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Compare Home Purchase Mortgages

For many individuals and households, purchasing a home represents the biggest financial investment they will ever make. For all but the most affluent or frugal home buyers, home loans are necessary to make those purchases possible. And although each mortgage situation is unique, there are common factors to consider when shopping for home loans to bring a home buyer’s dream home within financial reach.

Your FICO Score and Your Mortgage

One of the biggest factors in determining the terms of a mortgage – or even whether a mortgage application will be approved at all – is the credit profile of the potential buyer, including the FICO score. Many commercial lenders refuse to approve home loans to buyers with FICO scores below the mid to upper 600 range.  Borrowers seeking Federal Housing Administration (FHA), Veterans Administration (VA) and other government loans have somewhat greater leeway where FICO scores are concerned.

Prospective home buyers should obtain credit reports from all three of the major credit reporting agencies: Experian, Equifax and TransUnion before beginning the home buying process.  Information often varies from one reporting agency to the next, and reports often contain errors that can drag down FICO scores.

Prequalification, Preapproval and Rate Locks

Many borrowers seek preapproval or prequalification at the beginning of the home buying process. Prequalification provides borrowers with a fairly good idea of their status where home loans are concerned, but are not binding. By contrast, preapproval represents a bona fide offer from a mortgage lender, and provides borrowers with greater leverage with realtors and sellers. However, many preapproval offers carry what is known as a lock period – a limited period of time during which the offer applies.

Prequalification involves a “soft” credit pull which should not have an adverse effect on FICO scores. Preapproval requires a “hard” credit pull, which can reduce FICO scores by a few points. However, credit reporting agencies expect that home buyers will be shopping for the best mortgage terms, and therefore view a number of credit pulls for the same type of transaction during a short window of time as a single credit pull, minimizing the effect on FICO scores.

Adjustable versus Fixed Rate Mortgages

There are two different types of mortgage rates: fixed rate and adjustable rate. Fixed rate mortgages carry the same interest rate for the entire life of the mortgage, and can protect buyers from sharp spikes in interest rates. On the other hand, adjustable rate mortgages can translate into significant savings when interest rates are falling, because lower rates are applied to the borrowers’ balances.

FHA, VA and Other Government Mortgages

Many home buyers who would otherwise have to settle for commercial home loans with subprime lending terms qualify for FHA (Federal Home Administration) or VA (Veterans Administration) loans. Such loans carry guarantees for lenders against default by the federal government, along with lower interest rates than for conventional mortgages and low (or no) down payment requirements. VA loans allow home buyers to post less than 20 percent down payment without imposing a requirement for private mortgage insurance (PMI).

Private Mortgage Insurance

As a rule of thumb, borrowers are expected to provide at least 20 percent down payment to qualify for the best commercial home loans. Borrowers who provide lower down payments are often required to purchase Private Mortgage Insurance (PMI) to make up the difference, which adds to the total cost of the home. PMI must be maintained until home buyers have accumulated equity in excess of 20 percent of the purchase price of their homes.  FHA loans include an equivalent to PMI. Some home buyers obtain “piggyback” home loans to bring their down payments up to 20 percent, and avoid the need to purchase PMI.

Closing Costs and Fees

Many buyers fail to include closing costs and incidental fees in calculating the potential costs of their home loans.  While closing fees are legitimate, buyers should be wary of junk fees such as loan processing or loan administration fees.  Shopping around is the best way to minimize or perhaps avoid such add-on fees altogether.

Mortgage-Related Questions for Potential Homebuyers

  • What is your total budget?
  • How does your credit rate? (Excellent, Good, Fair/Average, Poor, Very Poor)
  • Are there errors or disputed items on your credit report?
  • How much down payment can you provide?
  • If you can’t provide 20 percent down payment, is PMI or a piggyback loan better?
  • Do you qualify for FHA or VA financing?
  • Can you obtain prequalification or preapproval for your mortgage?
  • Do you want a 15-year or 30-year mortgage?
  • Is a fixed-rate or variable-rate mortgage preferable?
  • Does this mortgage offer include hidden fees?

Compare Home Purchase Mortgages

For many individuals and households, purchasing a home represents the biggest financial investment they will ever make. For all but the most affluent or frugal home buyers, home loans are necessary to make those purchases possible. And although each mortgage situation is unique, there are common factors to consider when shopping for home loans to bring a home buyer’s dream home within financial reach.

Your FICO Score and Your Mortgage

One of the biggest factors in determining the terms of a mortgage – or even whether a mortgage application will be approved at all – is the credit profile of the potential buyer, including the FICO score. Many commercial lenders refuse to approve home loans to buyers with FICO scores below the mid to upper 600 range.  Borrowers seeking Federal Housing Administration (FHA), Veterans Administration (VA) and other government loans have somewhat greater leeway where FICO scores are concerned.

Prospective home buyers should obtain credit reports from all three of the major credit reporting agencies: Experian, Equifax and TransUnion before beginning the home buying process.  Information often varies from one reporting agency to the next, and reports often contain errors that can drag down FICO scores.

Prequalification, Preapproval and Rate Locks

Many borrowers seek preapproval or prequalification at the beginning of the home buying process. Prequalification provides borrowers with a fairly good idea of their status where home loans are concerned, but are not binding. By contrast, preapproval represents a bona fide offer from a mortgage lender, and provides borrowers with greater leverage with realtors and sellers. However, many preapproval offers carry what is known as a lock period – a limited period of time during which the offer applies.

Prequalification involves a “soft” credit pull which should not have an adverse effect on FICO scores. Preapproval requires a “hard” credit pull, which can reduce FICO scores by a few points. However, credit reporting agencies expect that home buyers will be shopping for the best mortgage terms, and therefore view a number of credit pulls for the same type of transaction during a short window of time as a single credit pull, minimizing the effect on FICO scores.

Adjustable versus Fixed Rate Mortgages

There are two different types of mortgage rates: fixed rate and adjustable rate. Fixed rate mortgages carry the same interest rate for the entire life of the mortgage, and can protect buyers from sharp spikes in interest rates. On the other hand, adjustable rate mortgages can translate into significant savings when interest rates are falling, because lower rates are applied to the borrowers’ balances.

FHA, VA and Other Government Mortgages

Many home buyers who would otherwise have to settle for commercial home loans with subprime lending terms qualify for FHA (Federal Home Administration) or VA (Veterans Administration) loans. Such loans carry guarantees for lenders against default by the federal government, along with lower interest rates than for conventional mortgages and low (or no) down payment requirements. VA loans allow home buyers to post less than 20 percent down payment without imposing a requirement for private mortgage insurance (PMI).

Private Mortgage Insurance

As a rule of thumb, borrowers are expected to provide at least 20 percent down payment to qualify for the best commercial home loans. Borrowers who provide lower down payments are often required to purchase Private Mortgage Insurance (PMI) to make up the difference, which adds to the total cost of the home. PMI must be maintained until home buyers have accumulated equity in excess of 20 percent of the purchase price of their homes.  FHA loans include an equivalent to PMI. Some home buyers obtain “piggyback” home loans to bring their down payments up to 20 percent, and avoid the need to purchase PMI.

Closing Costs and Fees

Many buyers fail to include closing costs and incidental fees in calculating the potential costs of their home loans.  While closing fees are legitimate, buyers should be wary of junk fees such as loan processing or loan administration fees.  Shopping around is the best way to minimize or perhaps avoid such add-on fees altogether.

Mortgage-Related Questions for Potential Homebuyers

  • What is your total budget?
  • How does your credit rate? (Excellent, Good, Fair/Average, Poor, Very Poor)
  • Are there errors or disputed items on your credit report?
  • How much down payment can you provide?
  • If you can’t provide 20 percent down payment, is PMI or a piggyback loan better?
  • Do you qualify for FHA or VA financing?
  • Can you obtain prequalification or preapproval for your mortgage?
  • Do you want a 15-year or 30-year mortgage?
  • Is a fixed-rate or variable-rate mortgage preferable?
  • Does this mortgage offer include hidden fees?

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Company

Reviews

Loan Amount

Loan Term (Years)

APR

Additional Details

Company Website

loanDepot

loanDepot

NMLS ID# 174457
4
 
 
4 total votes
Maximum Loan Amount $2M Maximum Loan Amount
Loan Term (Years) 10 - 40 1 40
APR N/A APR
  • No Prepayment Fee
  • Primary Residence
Veterans United Home Loans

Veterans United Home Loans

NMLS ID# 1907
1
1
 
2 total votes
Maximum Loan Amount $1.5M Maximum Loan Amount
Loan Term (Years) 15 - 30 1 40
APR 1% - 8% 1% 14%
  • No Prepayment Fee
Quicken Loans

Quicken Loans

4
1
1
6 total votes
Loan Amount $25K - $3M $5K $2M+
Loan Term (Years) N/A Loan Term (Years)
Starting APR 3.46% Starting APR
  • Primary Residence
AHC Lending

AHC Lending

2
3
1
6 total votes
Loan Amount $75K - $1M $5K $2M+
Loan Term (Years) N/A Loan Term (Years)
Starting APR 2.931% Starting APR
  • No Prepayment Fee
  • Primary Residence
Discover Home Loans

Discover Home Loans

1
 
 
1 total votes
Loan Amount $35K - $150K $5K $2M+
Loan Term (Years) N/A Loan Term (Years)
APR 4.49% - 11.99% 1% 14%
  • Primary Residence
SoFi

SoFi

1
 
 
1 total votes
Maximum Loan Amount $3M Maximum Loan Amount
Loan Term (Years) N/A Loan Term (Years)
Starting APR 3.274% Starting APR
  • Primary Residence
Movement Mortgage

Movement Mortgage

1
 
 
1 total votes
Maximum Loan Amount $2M Maximum Loan Amount
Loan Term (Years) N/A Loan Term (Years)
Starting APR 4% Starting APR
  • Primary Residence
1st Alliance Lending LLC

1st Alliance Lending LLC

 
1
 
1 total votes
Maximum Loan Amount $424.1K Maximum Loan Amount
Loan Term (Years) N/A Loan Term (Years)
APR N/A APR
  • Primary Residence
Stearns Home Loans

Stearns Home Loans

 
 
1
1 total votes
Loan Amount $50K - $2M $5K $2M+
Loan Term (Years) N/A Loan Term (Years)
APR N/A APR
  • Primary Residence
LendingHome

LendingHome

1
 
1
2 total votes
Starting Loan Amount $50K Starting Loan Amount
Loan Term (Years) N/A Loan Term (Years)
Starting APR 3.557% Starting APR