Shopping for low-down payment mortgages in Sayreville NJ, what you need to know.

Shopping for low-down payment mortgages in Sayreville NJ, what you need to know.

You now want to buy a home and need a low-down payment program or lender.  You would think it would be easy to call around to mortgage companies and ask, “What is today’s interest rate for a low-down program”.

There are a few misconceptions that many have when shopping for low-down payment programs:

• That all lenders have one basic in the same rate that they offer.
• That big lenders or big banks have better rates than smaller lenders and can give discounts.
• Because my bank is servicing my checking and saving accounts this means that’s how they can offer lower rates.
• Since this is my first home I automatically qualify for a low-down program.
• I owned a home 4-5 years ago I’m disqualified from any kind of program.

Lenders have many different types of programs and interest rates, which dependents on many different factors. Rates should be relatively close from one to the other. Why should interest rates be the same or very close? Because lenders get the rates from basically the same place, which are dictated by investors on Wall Street.

We just heard from a potential client shopping for a loan that their realtor told then that XYZ company can give discounts on the rates. This coming from a realtor that is speculating. This is a blanket statement, way too many factors involved when determining rates. Just because a bank or lender might be servicing your loan doesn’t mean that is how they can offer lower rates. In reality, even that bank or lender that is servicing your loan, has sold bits and pieces of it to other investors. 

Some programs are based on location of the property, in that the property is in a low to moderate census track for CRA (Community Reinvestment Act), so the income may not be factor. But some programs are basis on you meeting low to moderate census track income for CRA (Community Reinvestment Act) for that location.

Here’s many different factors involved when shopping for a mortgage program:

Goals – What are your goals, for the next 5, 10, and 20 years. This could help a good loan officer determine if you should pay points or not, or what mortgage program to offer.

Credit scores- Your credit scores are a HUGE factor when it comes to determining your interest rate and or the penalties because of your fico credit scores.

Interest Rate Lock-In Period- How long is my interest rate good for and when can you lock it in should be talked about. You need to shop on the same day, because rates change daily, sometimes twice in one day.

Loan Amount – The size of the loan amount will have some impact on your interest rate. All lenders have a basic profit margin that needs to be met on each loan. The lower the loan amount, the more points it may require or a higher rate that pays more premium back to the lender.

Size of down payment – This used to hold true for conventional loans, because Fannie Mae and Freddie Mac have pricing hits depending on how much you put down and what your credit scores are. A minimum of 20 percent down payment is not the standard anymore. New first-time homebuyer programs are available with as little as 3.5% down. The cost of the mortgage insurance (MI) maybe paid by the bank depending on the borrower's credit score and location of the property there buying. Borrowers with lower credit scores may be better off with an FHA loan. The disadvantage with FHA loans is that the borrower cannot cancel the MI for an FHA loan. The only way to get out of it is by refinancing into a conventional loan.

Just because one bank/lender advertised a low rate, doesn’t mean it’s true. All of the factors that I mentioned above need to be reviewed and met before offering any such rate.

Hope this helps.

Shopping for low-down payment Mortgages in Sayreville NJ, what you need to know. by Tony Busanich a loan officer with TD Bank, a portfolio lender from Maine to Florida. You can trust TD Bank to deliver a superior mortgage experience. Whether you’re purchasing or refinancing, we provide straightforward, easy-to-understand products and advice, allowing you to make smart borrowing decisions that meet your needs today and tomorrow. My web site at www.tdbank.com/tonybusanich Please contact me at 732-306-2231 or by email at anthony.busanich@td.com .