In this post, USDALoanInfoNewYork wants to talk about hiring a really good loan officer or Mortgage Lender in New York and the importance of doing that, especially when searching for a USDA Loan in New York.
We want to give you a real-life scenario that happened to a buyer who was searching for a mortgage lender in New York this week. This should serve as a sample to really drive home the point on how important it is to hire and make sure you get a really good loan officer.
USDALoanInfoNewYork believes that you should search for an honest mortgage lender, no matter where your house buying adventure takes you.
To get started with our Mortgage Lender example, we find ourselves taking a buyer call with what happened. One of our officers had just got back from vacation and found out that there was a problem with the USDA Loan in New York. The lender that the prospect had hired actually made an error which delayed three days of the process!
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.
The Mortgage Lender wasn’t using the builders lender so what happened is the Builder was charging them $300 per day for every day they did not close.
The prospective client was getting hit with a $900 bill the good thing is they had a really good loan officer with a really good company and they basically stepped up to the plate and paid that bill!
Here, you might be thinking to yourself well yeah of course they should and you’re absolutely right. They should but, we have been on the end where these lending companies not they’re just like ‘hey we’re sorry this stuff happens it’s not our fault we’ll get the loan done as quick as we can’.
There’s situations, especially in this market right here in Pennsylvania that we’re in – meaning we are in a seller’s market – where, if you don’t close on time and there’s a backup offer that’s better than yours on a pre-owned home.
If that happens, they might just cancel the contract and they let it expire and take the other offer.
If you’re working with a builder or if it’s on a relocation company, there’s a per diem every day if you don’t close and it could wind up into hundreds if not thousands of dollars.
If you’re searching for a Mortgage Lender in New York, you need to make sure the lending company that you hire is:
-Understands the USDA Eligibility Guidelines
AND is someone who’s going to do the right thing. USDALoanInfoNewYork suggests that you always ask for references.
The best place to start is your real estate agent if they’ve been in the business a while they should have a really good relationship with a really good loan officer and mortgage lender company.
Mortgage Lenders in New York: Here’s how to Apply for a USDA Loan
Hi everybody, your real estate expert, LanceMohr. And in this series, I'm talking about how to buy a house. Today, I'm going to talkabout how to pick a mortgage lender. If you don't need financing, don't worry aboutwatching this video unless you just want more information. Alright, so how to pick a lender. First off, if you've already chosen a real estate agent, this is a good place to start. You could also ask some friends and family members, co-workers, get an idea who theywould choose. Now personally, I was in the mortgage banking industry for several yearsand I was a co-owner of a mortgage company. There's three types of lenders out there;number one is your big bank, your Bank of America, Wells Fargo and then you have yourmortgage bankers and then you have your mortgage brokers. Now I'm not a real big fan of thebig banks or credit unions for that matter. I think there's a lot of credit unions thatare really good, don't get me wrong and I'm not saying that there is anything wrong withbig banks. I'm not a fan of them and the reason is – the reason why I don't like big banksis because if you go into a bank like Bank of America or say a Wells Fargo, you are onlyusing their money. So if you go in and you have a very unusual circumstance and maybeyou don't qualify for their loan, they're not going to tell you "you don't qualify forour loan, go somewhere else". They're just going to say, "You don't qualify for a loan. Sorry. " Now you may go to a mortgage banker or a broker and qualify for theirs. So that's the problem, they are very, very limited because they only lend their money. If you are round, you're not going to be able to fit in their square hole. So it's not areally good way. Now if you do use a bank, if you say Bank of America which I'm not afan at all, I haven't had them close a transaction on time in years, if they even close it atall. So I got to say that, the only bank I can say that about. But let's say you go toa Wells Fargo or you go to a Bank of America, always try to use a local loan office or don'tuse someone out of state, because you've heard of the term, "out-of-state, out of mind","out of area, out of mind". That's really how it is. You want someone local that knowsthe local ways in Florida, and more specifically I'm in Florida, I'm in Tampa, so the cityyou live in. So that would be my first personal recommendation and I know a lot of lendersout there might be getting mad if they're watching this right now, especially if theywork for Bank of America. But that's my opinion, I've worked with a lot of credit unions whenI was in the lending business and certainly not all of them. Credit unions, the good thingis they really care about their customer. The problem is they don't really do a lotof training to their loan officers unfortunately. And you know, a lot of times when you're goinginto and getting a loan with a bank or credit union, a lot of times the loan officer ison a salary plus bonuses, and you want someone who, if they don't get you a loan, they don'tget paid any money. That's the best way you are going to get a loan. So I am a big fanof bankers. Now really the difference between a bankerand a broker, is a banker lends their own money and will underwrite the file, usuallyin-house. They are also called correspondent lenders. Now I've worked for bankers before,and if bankers just don't have a competitive program – let's say you go in and maybeyou are a veteran and they're not real competitive on VA loans, let's just say. They will usuallyhave brokers that they work with as well as and they could do different things. So theyare usually good. Brokers, I've worked for brokers when I wasn't lending as well andit's the same thing, but the difference is brokers have access to dozens and dozens oflenders. Don't get fooled by that. Most brokers only have about 5 to 7 lenders they work withat any given time; they might have a lender for their conventional financing, they havea lender for their government financing, they have a lender for their jumbo finances. So don't get caught up into all that. But the difference between bankers and brokers,if they don't find a way to say yes, they don't get paid. And a lot of time what peoplewill do, is they will go out and they will be picking say maybe three companies, andthey will call up for a rate quote. But you really, when you are calling up for a ratequote, you need to ask very specific questions and you need to do it all on the same day. Because you could call one institution on Tuesday and rates could have changed up ordown on Wednesday. And then you need to call the same day, you need to give the same parametersfor each one of them, "So I'm calling, I want to get a loan amount of $200,000 and what'syour rate lock?" Now I'm not a big advocate of going around and doing rate shopping becauseat the end of the day, lenders all get their money from the same place at the same price. If you call 10 lenders, probably nine of them are going to give you the same quote for themost part. Now banks will generally be a little bit more in the interest rate, but less inthe fees because everything is in-house, where a broker, they get their pricing at wholesale. So there you could usually be more competitive on the interest rates, but they are a littlehigher on closing costs because they have to sort of outsource it and get it underwrittenover here in the process and all that stuff. So get the information and call them all up,talk to them, ask them again the question, why should I work with you, what makes youdifferent, what makes your company different. Whatever you do, whatever they tell you, onceyou lock in the rate, get a rate lock. You don't want to be on different pages and theytell you one interest rate and then all of the sudden, you show up at closing and it'sa completely different interest rate, maybe it's a quarter percent higher. Because theseller doesn't really care about your loan, all they know is you have to close. So getit in writing from the lender, I can't tell you how many people – when I used to bein lending, pretty much everybody that I worked with, I always put everything in writing. No one ever asked me but I wanted it all in writing for the documentation. So always askfor it in writing and really try to take the person who you feel is looking out for yourbest interest, because at the end of the day, you could have the best interest rate in theworld, but if you are on the wrong loan program, the interest rate is sort of irrelevant. SoI hope this helps you. Leave a comment, if you have any questions, if you have anythingto say, you work for Bank of America – please leave a comment because I think it's goingto be real nice, but it is what it is. And if you like my videos, subscribe to my channel,give me a thumbs up. I appreciate it. I wish you the best of luck in buying a home. Havea great day.
Choosing a Mortgage Lender That's Right for You
Finding your dream home is usually the simplest part of the house buying process! Once you see somewhere you want to put in an offer for, youll want to move fast. It helps, therefore, to have your mortgage sorted before you find somewhere you want to buy. You can choose a lender and mortgage, apply for the loan and get your mortgage approved on principle before you even start looking for a house. This means that you know what your budget will be and can be fairly certain that your mortgage will be accepted. The lender will still want to see the valuation survey, however, and there may be other checks that have to be completed before the deal is closed. While most people used to take out their mortgage with a building society or bank, these days there are a number of other options to consider. Smaller, specialist mortgage providers can offer good deals and are sometimes more flexible about terms. Banks and Building Societies Since the market has become much more competitive, the larger finance houses have adapted their practice to become much more flexible with their mortgage deals. You will have the advantage of knowing that a reputable lender provides your mortgage, and local branches can make your day-to-day banking more convenient. Insurance Companies Some companies now offer their own range of mortgage products, which can give good terms, along with insurance products and investments. Legal and General are a well-known example. Check that you are not committed to taking out insurance policies with the lender along with your mortgage. Specialist and Centralised Lenders Generally this type of lender operates from one location you wont be able to visit a local branch, but they may offer lower rates as a result of having fewer overheads to cover. Virgin Direct and Mortgage Trust are two lenders who can offer particularly flexible mortgages. Telephone and internet banking make this kind of borrowing more convenient. Local authorities Council house residents may wish to apply to their local authority for a mortgage. There are also some mortgages available from some authorities for people who wish to renovate derelict houses contact your local council for more information. Its good practise for a lender to subscribe to the Mortgage Code this is a voluntary scheme that means the lender has promised to uphold commitments to good service.
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