How do I choose the best mortgage lender for me?
The sign of a good mortgage is one that saves you money over the years and provides excellent customer service. You want a company you can call if your situation changes and you want to refinance or make other changes to your mortgage. A solid lender offers more than savings. Here are some other features to look for:
- A lender who will be happy to explain the loan process to you
- A transparent lender, letting you know the total amount you will pay
- A lender who answers your questions in a timely manner
- A lender that offers both low interest and low fees
How Do I Get Approved for a Home Loan in Maryland?
Some find the approval process stressful. You can minimize stress by following these steps.
- Order a free copy of your credit reports. Once a year you are entitled to a free copy from each of the “big three” credit reporting agencies – Equifax, TransUnion and Experian. Order all three online via annualcreditreport.com. Once you receive them, go through them with a fine-toothed comb, looking for errors. If you find an error, dispute it with the credit reporting agency in question. The idea is to make sure your credit reports are as accurate as possible.
- If your credit score is low, take steps to improve it before applying for a mortgage. It may take a while, but a higher credit score can save you thousands of dollars over the life of the loan.
- Gather all necessary documents in a place. That way, when a lender asks to see your latest tax return or W-2 for the past two years, you won’t have to waste time digging for them. As you gather your records, make a list of your outstanding debts. Part of the approval process is comparing the amount of debt you have against your income.
- Shop around for mortgage lenders. If you’re worried about the check hurting your credit score, you have nothing to worry about. Although your credit score will be shaken up a bit by a firm credit check, as long as you complete all loan purchases within two weeks, all inquiries are consolidated into one check. A few payments made on time should bring your credit score back to its previous (or higher) level.
- Provide lenders with all requested documents in a timely manner. The sooner you get the supporting documents to the lender, the faster the lender can process your application.
- Once you’ve been approved, compare offers. Look at everything from the APR to the fees charged by each lender. The best rate doesn’t tell the whole story. Only by comparing rates and fees can you determine the best mortgage lender for you.
What credit rating do I need for a mortgage in Maryland?
Depending on the type of loan, it is possible to be approved for a Maryland mortgage with a credit score as low as 580 to 620. The important thing to know about getting approved for a loan with the lowest score possible is that you will have to pay a higher interest rate than you would pay if your score were higher. One solution may be to take some time to establish your credit score before applying.
How much is a down payment for a home in Maryland?
The amount of down payment needed depends entirely on the type of loan you take out. For example, a VA loan requires 0% down payment and an FHA loan requires a minimum of 3.5% down payment. Buyers who put 20% or more on a mortgage are not required to pay monthly mortgage insurance. Mortgage insurance is a fee you pay to the mortgage company. The lender uses the fee to purchase insurance from a third party. This way, if you fail to repay your loan, the lender can recoup the loss.
What homeownership programs does Maryland offer?
The Maryland Mortgage Program offers a range of programs, including:
- 1st time advantage: Offers first-time buyers the lowest rate available on a 30-year fixed rate mortgage.
- Flexible Loan: A 30-year fixed rate loan with additional funds for down payment and closing. Assistance is available in the form of a deferred loan, an interest-free loan or a direct grant.
- Partner correspondence: An interest-free deferred loan used to cover the down payment and closing costs.
And then there are specialty loans, like:
- Home Ownership Program VI: Available to borrowers in Montgomery County.
- Accommodation capacity : Provides financial assistance to homebuyers with disabilities.
- Maryland SmartBuy: Available to homebuyers with eligible student loan debt.
What else should I know about buying a home in Maryland?
With current Maryland mortgage rates, it’s tempting to buy a home. But before you go house hunting, analyze the numbers to find out how much you can afford. Once you know how much you’re comfortable spending, stick to your budget. There are few things more uncomfortable than living paycheck to paycheck because of a mortgage payment.
If the current market pushes you beyond your comfort zone, you can wait. Waiting means more time to collect a larger down payment and to choose the lender that best suits your needs.