Then they can also shop around for home loan rates and terms and help you choose the one that suits you best.

However, there are numerous mortgage brokers out there. So it's only reasonable to make sure that you work with one that has your best interests at heart. Not only that, but they also need to be knowledgeable about what they do.

To help you choose the right mortgage broker, here are 6 questions you can ask them:

1. What kind of mortgage is right for me?

There are many different kinds of mortgages, all with different rates, terms, and requirements. The most common ones are:

• Conventional Loan: Conventional loans are loans that are not guaranteed by the government, though they may be offered through government enterprises such as Fannie Mae or Freddie Mac. The minimum downpayment is 3% for first-time homebuyers and 5% for non-first-time buyers. Conventional loans usually have a fixed-rate interest. This means that your interest would stay the same throughout the life of the loan. However, your interest rate will depend on your credit score, with 620 as the lowest acceptable score.
• FHA Loan: FHA loan is an excellent alternative for those having trouble qualifying for conventional loans. This type of mortgage is backed by the government, allowing it to provide a lower interest rate. The minimum credit score required for FHA loans is 500. But if your credit score is 580 or higher, you'll be allowed to provide a 3.5% down payment. If it's less than 580, then you'll have to put 10% down.
• VA Loan: VA loan is guaranteed by the Department of Veterans Affairs. This type of mortgage is only available for military veterans and their relatives. VA loans are a lot stricter compared to other loan types. Its requirements include having a credit score of 580 or higher, having served 181 days during peacetime, served 90 days during wartime, or served 6+ years in the national guard or the reserves.
• USDA Loan: USDA loan is a great choice for those who want to live in rural areas—although it must be a USDA-designated area. There is no down payment required, but your credit score should be 620 or higher. Moreover, your income should not be higher than 15% of the local median salary.

Although you can only choose one, you might be eligible for multiple mortgage types. A mortgage broker can help you understand your options and assist you in selecting the best one that suits your financial needs and situation.

2. How much money should I put down?

The ideal down payment amount is 20% of the purchase price. This amount would save you from paying mortgage insurance. But if you can't put 20% down, the amount you need to give will depend on the type of mortgage you have. With conventional loans, you'll need 3-5% down; FHA loans at least 3.5% down; and for both USDA and VA loans, you'll have the option of not paying a down payment at all.

3. Can I qualify for down payment assistance?

For those having trouble with providing a down payment, a Down Payment Assistance program might be an option for you. This program is great for first-time homebuyers, educators, civil servants, or those whose income is less than or equal to 140% of the state or county Average Median Income. For more information about down payment assistance requirements, visit this page.

4. What information do I need to provide?

Generally, the information that you need to provide for a mortgage application includes:

• Proof of identification
• Monthly income and household expenses
• List of assets and debts
• Bank statements
• Income verification (e.g., 30 days worth of pay stubs, two years worth of W-2 forms)
• Credit explanation for derogatory items on your credit history

For more information on the details needed for a mortgage application, please contact us at (813) 284 - 4027.

5. How much would buying a home would cost me?

Other than the down payment, there are other out-of-pocket expenses that you need to prepare for, including:

• Earnest money
• Home inspection
• Escrow fee
• Homeowners' Association transfer fee
• Property tax
• Owner's title insurance
• Underwriting fee

6. How long will the mortgage application take?

Generally speaking, a mortgage application process can take from 14 to 60 days. However, this depends on certain factors, such as the time it takes to get pre-approved, looking for a home, and getting an appraisal or inspection.

Do you need more help?

If you have more questions about mortgages or need help in applying for one, Ebenezer Mortgage Solutions is ready to serve you. Call our mortgage broker today at (813) 284 - 4027, and let us help turn your dream home into a reality.