Looking for the Top Mortgage Lender in New York City?
When you’re searching for your first home, you’re also searching for your first mortgage lender.
Now, it’s difficult to make specific recommendations on lenders because it’s way too tough to stay up to date on the many thousands of lenders who work in the New York State Area
However, USDALoanInfoNewYork can give you some very useful tips for how to approach your search for a lender.
When you’re looking for a mortgage lender you want start off by talking to a mortgage broker who has a good reputation in your area.
So let's say you want to invest in propertybut you don't have the minimum 20% deposit required.
Well, you're likely going to haveto pay what's called Lender's Mortgage Insurance.
But what exactly is Lender's Mortgage Insuranceand is it worth the cost? In this episode, I'm going explain Lender's Mortgage Insurance.
What exactly it covers and why you would want to get it.
Hey, I'm Ryan from onproperty.
Au, helpingyou find positive cash flow property and I've just moved house.
If you're watching the video,you can see a bunch of boxes in the background behind me so I apologize that I don't havethe best setup today, but I did want to create some good content for you.
And this is a questionthat a lot of people ask.
A lot of people want to see lender's mortgage insurance explained.
And I do feel like often times, banks and lenders and sometimes mortgage brokers don'treally explain exactly what lender's mortgage insurance is or they don't take enough timeexplaining it so you actually understand it.
So we're going to get down to it, try andunderstand exactly what it is and why it could benefit us and whether or not it's worth payingfor.
Lender's mortgage insurance is an insurancefee that helps to cover the lender when they're taking an increased risk on a loan.
So, lender'smortgage insurance, some people believe that it's actually to cover you personally as theborrower of the loan, but it's not.
It's for the lender to protect them if they're takingan increased risk on a loan.
What exactly is an increased risk? Well, for most properties- most residential properties - banks want to see at least a 20% deposit in which casethey won't charge you lender's mortgage insurance.
They like to see a 20% deposit because ifyou, for some reason, default on your loan and they need to sell their property, they'requite confident that they're going to get at least 80% of the value that you paid forthe property back when they sell the property and this will cover their loan.
However, if you're only borrowing 5% of theproperty's value, then they're a lot less confident that if you default on the loanthey're going to get 95% of the value of the property back.
So it's a higher risk loanfor them.
And so, in order to cover this higher risk, they charge an insurance fee to coverthat extra risk.
Obviously, a lot of people will take out this insurance, not everyonewill need it.
That's the way that insurance works.
So the banks will charge you a one-timefee and everyone else a one-time fee and I guess this insurance covers them against thosefew circumstances where people do default on a loan and they have more trouble sellingthe property and getting enough value back.
So lender's mortgage insurance, it's a one-timefee that you pay and it goes to protect the lender because they're taking an increasedrisk on you to get the loan.
This sounds like it's not very beneficialto you, right? It's a fee that you have to pay, generally, it's added on to the loanso your loan gets bigger, but you've got to pay it and it protects them as the banks.
Well, what's the benefit to you as a borrower? Well, the benefits aren't obvious, but theyare there.
The benefit of lender's mortgage insurance is that if you don't have the fulldeposit, then you can still get money from the bank.
If lender's mortgage insurance didn'texist, then if you didn't have a 20% deposit, you might not be able to get a loan at all.
So, those of you who are going out and wanting to invest with a 5%, 10%, 15% deposit, youwould need to keep saving.
Or, the flip side of that is if they would still lend out themoney, they would need to hike up their interest rates an give you much larger interest rates,so you wouldn't have a great interest rate on your property.
You'd be paying a certainamount of points above the standard interest rate because they're taking increased on that.
So, even though lender's mortgage insuranceis a fee that you need to pay, at least, you can still get a loan and you can still geta loan at a good interest rate.
If lender's mortgage insurance didn't exist, then youprobably couldn't do that.
So, lender's mortgage insurance does have value to borrowers.
However,it's just a bit less apparent than the value that it is for the lenders.
So how much does lender's mortgage insurancecost? This is an impossible question to answer because there's so many different varyingfactors.
For example, the value of the loan is a varying factor.
The percentage of deposit- whether you've got 5%, 6%, 10%, 15%.
That's all going to affect the value of the lender'smortgage insurance that you have to pay.
Basically, the larger the risk the bank feels that they'retaking, the larger your lender's mortgage insurance is going to be.
They may take intoaccount whether you've got proven savings or not.
And if you don't have proven savings,your lender's mortgage insurance might be higher.
They might also look into your credithistory and things like that, but I'm not really sure if that affects lender's mortgageinsurance.
But another factor is that lender's mortgage insurance varies from lender to lender.
So you may go to one lender with the same loan value, the same percentage of depositand you may have a slightly different figure than if you go to another lender.
So if youwant to find out how much lender's mortgage insurance is going to cost for your specificsituation, then just go to Google, type in "lender's mortgage insurance calculator".
You should get a few of those come up and you can punch in your figures and it'll giveyou a pretty close estimate to how much you're going to pay.
But, obviously, you're goingto need to speak to your lender or speak to your mortgage broker to get a more accurateestimate of how much lender's mortgage insurance is going to cost.
If you want to avoid paying lender's mortgageinsurance, the only ways I know how to do this is to save a larger deposit.
So thatmight mean 20% for residential property, it might mean 30% for commercial property.
Butmake sure you speak to lenders to find out how much you'll need to save.
So you can savea larger deposit.
You could buy cheaper properties so your deposit is now worth more as a percentageof the property.
So if you get that percentage over 20% for residential, then you may beable to avoid lender's mortgage insurance.
Or, you can get a family guarantor on yourloan.
so if you've got parents or you've got immediate family who are willing to put uptheir property as security for your loan, then the banks can take some security forthem.
It then becomes a less risky deal for the banks.
And, therefore, you don't haveto pay a lender's mortgage insurance.
So, having a family member go guarantor on yourloan is a way to reduce or remove lender's mortgage insurance.
So, that's how you canavoid it.
Save more, buy a cheaper property so you're deposit's worth more as a percentageof your property or get a family to guarantor your loan.
The last question and thing that I want tocover is: Is it actually better to pay lender's mortgage insurance or is it better to waituntil you have a large deposit? I've seen people talk on both sides of the scale andto say you should absolutely never pay lender's mortgage insurance.
You should always savea 20% deposit when you invest.
Lender's mortgage insurance, absolutely wasted money becauseit's a fee that goes to the bank and you've got nothing to show for it.
And then, theother side of the pendulum are people saying that you should always pay lender's mortgageinsurance and always invest with the smallest deposit possible so you've got the least cashin the deal so that you can take the cash you do have and invest in more propertiesand grow your portfolio faster.
So, some people say never pay it, always save at least 20%.
Some people say always pay it, put as little cash into each deal as possible, which meansyou're going to pay basically the maximum lender's mortgage insurance for your situation.
So there's people on both sides of the table.
I think a better approach to it is to actuallylook at your own situation and assess whether it's worth it for you.
Lender's mortgage insurancecost thousands of dollars.
So you need to weigh up: is it worth investing in this propertynow with the smaller deposit and paying thousands of dollars versus actually saving more toget a deposit? Someone who only has a 5% deposit, they have a lot of trouble saving, but theycould get into the market now.
Maybe they're great at renovation so they can build equityand value in their property, it might be worth investing for them and paying the lender'smortgage insurance because they can into the market faster, they can build equity and they'regoing to make more than the lender's mortgage insurance cost them.
Or they might be someonewho's more risk-adverse.
They want a larger deposit or maybe they've got 15% and they'regreat saver so it's only going to be a couple of months until they're at 20%, well then,it might not be worth it for them to pay lender's mortgage insurance because they are more risk-adverseand they can save the money so they don't have to pay it anyway.
I think the best approach is to look at itand say, what are the risk versus the reward? How much is the lender's mortgage insurancegoing to cost me? And am I going to make more money back than the lender's mortgage insuranceis going to cost me? So if I can invest one year earlier, but I have to pay lender's mortgageinsurance, can I make that money back in one year of capital growth? Or one year of theability to have access to that property and improve the property? Or one year of positivecash flow from a property? So how much is it going to cost me? And then, how much amI going to make out of that and can I make more than it's going to cost me? And that'skind of how I would assess it.
For me personally, I would pay lender's mortgageinsurance to get into the market earlier because I'm not the best saver in the world.
So ifI had enough deposit to go, but it means I got to pay lender's mortgage insurance, aslong as I've done my research, I'm confident in the area, I'm confident in the propertythat I've purchased and I've got a strategy to make money for that property, I'm happyto lock that property down.
Pay some lender's mortgage insurance, but I get it and I'vethen got the opportunity to make money versus just saving and waiting and waiting and thenmaybe not investing in the future because we all know things happen that dwindle ourmoney supply.
Emergencies come up or we decide to go on holidays or whatever it may be.
SoI'm not the best saver so I like taking action, locking it in and moving ahead.
Other peopleare different.
So you really need to assess whether it's worth it for you.
I hope that this has explained what exactlylender's mortgage insurance is and then you can assess for yourself whether or not youthink it's worth the cost that it's going to cost you or whether you'd be better offactually saving extra money so you don't have to pay lender's mortgage insurance.
Just tocover it off again, in case you didn't completely get it at the start, lender's mortgage insuranceis a one-time fee that you pay on the creation of your loan and that fee goes towards de-riskingthe banks.
It's lender's mortgage insurance, it's their insurance - the lender's insurance.
It's going to protect the lender against the increased risk their taking on you becauseyou don't have what they consider a large enough deposit to be a low-risk loan thatthey're riding.
So you pay a one-time free, it protects them.
Apart from that, there'sno benefit to you.
It means you can borrow money, but that money is protecting the lender.
It's not going to protect you in any way.
I hope we made clear what lender's mortgageinsurance is.
So when you're talking to your mortgage broker or talking to your lenderand they mention it, you say, "Okay, yup, I understand.
That's a fee I have to pay becauseI don't have a large enough deposit and it's helping you to be able to lend me this moneywithout charging me an exorbitant interest rate or without saying, 'No, sorry.
We can'tgive you that loan.
'" I'm a big fan of lender's mortgage insurancein the industry.
It lets a lot of people get into the market earlier who want to.
And so,I'm not against the fee.
But, again, you need to assess it for your own situation.
If you're interested in investing in positivecash flow property and you need help finding it, then go ahead and check out my membershipwhere I go out, I find a high rental yield property every single day and share it withthe community.
So head over to onproperty.
Au/membership if that's something that you're interestedin.
Otherwise, until next time, stay positive.
You should also, at the same time, talk to a regional lender, a credit union (if you belong to one or you can join one) and a small local bank.
Each of these different types of lenders will offer different loan programs at different prices.
You should also ask friends and relatives who they’ve used for their home loans and how the experience went.
But emphasis is on the experience.
I have a great friend who once asked her sister for a lender recommendation, and the sister gave her a name and my friend had this horrific experience.
And when she went back to her sister to see what kind of experience her sister had had with this person, the sister confirmed that she, too, had a horrific experience.
“Hello! Why did you give me that lender’s name?” my friend asked, and the sister said, “Well you weren’t specific that you wanted someone good.
Sounds like a Seinfeld episode, right? And yet, this kind of stuff goes on all the time.
So here are some questions you should ask the person providing the recommendation that will help separate the wheat from the chaff:
- Did the lender repeatedly ask for the same documents?
- Is the lender organized?
A good lender should enable you to close on a home within about forty-five days – unless there’s some real serious problems with the house – so make sure to ask your friends and relatives if their lenders were able to meet that standard.
It may sound obvious, but it’s a good idea to look for a lender who specializes in making residential loans and has a reputation in your area for coming through with these loans.
Banks that aren’t generally known for their mortgage lending can be tougher to work with than some of the really big lenders.
And while you may be thinking to yourself, “I want to avoid the big banks,” you’re probably going to end up with one anyway.
Even if you go with a mortgage broker, that mortgage broker may actually work with a whole bunch of big lenders to fund your loan.
Above all, you need to find a lender that helps you understand the mortgage application process in a way that makes you feel comfortable and secure.
This is a huge decision.
You’re going to finance this property for the long run, and you want to do that with the right kind of partner.
And I just want to give a shoutout to anybody who is closing around October of 2015.
If you are, please watch the videos that I’ve made on the TILA-RESPA changes that are coming your way.
Right now they’re scheduled to go into effect October 3rd of 2015.
If you are looking to close around that, either before or after, you may have to build in some extra time to make sure that you don’t get caught up in all the craziness that’s going to go on I think when TILA-RESPA actually goes into effect.
How's it going everyone? Matt Leighton, welcome back to another video. In this episode, we are talking mortgages,lending. I'm here with Rich Conlon from Atlantic CoastMortgage. Say what's up Rich. Hi, Rich Conlon, Atlantic Coast Mortgage. Loan Officer. Born and raised in Vienna, Virginia. Love the area. Still live in the area. Just here to help out with my man Matt andhelp answer any questions. Awesome, whenever someone has a mortgage questionfurther than "What is the rate?", I just tell them to talk to Rich. I know a little bit about mortgages. Buttoday we're talking about the top mistake people are making when they're applying fora loan. You see all these loan commercials. It's funny, when we get the primer, one-sheeterson the list of things NOT to do. One of them is like, "Don't go and buy a boat". Don't buy a new car. I'm thinking to myself, nobody in the historyof loans has ever gone under contract and then bought a boat the day after. I'm sure it has happened. But it obviously is not the number one mistakepeople are making when they're trying to buy a home. That's where Rich comes in. Rich, you're on the spot here. What is the number one thing people are doing,that they shouldn't be doing when they're applying for a loan with you guys? It's simple, it's before you even get to contract. It's just waiting until the last minute toget pre-approved. We understand circumstances sometimes that'sjust how it is. The big thing is, after meeting your agent,talking about price ranges and goals, the next step, it can't hurt to just reach outto a lender or two or three and start identifying what you can actually qualify for. That's the best thing. The earlier the better. Main reason is that it allows time to findany potential pitfalls that can come back in the underwriting process a week beforeclosing. Last minute surprises are the worst. Nobody wants that. Getting pre-approved early is always better. It allows time to figure out if there areany extra hoops to jump through. That just gives you better piece of mind. When you're out with your agent. Definitively what you can and can't qualifyfor. In addition, we always like to provide youwith estimates on homes that you're going to go see so when you're looking at them,the wheels are turning. What are my payments going to be like? There's a ton of benefits to getting preapprovedearly, rather than waiting for the last minute. And it is beneficial from the very beginningall the way to settlement. It will make your transaction much more transparent,seamless, and less stressful. It takes a village. And it just helps when everything is linedup. Yeah certainly execution is the number onething. You can look online at how to apply for amortgage, what pitfalls to avoid, how to do this, how to do that. At the end of the day, actually going out,going on your lender's website and getting preapproved. You know when I'm working with buyers, I alwaysask two very important questions. Number one: are you already working with areal estate agent. Very important. I've not asked that in the past and it's comeback to bite me, believe it or not. Well, it's very easy to believe actually. And number two, are you pre-approved witha local lender? If you are looking for homes and you are notpre-qualified, you are not a serious buyer. You are wasting your time. You might say "well, I'll just get a letteronce I write a contract, it's fine". Well, my buyers already have that letter andthey will beat you to the punch and get their offer in before you. Nobody likes to get bad news. You don't want to waste your time fallingin love with something that you ultimately don't qualify for. We find that our clients 99% of the time arepre-approved early just makes your guy's time much more efficient and you know what youcan qualify for. All of your processes are so streamlined justto a T that if you do them, you will get qualified, you will have your letter. The reason you screw up is you go off astray,you don't return calls, you don't return emails. We're a referral-based company so communicationis key. Delivery, setting expectations and obviosulymeeting those expectations. Pre-approvals we can do in as little as 24-hoursand especially in this market. Spring time, summer time, that's what it takes. Speed kills. That's how we like to operate. And communicating to you and your agent sowe can all move quickly. Awesome, there you have it from Rich Conlon,Atlantic Coast Mortgage here in Northern Virginia. If you have any questions about the top mistakeor any mortgage and lending related questions, I'll list Rich's information in the descriptionbelow. Thank you very much for watching. Until next time, create a productive day. Take care.