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.
A mortgage is usually thought of as a home loan, but a mortgage is not a loan. You are not given anything by a lender through a mortgage; instead, a mortgage is a security instrument you give to the lender. The lender's interests in your property are protected through a mortgage document.
A mortgage is executed by two parties - the mortgagor (borrower) and lender (mortgagee). The mortgaged property cannot be sold or transferred to someone else until you pay the debt that releases the lien. The lien is created by the mortgage document and it provides security for the lender on the debt owed by you. Full title to the property stays with you, even though your loan is secured by a mortgage and you do have full ownership rights.
If the debt is not paid, the lender is given the right, through the mortgage, to sell the property to recover the money owed them. A foreclosure sale is the process used to sell property that has fallen into this category and because of the mortgage used for security, this process has to go through the court system. Judicial foreclosure is what this type of foreclosure is called.
A mortgage should not be confused with a deed of trust. Over half the states in the United States use a deed of trust, which acts as a means of security for the lender in much the same way as a mortgage, with a few exceptions. A deed of trust is recorded in public records, which lets everyone know there is a lien on your property. Whereas there are two people involved in a mortgage, a deed of trust involves three parties, the lender (beneficiary), a trustee and trustor (you). The trustee holds temporary title of the property until the lien is paid and released. The trustee is not allowed to take your property and there are laws in place to protect you against them doing so. The trustee has to be a disinterested party and usually attorneys will perform the responsibility of trustee.
If foreclosure becomes necessary, then a mortgage and deed of trust will affect you differently, as the property may be sold by the trustee. This is the trustee's responsibility if the loan becomes delinquent. He will be given proof of the delinquency by the lender and the lender will ask the trustee to start foreclosure proceedings. This type of foreclosure proceeding bypasses the court system and results in a much faster and cheaper way for the lender to foreclose.
You do not have the option of choosing which type of loan security you want, as this is decided according to the state where you live. But, it is essential you understand what type of lien is securing the debt for your property.
When purchasing a home, a mortgage broker provides a borrower with a program best suited for that particular individual. They are professional and can find a lender to meet your needs, even though you may have difficult requirements or special requests. A mortgage broker is regulated by state banking laws. A broker works for you, the consumer, in negotiating and processing loans.
When borrowing for the purchase of a house, the amount of money lent to you by the lender is called the mortgage amount and the amount of your monthly payment is determined by the term or number of years you pay back the borrowed amount. A term of 30 years is the most popular, as spreading out the payments over a longer period of time, reduces your monthly payment. The shorter the term, the higher the monthly payment, so keep in mind there are also 10 year, 15 year and 20 year terms.
Interest rates are on the rise again and this is something else to consider, when purchasing a home.
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.
What questions should I ask a mortgage broker?If you're dealing with a mortgage broker there's some questions that you should ask both onyour first meeting with the mortgage broker and throughout working with your mortgagebroker to make sure that you're getting the best service possible.
I'm going to go through10 different questions that you can ask your broker to make sure you're getting the loanthat you need and the service that you want.
The first question that I think everyone shouldask a mortgage broker is a pretty straightforward one.
And that's, "How much will it cost me?"Most mortgage brokers actually work for free.
So it doesn't actually cost you anything inorder to do it.
They get money because they are paid by the banks when you successfullyget a loan.
So they get a small commission of the loan that you apply for and if youget it.
So most mortgage brokers will work for free and it won't cost you anything.
However,there are some mortgage brokers out there who do require deposits or who do requireyou to pay.
So, it's important to ask, "How much will this cost me?" when assessing whichmortgage broker you want to go with.
Another question that you want to ask themortgage broker is simply, "How much do you earn in commission from me and from my loan?"This is less to understand exactly how much they make.
If you want to understand how muchmortgage brokers make, I've done an episode on that, which you can check out at onproperty.
And you can see what percentage of commissions they make and things like that.
But it's moreto understand whether or not they'll be willing to give you this information.
A transparentmortgage broker is someone that'd be willing to give you this information and you knowthat they have your best interest at heart.
If they skirt around this issue and they don'ttell you how much they earn.
Well then that would send out red flags for me because Ican't trust them to put my best interest at heart because there are some circumstanceswhere one loan will earn them more money than a loan that could potentially be better forme but not as good for them.
So, I'm just trying to establish whether or not this mortgagebroker is someone that I can trust.
And by asking them the big question, the money question,"How much will you earn from me?" That's a great way to understand whether or not youcan trust them.
So ask that question and see how they respond.
Question number three is, "Do you invest yourself?"Now, I don't think a mortgage broker has to be a property investor in order for them tobe able to get you a good loan and for them to help you successfully invest in property.
However, if they are interested in property, if they do invest themselves, then that isgoing to go a long way to help you because they understand what it's like to be in yourshoes.
They understand what you're trying to get out of this and they've done it themselvesso they can help you miss some of the pitfalls and things like that.
If they don't investthemselves, then I would want to ask them, "Have you worked with many people that investin property?" Because as mortgage brokers, some of them just work with people who arebuying their own home.
Some of them work with people who are doing particular investmentstrategies.
So, some might work with people who invest in positive cash flow propertyor who invest in rural areas, who invest using developments.
So I would want to find a mortgagebroker who either had that experience themselves or who had clients that they had got similardeals for 'cause that way I know that they can negotiate on my behalf and they can getthis deal across the line.
The next question will be, "What details doyou need from me?" It's one thing to call up a mortgage broker and just to get an estimateof your borrowing capacity but if you're going through pre-approval and stuff like that,then you're going to need to provide the mortgage broker with more in-depth details.
You mightneed pay slips; you might need proof of identity, all of that sort of stuff.
If you ask themupfront, "What details do you need from me?" And when you go to your meeting with themyou actually provide them with those details, well that just makes things so much easier.
Remember, a mortgage broker is only paid once the deal goes through and once you actuallyget financing.
So the easier you make it for them, the more likely you are going to getbetter service.
Which leads me to my next question is, "Howcan I make your life easier?" Or "What can I do as a client to make this go as smoothlyas possible?" You have the goal of getting financed for your property, the mortgage brokerhas a goal of you getting financed for your property and no one wants it to be difficult.
And so, if you can ask the mortgage broker, "Look, how can I work with you? How can Imake things easy for you?" They're the experts; they know what they're doing.
They can tellyou exactly what they need and then you can work hard to provide that for them so thatthey can get everything across the line as quickly as possible.
You know, I have customers,I deal with customers and even though I'm not a mortgage broker myself, I know thatwhen there's difficult customers that you don't want to deal with, it just makes lifeso much harder and you don't want to work hard for those people.
And when there's customerswho are really nice to you and who try really hard to help you provide them with the serviceyou provide, you will bend over backwards to do anything you can for those customersto get them across the line, to help them as much as possible.
So, be one of those customersthat the mortgage broker wants to bend over backwards to help you because you have theirinterest at heart as well.
You want to see them get paid.
You want to see them do aneasy mortgage so they get paid easily.
And so you can develop a relationship into thefuture.
So ask them, "How can I make your life easier?" Next question is, "Which lenders can I borrowthe most from?" Most people go into a mortgage broker looking for the cheapest interest ratepossible.
What is the cheapest interest rate I can get? And the fact of the matter is amortgage broker is likely to show you the banks that will lend you the amount of moneyyou need and will also have the cheapest interest rate as well.
However, they might not showyou banks that will lend you more money than you potentially need at the moment.
Now, it'simportant to ask, "Which lenders can I borrow the most from?" because this will help youto project into the future.
Maybe you don't need to know that for this loan right nowbut maybe, in the future, you might need to borrow money again and you know, or roughlymy borrowing capacity is this.
Or if you find out which lenders you can borrow more from,and you find that you can actually borrow an extra $300,000, well you might split upyour deposit and invest in two investment properties instead of just one.
And so askingthem, "Which lenders can I borrow the most from?" is a great question to ask to reallyunderstand your position.
Because, yes, interest rate is important but how much you can borrowis also important as well.
Another question to ask your mortgage brokeris, "Can I see a full list of my borrowing options?" Most mortgage brokers will provideyou with, usually, like a top three or sometimes only a top one.
"This is the one that I recommendfor you.
" And I always like to think, "Can I see a full list of my borrowing options?"Again, this is less to say you want to go through all of this in minute detail and see.
You're probably going to still choose from one of the top three ones.
But you just wantto see that they're giving you the full amount of information.
And most mortgage brokersare good people but there are some dodgy mortgage brokers out there who are just trying to getthe deal that gives them the biggest commission.
And so by asking to see a full list of whatyour borrowing options, you can then look at that and you can then assess, "Okay, wellwhich loan do I think is going to be best for me?" rather than just taking the recommendationof the mortgage broker who may or may not be thinking about themselves.
So, again, mostmortgage brokers are great people out there to help you but it's always a good idea toget a full list of your borrowing options that are available.
Next question to ask is, "Will this put amark against my credit file?" And so this is when you're trying to work out how muchyou're going to borrow and stuff like that.
When you go into a bank and you try and findout how much you can borrow, often, the bank will do a credit check and this puts a markagainst your credit file.
And what happens is if you have a lot of these marks againstyour credit file, even though it's nothing bad, this can actually stop you getting aloan.
So, talk to your mortgage broker and when you're looking at, "What can I borrow?"or your looking at getting pre-approval, just understand, "Will this put a mark againstmy credit file?" 'Cause it's not bad to have a couple or whatever.
But if you're gettinglots and lots of marks against your credit file, then that could be an issue.
So justmake sure and you know when a mark's being put against your credit file and when a markisn't being put against your credit file.
Second last question to ask is, "How sooncan I revalue or borrow again?" So if you're investing in a property to renovate it orto develop it or even if you're investing in a property that's potentially under marketvalue, you want to know how quickly can you revalue that property so you can get equityand then hopefully draw equity out of the property to go ahead and invest again.
Thereare a lot of lenders out there who don't allow you to revalue within a 12-month period.
So,speak to your mortgage broker about the lenders that will allow you to revalue faster.
Andbasically, this will give you an idea of how quickly you can revalue to consider goingagain.
You're also going to want to ask them, "After I invest in this property, how sooncan I borrow again or what do I need to do to put myself in a position to be able toborrow again and to purchase the next property?" Because hopefully, your goal isn't just topurchase one property but to grow your property portfolio and to achieve that financial freedomand that financial security that you're striving for.
And last question is, "Will my loans be cross-collateralised?"Now, I have heard a lot of stories about investors whose loans have been cross-collateralisedand it's cause major problems when they've gone and sold their property because the bankshave been able to take that money and pay off debt.
And basically, you want to avoidthis at all costs from what I hear.
And so, it's good to ask your mortgage broker, "Willmy loans be cross-collateralised in any way?" Generally going with the same lender for twoloans does it by default, even though it doesn't say they're cross-collateralised.
So, it'sjust something that you want to look at the fine print, you want to understand, "Are thesecross-collateralised?" And if they are, try and avoid it, try and get loans that aren'tgoing to be cross-collateralised.
So there you have some questions to ask yourmortgage broker next time you go and see a broker to find out how much you can borrowor get pre-approval or get financed for another property.
So I hope that has been helpful to you.
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So until next time, guys, stay positive.