Navigating a real estate purchase can quickly become an overwhelming proposition, particularly if you are doing it for the first time.
Mark Hauser is an experienced private equity investor who has operated as the Managing Partner at Hauser Private Equity since the establishment opened its doors in 2008. Having helped countless individuals find the home purchase of their dreams, Hauser took the time to outline key pieces of information every potential buyer should know.
Realities of a Residential Mortgage
A residential mortgage in the United States market enables an individual to finance a property purchase. After putting forth their cash deposit, a lender will agree to forward the rest of the price on behalf of the buyer with an agreed-upon payment plan, typically including the entire balance plus additional interest.
A residential mortgage is a secured loan which means that if the homebuyer cannot stay up to date with their mortgage, the lender can take the property back. Many lenders will work with buyers to better find more amenable terms, avoiding foreclosure altogether.
Common Mortgage Lenders
Mark Hauser notes that there are four primary types of mortgage lenders to work with, though choices may depend on the market a buyer is entering. Some companies cater to certain products or markets, while others try to appeal to a wider variety of potential buyers.
Banks – National, regional, and community banks are all great choices for buyers looking to ascertain the best mortgage option, particularly if they have a good credit score and access to finances for a down payment.
Credit Unions – Member-run credit unions offer a variety of banking services, with non-profit institutions only catering to qualified applicants. Member-run credit unions offer mortgages with differing fee structures, offerings, and products.
Mortgage Brokers – A professional mortgage broker works on commission, earning income when they match a homebuyer with the right home loan. Mortgage brokers will end their service after the monthly payments have begun.
Online Lenders – Finally, the internet has made it easier than ever to find online mortgage lenders who are willing to work with individuals who have low credit scores. Online mortgage lenders have limited offerings and aren’t ideal for first-time homebuyers unfamiliar with the process.
No matter what type of mortgage lender a buyer is pursuing, they would be at their best if they took the time to make sure they met all loan qualifications and requirements. SoFi Bank outlined a list of universal approval requirements, with many of them revolving around mortgage type, credit rating, and access to a downpayment.