What questions should I ask a mortgage lender in Laurel Springs ? If you’re dealing with a mortgage broker there’s some questions that you should ask both on your first meeting with the mortgage broker and throughout working with your mortgage broker to make sure that you’re getting the best service possible.
USDALoanInfoNJ is going to go through 10 different questions that you can ask your mortgage lender in Laurel Springs. Be aware that your USDA Loan or Mortgage broker will be getting the loan that you need and the service that you want.
The first question that I think everyone should ask a mortgage broker is a pretty straightforward one.
How Much Will a Mortgage Broker Cost?
Most mortgage lenders in Laurel Springs actually work for free.
So it doesn’t actually cost you anything in order to do it.
They get money because they are paid by the banks when you successfully get a loan.
So they get a small commission of the loan that you apply for and if you get it.
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So most mortgage brokers in Laurel Springs 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 require you to pay.
So, it’s important to ask, “How much will this cost me?” when assessing which mortgage broker you want to go with.
How much do Mortgage Lenders earn in commission from me and from my loan?
This is less to understand exactly how much they make.
You can see what percentage of commissions they make and things like that by visiting USDALoanInfo.
But it’s more to understand whether or not they’ll be willing to give you this information.
A transparent mortgage broker is someone that’d be willing to give you this information and you know that they have your best interest at heart.
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If they skirt around this issue and they don’t tell you how much they earn.
Well then that would send out red flags for me because I can’t trust them to put my best interest at heart because there are some circumstances where one loan will earn them more money than a loan that could potentially be better for me but not as good for them.
So, I’m just trying to establish whether or not this mortgage broker in Laurel Springs 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 you can trust the mortgage lender.
So ask that question and see how they respond.
Do Mortgage Lenders Invest Themselves?
Now, I don’t think a mortgage broker has to be a property investor in order for them to be able to get you a good loan and for them to help you successfully invest in property.
However, if they are interested in property in Laurel Springs, if they do invest themselves, then that is going to go a long way to help you because they understand what it’s like to be in your shoes.
They understand what you’re trying to get out of this and they’ve done it themselves so they can help you miss some of the pitfalls and things like that.
If they don’t invest themselves, then I would want to ask them, “Have you worked with many people that invest in property?” Because as mortgage brokers, some of them just work with people who are buying their own home.
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Some of the mortgage lender folk who work with people who are doing particular investment strategies.
So, some might work with people who invest in positive cash flow property or who invest in rural areas, who invest using developments.
The Business and Industry (B&I) loan program administered by the United States Department of Agriculture (USDA or Agency) guarantees loans by qualified lenders to benefit rural businesses. For eligible projects, community banks can obtain an 80% guarantee for loans up to $5 million, a 70% guarantee for loans between $5 million and $10 million and a 60% guarantee for loans between $10 million and $25 million. The B&I guaranteed loan program allows lenders to expand their loan portfolio, obtain a deficiency guarantee, increase earnings by participating in the secondary market, make loans in smaller communities with traditionally lower collateral values and extend loans above their legal lending limits.
For each loan, lenders submit a detailed guarantee application to the Agency office in the state where the project is located. Approval or denial decisions generally take several weeks. Projects eligible for B&I financing include business acquisitions, commercial real estate purchases, startup costs and working capital, machinery and equipment purchases and some refinances.
On December 17, 2008, the USDA published a new interim rule pertaining to the B&I loan program in the Federal Register. Effective October 1, 2009, the new rule is designed to streamline the application, accelerate the guarantee approval process and expand the types of eligible projects. The Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.
Under the previous rule, the B&I loan program required lenders to compile burdensome applications and to deal with lengthy approval timelines and limited loan features. For example, a common lender complaint has been the laborious guarantee application process. For every loan under the previous regulations, B&I lenders had to submit to the local Agency all of their underwriting and loan approval documents, at least three B&I application forms, the draft loan agreement, copies of loan origination and servicing policies and procedures, and details concerning lending history, experience and their relationship with regulators. The Agency also awarded guarantees on a "priority scoring" basis, which gave loans in particularly rural areas with compelling purposes priority over otherwise eligible loans that earned a lower "score". An approval or denial decision for lower scoring loans could take months from the application submission.
The USDA aims to reduce these drawbacks with the revised rule. The new rule attempts to streamline the original application process. Lenders must apply to participate in the guaranteed loan program by submitting background information such as descriptions of lending history and experience, policy and procedures and documentation concerning regulatory compliance (7 CFR 5001.9). Although lenders had to submit this information under the old rule, they are now permitted to submit summaries instead of copies of their policies and procedures (§5001.9(a)(1)). Once approved by the agency, lenders will no longer have to submit this background information when applying for loan guarantees (§5001.9(b)(4)). The revised rule also reduces the number of guarantee application forms (§ 5001.12(a)) and eliminates the draft loan agreement (§5001.34). In addition to simplifying the application process, the new rule endeavors to reduce the guarantee approval timeline.
Two changes aim to accelerate the guarantee approval process. The Agency has eliminated its "priority scoring" system in favor of a simpler first-come-first-serve approach (§5001.103(f)(1)). Additionally, the Agency has created a preferred lender program (PLP) (§5001.9(d)). The benefits of obtaining PLP status include a ten day approval or denial decision (§5001.11(c)), a smaller guarantee application package (§5001.12(b)) and the opportunity to obtain preferred status in more than one state with a single PLP application (§5001.9(d)(2)). In addition to streamlining the application process, the Agency has introduced some new loan features to the B&I loan program.
B&I guarantees may now be issued for additional uses and purposes. Under the previous regulations, lines of credit were ineligible. Lines of credit are now eligible when used for annual operating/business expenses, debts advanced for the current operating cycle, scheduled non-delinquent term borrower debt or closing costs (§5001.103(b)(2)(xix)). Projects involving leasehold improvements and the purchase of mixed use commercial and residential buildings are also now eligible for B&I guarantees (§5001.103(b)(2)(xviii, xx)). Another new feature removes the prohibition that interest rates change no more often than quarterly, and allows lenders to set a variable rate that adjusts as often as daily (§5001.31(a)). These new features allow lenders to obtain a valuable B&I guarantee for projects that previously were ineligible.
Although these features are now available to lenders, some revisions to the rule are less clear and useful tools have been eliminated. For example, the Agency has replaced the proposed cash equity criterion with a debt-to-tangible net worth ratio criterion (§5001.6(c)), but has failed to define this calculation other than referring to Generally Accepted Accounting Principles. Additionally, the rule eliminates the Agency's limited authority to issue 90% guarantees. Again, the Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.
So I would want to find a mortgage broker who either had that experience themselves or who had clients that they had got similar deals for cause that way I know that they can negotiate on my behalf and they can get this deal across the line.
What details do Lenders need from me?
It’s one thing to call up a mortgage broker and just to get an estimate of 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 might need pay slips; you might need proof of identity, all of that sort of stuff.
If you ask them up front, “What details do you need from me?” And when you go to your meeting with them you actually provide them with those details, well that just makes things so much easier.
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Remember, a mortgage lender is only paid once the deal goes through and once you actually get financing.
So the easier you make it for them, the more likely you are going to get better service.
What can I do as a client to make this go as smoothly as possible?
You have the goal of getting financed for your property, the mortgage lender has 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 I make things easy for you?” They’re the experts; they know what they’re doing.
They can tell you exactly what they need and then you can work hard to provide that for them so that they 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 that when there’s difficult customers that you don’t want to deal with, it just makes life so much harder and you don’t want to work hard for those people.
And when there’s customers who are really nice to you and who try really hard to help you provide them with the service you provide, you will bend over backwards to do anything you can for those customers to get them across the line, to help them as much as possible.
So, be one of those customers that the mortgage broker wants to bend over backwards to help you because you have their interest at heart as well.
You want to see them get paid.
You want to see them do an easy mortgage so they get paid easily.
And so you can develop a relationship into the future.
Which lenders can I borrow the most from?
Most people go into a mortgage broker looking for the cheapest interest rate possible.
What is the cheapest interest rate I can get? And the fact of the matter is a mortgage broker is likely to show you the banks that will lend you the amount of money you need and will also have the cheapest interest rate as well.
However, they might not showy ou banks that will lend you more money than you potentially need at the moment.
Now, it’s important to ask, “Which lenders can I borrow the most from?” because this will help you to project into the future.
Maybe you don’t need to know that for this loan right now but maybe, in the future, you might need to borrow money again and you know, or roughly my 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 up your deposit and invest in two investment properties instead of just one.
And so asking them, “Which lenders can I borrow the most from?” is a great question to ask to really understand your position.
Because, yes, interest rate is important but how much you can borrow is also important as well.
Can I see a full list of my borrowing options?
Most mortgage brokers will provide you with, usually, like a top three or sometimes only a top one.
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 want to see that they’re giving you the full amount of information.
And most mortgage brokers are good people but there are some dodgy mortgage brokers out there who are just trying to get the deal that gives them the biggest commission.
And so by asking to see a full list of what your borrowing options, you can then look at that and you can then assess, “Okay, well which loan do I think is going to be best for me?” rather than just taking the recommendation of the mortgage broker who may or may not be thinking about themselves.
So, again, most mortgage brokers are great people out there to help you but it’s always a good idea to get a full list of your borrowing options that are available.
Will this put a mark against my credit file?
And so this is when you’re trying to work out how much you’re going to borrow and stuff like that.
When you go into a bank and you try and find out how much you can borrow, often, the bank will do a credit check and this puts a mark against your credit file.
And what happens is if you have a lot of these marks against your credit file, even though it’s nothing bad, this can actually stop you getting a loan.
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 against my credit file?” ‘Cause it’s not bad to have a couple or whatever.
But if you’re getting lots and lots of marks against your credit file, then that could be an issue.
So just make sure and you know when a mark’s being put against your credit file and when a mark isn’t being put against your credit file.
How soon can I revalue or borrow again?
So if you’re investing in a property to renovate it or to develop it or even if you’re investing in a property that’s potentially under market value, you want to know how quickly can you revalue that property so you can get equity and then hopefully draw equity out of the property to go ahead and invest again.
There are 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.
And basically, this will give you an idea of how quickly you can revalue to consider going again.
You’re also going to want to ask them, “After I invest in this property, how soon can I borrow again or what do I need to do to put myself in a position to be able to borrow again and to purchase the next property?” Because hopefully, your goal isn’t just to purchase one property but to grow your property portfolio and to achieve that financial freedom and that financial security that you’re striving for.
Will My Loans be ‘cross-collateralised’?
Now, I have heard a lot of stories about investors whose loans have been cross-collateralised and it’s cause major problems when they’ve gone and sold their property because the bank shave been able to take that money and pay off debt.
And basically, you want to avoid this at all costs from what I hear.
And so, it’s good to ask your mortgage broker, “Will my loans be cross-collateralised in any way?” Generally going with the same lender for two loans does it by default, even though it doesn’t say they’re cross-collateralised.
So, it’s just something that you want to look at the fine print, you want to understand, “Are these cross-collateralised?” And if they are, try and avoid it, try and get loans that aren’t going to be cross-collateralised.
So there you have some questions to ask your mortgage broker next time you go and see a broker to find out how much you can borrow or get pre-approval or get financed for another property.
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Did You Know – You Can Get Pre-Approved for a USDA Loan in Laurel Springs?
So Steve, What are the requirements for the USDA program? So USDA has a few interesting requirements First of all, you'll need to have at least a 580 credit score Some lenders require a 620 credit score Your household income has to be under the county maximum Like a lot of down payment assistance programs This is based on family size So 1 to 4 is one category and then 5 and above is a higher threshold for qualifying What's unique about this one is the home has to be within a designated area.
So, Typically what that means is.
NOT within a metropolitan area So within our area here (Riverside county) Our local cities around her don't qualify But we only need to go 10 miles away to where there's an open area where there's Several homes that qualify.
USDA stands for United States Dept of Agriculture But it's NOT a farm loan.
Specifically, they don't finance this program for farms.
It has to be a Single Family home without a barn structure on the property.
and then it also has some home price limitations.
The Threshold is a little bit lower than say an FHA loan for the loan limits.
Ok, and how does this program differ from other Down payment programs? So it's different because it's not really a down payment program but it allows financing up to a 100% of the purchase price And it's interesting because you can actually use this program with 1 or 2 of the other programs.
If you need closing cost assistance But, what's unique it's a 100% Financing So you don't need a 2nd or a 3rd lien on the property.
Your interest rates are typically lower Than if you combine it with a down payment assistance programs And you don't have to repay any down payment assistance It has a monthly factor It's like mortgage insurance upfront It's financed at a monthly component Much less than FHA So if you can qualify for this program It's better than FHA And As I mentioned, rates and payments Are typically lower on this program So USDA is really a great program.
Great! And on average How much does the home buyer have to come in with out-of-pocket? So Again, we are financing the whole loan Purchase price up to 100% So the only thing remaining is then the closing costs Typically, plan on around 3% of the purchase price for funds to close.
The question there then becomes, Well, Where does that come from? Typically, we ask the seller to cover those costs And if we can get the seller to cover 3% Then, the buyer may only need to come in with an earnest money deposit.
And they may even get most or all of that back.
If the seller is covering all the fees.
One unique feature about USDA Versus all other loans is that if the home appraises for more than the purchase price We can finance the closing costs Up to that appraised amount So, no other loan I know that we can actually finance the closing costs.
on that type of loan What type of home buyer is this program ideal for? So certainly those that don't have access to money for a down payment Anyone that wants to live that doesn't have to live within a metropolitan area because, again, the house has to be in an area that is not in a high densely populated area It's also suited well for people who have some credit issues and anybody that qualifies for this program would definitely be better served than going FHA so those type of people.
And besides the Area restrictions are their any other property restrictions? So property restrictions are going to be similar to FHA They'll do manufactured homes They'll do homes with Casitas So no real other restrictions.
Just if it conforms to the FHA guides then it should qualify for USDA There's a couple little quirky things That you don't run into very often Like you can't actually have a barn on the property It definitely can't be for agricultural purposes It has to be for residential purposes Ok Great! Thanks Steve.
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Thousands of service members leave theArmed Forces each year and many of them are seeking new career opportunities.
The United States Department of Agriculture is stepping up to help.
Farming and agriculture is a lifestyle just like military's a lifestyle.
There are multipleprograms that assist beginning farmers and ranchers, not only getting startedbut to grow and thrive, manage the risk and help build critical stewardship oftheir resources.
There's both a huge need and a huge opportunity for the next generation of farmers and ranchers to come and be a part of growing the future.
Veterans in particular have a skill set and work ethic that is directly at theheart of what it takes to make a good farmer or rancher.
Farmers like Navy veteran Lenny Miles Jr.
carry the responsibility for growing food which hedoes on his family farm with his father and grandfather.
If you're interested in owning or operating a farm Lenny has this to say, It's endless possibilities where you could go as a career in agriculture orfarming and you just feel responsible to present good product for consumers andcompelled to take care of the land.
Farmers and ranchers understand that the land is aresource to be protected and enhanced Lenny uses farm loans from USDA's FarmService Agency and participates in the Conservation Reserve Program and theConservation Reserve enhancement program to improve wildlife habitat in erosioncontrol.
So with the CRP and CREP programs we take traditionally unproductive land out of farming production and put into conservation.
It's important to be a good steward of land and be responsible farmer.
But Lenny isn't alone.
Other farmers have taken up the reins as farmers.
They come from occupations you wouldn't necessarily expect.
Tom and Anita Roberson bothserved in the Army a combined 34 years in the medical field.
Tom worked in aprivate practice for several years before leaving the medical field for anew kind of field.
As beginning farmers the couple then worked on their passionand farming and not too long after they were operating their own farm.
If youwant to get into farming excuse that you have is yourself becausethe resources are there.
The government, USDA has plenty of resources.
Those resources help farmers with getting started and operating the day to day butAnita stresses you have to be ready before you start.
The first thing youwant to do is have a business plan.
You have to have a starting point andknow what you want to shoot for.
Farmers and ranchers are part of the smallbusiness fabric of America.
USDA is teamed up with SCORE, a non-profitresource partner of the Small Business Administration to connect farmersranchers and other small business owners with free business mentors.
The small farm outreach program they have a wonderful beginning farmer andrancher program where they'll take you through all the steps.
Those mentors canhelp you with your business plan and establish good foundations for yourbusiness.
There's a place for you in agriculture and USDA is here to be your partner in this exciting new adventure.
Some have already answered the call.
Come talk to us today.