Jane Hale asked:




Shopping around for a new home can be a long and tiresome process. Between overpriced housing markets and potential bidding wars, it is easy for a home buyer to become frustrated. However, the process of finding a good mortgage lender should not be stressful. Choosing a good lender is critical. For this reason, home buyers must avoid rushing the process or making haste decisions. If buying a home in Alabama, buyers should consider three factors when selecting a mortgage lender. Consider the following helpful tips for locating a reputable and trustworthy home loan lender.

Home Loan Lender’s Reputation

When applying for a home loan, buyers have many different lenders at their disposal. They may choose to apply for a loan with their personal bank, credit union, or use a mortgage company. Regardless of method, the lender chosen must have a good reputation. According to Alabama’s Fair Housing Act, mortgage lenders cannot refuse a loan application because of a person’s race, nationality, gender, or religion. On the other hand, some agents will discourage the seller from accepting bids or offers from buyers who have been pre-approved by an unknown or shady lender. Before choosing a mortgage lender, do your research. Contact the Alabama Better Business Bureau and inquire about complaints. If possible, choose a lender by referral

Online Home Mortgage Brokers

Another effective method for choosing a good lender is to submit an application with a mortgage broker. In a nutshell, brokers are middlemen. They do not lend money. Rather, they match home buyers with lenders and home loan programs. Because brokers have access to a wide assortment of loan programs, this is perfect for first time homebuyers, bad credit applicants, etc. Do you need down payment or closing costs assistance? Did you experience a bankruptcy or foreclose? If so, a mortgage broker can help.

Compare Mortgage Rates from Different Lenders

Currently, Alabama home mortgage rates are slightly higher than the national average. With this said, it is important to obtain mortgage rates from more than one lender, and make a thorough comparison. Many homebuyers mistakenly apply with a single lender, and accept their quote without shopping around. In some instances, this results in paying more for a loan. Fraudulent mortgage lenders earn a huge profit by charging unreasonably high rates. To avoid dishonest practices, get quotes from at least three lenders.

Tamara

Kristin Abouelata – Home Loans asked:


With the current “mortgage meltdown” we hear so much about these days, your average consumer thinks that the days of 100% financing have gone by the wayside. True, you are hard pressed these days to find a bank or lender that will want to carry a second mortgage that combined with a first mortgage adds up to 100% financing. That’s because if there is a default, sitting in second lien position is particularly dicey. Too much risk is involved. And since, in recent history, that scenario of the 80/20 combo was the most common 100% financing vehicle available to a certain group of consumers (non first time homebuyers), there’s a misconception out there that 100% options are all but dried up.

But, a-ha! There is hope for someone who has great credit but prefers to invest his/her assets elsewhere when rates are so low. It’s called the Flex 100. And it can apply to purchases and refinance transactions.

I heard an analyst mention on television the other day that mortgage money is so cheap right now it’s like a sale at Macy’s. That made me chuckle, but it’s true. In which case, why not invest your money elsewhere if you qualify for 100% financing. After all, the homes are still appreciating in most areas, but not at the stellar rate we saw in the past.

The Flex 100 requires you to invest $500 of your own cash towards the transaction, so I guess it’s technically not 100% financing, but it’s pretty darn close. And no, you don’t have to be buying your first home to get this deal. You can actually have owned a home in the past three years! However, it does apply to financing your primary residence only. You can’t get this deal for that nice cabin in Gatlinburg you want to use on the weekends or for that great rental down the street you think you can get a good deal on. You’ve got to live in the house to qualify for this financing.

But you can do a refinance, as long as it’s not a “cash-out,” meaning you’re not paying off debt or taking equity out of the property. It must be a rate term refinance only. However, you can pay off that second mortgage or home equity line of credit you hate, IF you obtained that 2nd lien mortgage when you got your first mortgage (a piggy back closing, we call it). Or to make it clearer, you originally had that 80/20 combo mentioned earlier. If you got that home equity mortgage a month or two after your initial closing to build a deck or payoff a credit card, than it that won’t work for a Flex 100 refinance.

What about your credit score? Well, it will affect the price you get, but there is no “minimum” credit score required for this program. You just have to get an approval through the automated underwriting system required. But be realistic – if you’ve got “iffy” credit, you probably won’t get an approval. A borrower with a credit score below a 620 would probably have to have a low loan to value or debt to income ratio for a chance of an approval.

A Flex 100 may or may not make sense for you. But hey, at least you know it’s an option. Your lender should be able to help you determine if this opportunity to flex your mortgage muscle makes sense for you.



WILBURN