After going to this meeting, I learned how UNPREPARED we were for buying a house. holy cow. So to begin, I did all my research online, apparently that’s frowned upon! So most of the questions I went in with, either didn’t apply or I crossed them off!
She began by explaining to us the difference between Conventional loans and FHA loans (federal loans), which there is barely any difference. For whatever reason, people “like” conventional more and will accept that offer instead of an FHA offer. This is something I still don’t understand but I just shrugged my shoulders and said okay…
Next, she explained that with FHA, the interest rates are much lower (generally) and conventional has higher interest rates. Both of the loans have [basically] the same outlines and no penalty for early payoff, which is what we’re all about! Conventional loans also need a slightly higher credit score than FHA and if your score isn’t high there is a possibility of having a higher interest rate. Our mortgage lender is the best and we 100% trust her and I think she will do all she can to help us out. This is the best thing we have going for us because the housing industry is dark in some areas and seeing what my brother had to go through with his fiance and their realtor is just a scary thought, she was awful.
One thing I took note of was that you can give something called a “good faith” deposit, meaning you put in your offer with an additional amount of money, like 3k or 4k separate from the offer. This money insures the seller you are serious about the house, making them more interested in accepting your offer. The best part is that if you put down this money, it gets put in escrow, which basically means it is held by an accountant until the loan goes through and they ensure that the money you put down as your good faith deposit is taken out of the total loan, therefore reducing the price. This is separate from the closing costs and taxes, etc.
Another thing to take note of is that when you are buying a home, if you use a realtor (which you should) the cost of the realtor is paid by the seller. When the seller works with a realtor they sign an agreement with the seller so that a certain percentage of the sale of the home gets split 50/50 between the two realtors each party is using. That takes away from the pile of expenses that tag along with buying a house!
In addition to the realtor fee being paid, there IS a cost for the mortgage lender that you use. Basically the reason to use a mortgage lender is so that a professional, who knows what they are talking about, is talking to the banks instead of you. If the lender is a good human being, they will explain to you that multiple mortgage companies that strictly give money for mortgage loans, pay lenders for giving them business. These companies pay the mortgage lender BUT there are still fees associated with using one, these fees are determined differently based upon which bank you choose to use. A good lender will give you options, some offer a lower interest rate but a higher price for the lender up front, but some of them have a bit of a higher interest rate but a lower price for the lender. Everything is in your hands (or it should be) at this point.
We were looking at rural areas for our home and because of that, our state offers a rural home buying grant which basically allows you to not have a down payment, it doesn’t go into your mortgage loan or anything you just…don’t have to have a down payment! CRAZY! However, apparently we “make too much”, somehow that is possible…I can’t believe it. Combined we make less than 70k just to give you an idea. There are some parts of home buying and the market that I think I will never understand.
There were a few more things that she went over with us that I can write about another time if you guys are still interested but for right now my wheels in my head are turning and I’m trying to figure out what we can afford and what we can do.
Let me know if you guys have any questions! Also if there is anything else you know that I haven’t included in this post!
3 thoughts on “What I learned from the Mortgage Lender”
Ah, how I remember embarking on the first time home-buyer journey back in 2015!
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