If you’re looking for a “mortgage lender near me,” chances are you’re about to embark on one of the most pivotal experiences of adult life: buying a house. As exciting as this time is, it is wrought with important decisions that you will make, from renovations and upkeep to long-term financing options.
When you’re buying a house, one of the most important decisions you’ll make is which mortgage lender to choose. There are many different types of mortgage loans available, and it can be confusing to know which one is right for you. In this article, we will discuss the basics of conventional mortgage loans and what the difference is between them and FHA loans. We’ll also give you some tips on how to choose the right mortgage lender for your needs.
What Is a Conventional Mortgage?
There are several different kinds of mortgage loans available, each with their own set of benefits and drawbacks—but you’ll likely want to know what a conventional mortgage loan is before you make the decision of how to finance the purchase of your new home. A conventional mortgage is any mortgage that is not backed by the federal government and which goes through a private lending agency. Conventional mortgages may be guaranteed, however, by federal enterprises Fannie Mae and Freddie Mac. (For More on Fannie Mae and Freddie Mac, check out our recent article on the topic!)
What Is a Government-Backed Mortgage?
Also referred to as an FHA Loan, government-backed loans are insured by the Federal Housing Administration and are known for typically having lower credit score, interest rates, and down payment requirements than conventional loans. However, it is not as easy to get a house approved for an FHA Loan, as it must first pass rigorous inspections.
How Do Mortgage Loans Work?
If you’ve looked at the real estate market lately, it’s likely not news to you that buying a house is one of the biggest purchases you are likely to make in your lifetime. As such, the process is often facilitated through the use of loans and monthly mortgage payments. This allows you to pay off your mortgage over time, rather than all at once—which for many average Americans is not a viable possibility.
Once you’ve decided which type of mortgage loan makes the most sense for your circumstances, you will have to content with the monthly payments. Each monthly payment can be broken into four different categories: taxes based on the value of your house in your neighborhood, interest from the loan, principal, which is the amount of your balance that is due each month, and insurance, which protects your home from natural disasters, fires, and other hazards.
Depending on the type and terms of the loan you have procured, you may be able to refinance your mortgage in due time, which can have many benefits, including lowering your monthly payment, locking in a fixed interest rate, eliminating the need for mortgage insurance, and more.
What Is the Difference Between a Mortgage Lender and a Mortgage Broker?
Not to be confused, these terms are distinct in that a mortgage lender is the institution which loans homebuyers the money, while a mortgage broker is an individual who finds an appropriate lender for your circumstances.
Can the Mortgage Lender Pull Out?
Many prospective homeowners rely on mortgage loans to finance the huge purchase of their home—however, this effort can sometimes be frustrated by mortgage lenders withdrawing their offer before move in day. In fact, this can occur at any point during the process of securing a loan, from the moment of submitting your application to after you’ve exchanged contracts with a lender.
Generally, however, a mortgage lender choosing to withdraw their offer should not come as a surprise—it should be outlined in a portion of the written mortgage offer in clear terms. Common reasons why mortgage lenders tend to pull out include:
- Failed credit checks
- Expiry of the mortgage offer
- Problems with the property
- A change of finances or circumstances
- Suspicious or fraudulent activity
It is rare, but mortgage lenders can even withdraw their offer on the day of completion of the sale as well, due to a sudden change in circumstance, a defect with the legal title, offer expiry, suspicious activity, changed lender criteria, or even errors on the application.
Which Mortgage Lender Lends the Most?
While this question is incredibly common, the answer is a little more difficult to pinpoint in that it really depends on a lot of circumstances. The prospective homeowner’s debt-to-income ratio, current interest rates, the size of the down payment, and the length of the mortgage lifespan are all factors lenders consider when looking at extending loan offers. However, if you have unique circumstances like poor credit or a minimal down payment, it’s best to speak with a professional mortgage broker so they can point you in the right direction for financing your house over the long-term.
Which Mortgage Lender Is Best?
Because everyone’s circumstances are different, the answer to this question varies widely based on the homebuyer’s needs—but typically this question can be boiled down to whether you want to go through a big mortgage lender or a smaller credit union. There are pros and cons to both options; with larger banks and lenders, you are likelier to have more options for financing than you will with credit unions, they’ll likely have accompanying loan insurance, and you also won’t have to worry about being a member. However, depending on the credit union, there can be perks to financing through a smaller lender, including less fees, easily approved loans, and lower rates than their big bank competitors.
Mortgage Lender Near Me
Because there are benefits to both types of lenders, many prospective homebuyers look for mid-range lenders like Gain Mortgage Group for a wide array of financing options, term flexibility, and attentive customer service. Are you ready to speak to a mortgage broker today to discuss the best terms for your mortgage? Contact Gain Mortgage Group today!