Mortgage brokers have experience with many financial products on the market, which means they can help with the details of the loan application, which can result in greater borrowing capacity. Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We've maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in what actions to take next. With home prices rising, you may want or need a larger mortgage.
Now may be a good time to apply for a larger loan, as rates are still relatively low for giant mortgages and other types of loans. If you need more borrowing power, these eight strategies could help. When you apply for a mortgage, the lender analyzes your debt-to-income ratio (DTI), which is the percentage of your monthly income that you are disbursing towards the minimum monthly payments on your debt. A DTI ratio of 36 percent or less is generally considered ideal and may help you qualify for a larger loan.
Many lenders are comfortable with even higher DTIs. If you're buying a home and your down payment is at least 20 percent of the price of the home, you won't have to pay private mortgage insurance (PMI), so you may be able to get a larger loan. The PMI, which protects the lender if you stop paying your loan, becomes part of your monthly payment and can reduce the amount of the loan you are eligible for. If you still have cash available after making a 20 percent down payment, you could pay your lender more in advance to lower your interest rate.
A branch's starting rate is usually between 0.325 and 0.625 percentage points lower than that of a conventional 30-year fixed-rate loan, Fleming says. Turning to a mortgage broker can be worthwhile if they can secure a better mortgage than you can find on your own. As long as you understand how the broker is compensated, and that compensation doesn't mean you get a worse mortgage, using a broker could save you a lot of time buying prices on your own. However, it's best to compare a broker's offers with a couple of lenders you've checked yourself to verify that you're getting a good deal.
Different lenders have different attitudes about how much they're going to lend, so it's important to compare prices. A broker with access to the entire mortgage market can advise you on which lenders are best to go to in your particular circumstances. A list of runners can be found here. You can also find out which lenders are right for you by checking your credit score and borrowing power.
You should go to a mortgage broker if you want to find access to home loans that aren't easily advertised to you. Mortgage brokers can also help loan applicants qualify for a lower interest rate than most commercial loans offer. A mortgage broker acts as an intermediary between someone who wants to buy real estate and those who offer loans to do so. By working through a broker, you may not have access to these lenders, some of which may offer you better mortgage terms than you can get through the broker.
Looking for the best mortgage could be one of the smartest financial decisions you make, whether you're looking for a new mortgage to buy a home or to refinance your current one. Because of these relationships, brokers know which mortgage companies to go to for the best chance of getting the best loan, and they may have access to more credit products than you would have on your own. Analyzing all the pros and cons of using a mortgage broker can help you make a decision about whether you need one. The mortgage broker gathers all documentation and ensures that the mortgage loan process proceeds to closing.
If you don't have incredible credit, if you have a unique debt situation, such as owning your own business, or if you simply don't see mortgages that work for you, then a broker could provide you with access to loans that are beneficial to you. Here's what you need to know about what a mortgage broker does, so you can decide if working with one will be the smartest option for you. Some lenders may offer homebuyers the same terms and rates they offer to mortgage brokers (sometimes even better). For this reason, it may still make sense to make some rate purchases on your own, in addition to the offers sent to you by the mortgage broker.
Agents can help you understand what documents you'll need to provide to get a mortgage approved and how information, such as your credit score or debt-to-income ratio, could affect your eligibility. In some cases, mortgage brokers can get lenders to waive some or all of these fees, which can save you hundreds to thousands of dollars. . .