You will qualify for a Residential or Bank or a Conventional Mortgage if you have Excellent Credit, Good Debt Ratios, and your Loan to Value ratio is less than 80%.
Does that mean that you will also get the lowest possible rate?
Each bank has its own rates but the rate is only one thing. You also have to see how is their service and how reasonable their underwriting criteria are. That is why going to a mortgage broker is always a winning idea. Mortgage brokers know the underwriting guidelines of all the lenders and know which lender will accept your file with your particular situation.
Unless you are in the mortgage field, it is very hard for you to know which Bank or a Lender at any given time is offering the lowest rates. It is also difficult for you to know which Bank may turn down your mortgage or charge you a higher rate because of something that another bank may find so insignificant and not care at all. If you get turned down or do not like the rate or terms, you have to go to another bank and start the process all over again. The new bank now will pull another credit report on you and have to order their own appraisal.
That is where the services of a mortgage broker make a huge difference. Being in the mortgage market day in and day out, a mortgage broker knows where to submit your mortgage where you will not get dinged for something insignificant; mortgage underwriting and funding will be smooth and fast and you will also get the lowest possible rate. If your file has any issues, your mortgage broker will resolve them beforehand and submit your file with a good and reasonable explanation with supporting documents that satisfy the lender.
Here is something you should know. Banks are retailers but they are also wholesalers. In fact, a significant volume of mortgages of all the banks and mortgage lenders come from approved mortgage brokers. If you go to ABC bank yourself for a mortgage, you will get their regular retail mortgage rate. But if your mortgage is submitted to the same bank by your mortgage broker, it will go to their wholesale division and you will get a lower rate. The reason is the mortgage broker has already processed and underwritten your mortgage. That saves the Bank time and money. Imagine getting hundreds if not thousands of mortgages a month. It will make sense to pay a discount on those ready to fund mortgages.
The best part is that the Bank pays a fee to the mortgage broker for bringing in the business. You do not have to pay any fees to the mortgage broker unless you fall into B or Private money mortgage category.
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