Mortgage... "you could save yourself a mountain of time and money."

Updated: Jan 18, 2021

Mortgages are defined as "A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt." (Lexico.com)

So you're ready to buy a house and you don't know where to start. I have found in the past that people usually start by driving around or cruising around the internet to look at houses.

STOP!

Finding the right people to surround yourself with is the best place to start. The real reason is because you could save yourself a mountain of time and money. (Both great reasons)

With the age of the internet upon us, it has resulted in a wealth of information being at our fingertips. Good or bad, this is the reality. If I do an internet search for a small physical ache or ailment--let's say dry skin--I seem to find all the possible deadly diseases that I have! It's not that I may or may not have some strange disease found in only .00009% of the world's population, but the information without some context and real world experience may be misleading. So if I bring a doctor into my little scenario and get some context, he will bring years of training, experience, context and other professional connections to my little dry skin issue. If I read on the internet that my dry skin may indicate Ebola, and began treating my dry skin as actual Ebola without talking to a doctor, you would rightly call me crazy.

So, it is also true that when you begin the process of purchasing your new home, you should surround yourself with wise counselors. But how do I find these professionals, you may ask. Well, usually a quick check with people you know and respect will result in a good list of people to start with. (Shameless advertisement warning...If you are reading here and are in the Gulf Coast area of Florida I would love to help.)

Let's define some Important terms....

Mortgage Broker- An intermediary who brings mortgage borrowers and mortgage lenders together, but who does not use their own funds. A mortgage broker connects lenders and borrowers, then seeks out the best fit in terms of the borrower's financial situation and interest-rate needs. The mortgage broker also collects and organizes paperwork from the borrower and gives it to a mortgage lender for underwriting and approval purposes.

Loan Officer- (Bank or Credit Union)- When consumers buy or refinance a home, the first step is often going to a loan officer in a local bank or credit union. A bank/credit union offers programs and mortgage rates from a single institution.

So in the simplest terms the Mortgage Broker matches clients to the mortgage lenders that best match their particular situation and the Loan Officer matches the client with the best loan product that their institution offers.

FHA Loan-An FHA loan is a government-backed mortgage insured by the Federal Housing Administration, or FHA for short. Popular with first-time homebuyers, FHA home loans require lower minimum credit scores and down payments than many conventional loans. Although the government insures the loans, they are actually offered by FHA-approved mortgage lenders.

FHA loans come in 15- and 30-year terms with fixed interest rates.

(https://www.bankrate.com/mortgages/what-is-an-fha-loan/)

VA Loan -What Is a VA Loan?

A VA loan is a mortgage loan available through a program established by the United States Department of Veterans Affairs (previously the Veterans Administration). The VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion of the loan, but doesn't actually offer the financing. VA home loans are provided by private lenders, such as banks and mortgage companies, instead.

(https://www.investopedia.com/terms/v/valoan.asp)

Conventional Loan -A conventional loan is any mortgage loan that is not insured or guaranteed by the government (such as under Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs).

(https://www.consumerfinance.gov/ask-cfpb/what-is-a-conventional-loan-en-117/)