Summer is winding down, and many potential homebuyers want to find a new house to move their family into before the new school year starts. If this describes you, you’ve probably already started to look at houses and townhomes in Hancock Park and may even have your eye on a property you plan to make an offer on.
Your Hancock Park real estate agent has likely advised you to obtain a letter of preapproval from a mortgage lender to increase your chances of having your offer accepted and to better understand how much house you can afford. If you’ve not yet been preapproved, don’t make the mistake of thinking that all mortgage lenders are alike. Choosing the right lender can make the financing process go much more smoothly, ensuring you get into the home of your dreams with a minimum of hassle and stress. Here are some tips to help you choose.
Pay attention to your credit score
A good credit score is the key to low mortgage interest rates and getting the size of loan you’ll need to buy townhomes in Hancock Park. Most mortgage lenders require a minimum score of 620 to qualify for a conventional mortgage. If you don’t have a high enough score, you’ll have two options: Find a lender who offers different types of loans that don’t necessitate a high credit score or take steps to increase your credit score before you apply for a loan. Loans that don’t require high credit scores include loans backed by the Federal Housing Administration (FHA), USDA loans backed by the U.S. Department of Agriculture, and VA loans from the U.S. Department of Veterans Affairs for current or retired active duty service members. Want to improve your credit score? Focus on paying your bills on time, reduce the amount of revolving credit you are using, and catch up on accounts that are past due. A knowledgeable mortgage lender can also take a look at your credit score and determine how you can increase it to the point where you can qualify for the type of loan you need.
Understand what you need
Many mortgage lenders have specialized experience and knowledge of certain types of loans. If you’re planning to get a special type of mortgage, like a jumbo loan or a government-issued loan, you should look for a lender who specializes in those types of mortgages. Not sure what type of loan you’ll need? Talk with your Hancock Park real estate agent about your financial situation and what type (and price) of home you’re hoping to buy. Keep in mind that the median price of homes in Hancock Park is $3.9 million. If you’re planning on buying a home in that price range, you’ll not only have to qualify for a very large mortgage, but you’ll also have to come up with a down payment and cover closing costs. On a $3.9 million dollar home, this amounts to $780,000 for a 20% down payment and between $78,000 and $195,000 for closing costs. If you don’t have access to the equity in a home you’ve sold, you may also have to explore short-term loan options with the lender.
Compare rates
Though mortgage interest rates tend to be similar among lenders, there is fluctuation, so it makes sense to compare rates from a few different lenders. You can talk to various lenders, such as credit unions, banks, and local independent lenders, to see what the rate differences are. However, make sure you’re comparing apples to apples. Some lenders may have a lower rate yet charge higher fees, thereby canceling out the rate discount. Hancock real estate professionals usually advise their clients not to select a mortgage lender based on price alone, but it’s always worth checking around to see what’s available.
Determine how they communicate
To ensure your Hancock Park real estate transaction goes smoothly, you’ll need to have open communication with your mortgage lender. Lenders have various communication styles, and you need to choose one who “speaks your language.” To determine this, take some time to talk with potential lenders and ask them questions. You may also want to send them a follow-up email or leave them a voicemail afterward with additional questions to see how quickly they respond. If you feel they are not responsive, don’t fully answer your questions, or seem uninterested in your situation, you should look for another lender.
Ask your Hancock Park real estate agent for recommendations
Getting recommendations for mortgage lenders is just one reason why it’s essential to work with an experienced Hancock Park real estate agent. Not only can a professional agent help you obtain the financing you need, but they can also help you locate homes in Hancock Park that meet your needs, craft an offer that the seller will accept, and walk you through the closing process. Your agent can also assist you in selling your current home so you can tap into your equity for a down payment or put additional money down on your new home.
Finding the right mortgage lender to work with is one of the necessary steps to successfully navigate the homebuying process. If you’re ready to find a lender and get preapproved so you can begin looking at new homes, reach out to the experienced Hancock Park real estate agents at McNamara & Associates to get started.