Property purchases usually include some kind of institutional (bank or savings and loan) financing. There are many types of financing to consider depending on your long-term financial goals.
Mortgage brokers are popular because they have relationships with multiple lenders. Mortgage brokers will search for the best loan programs with several lenders, and provide options for you, saving you time and energy.
Direct lenders (such as Wells Fargo or Bank of America) may be the right fit for you if you already have a relationship with a lending institution or credit union, or if the specifics of your situation call for it. Direct lenders will usually have fewer programs available to them than a mortgage broker, so you’ll be doing your own due diligence to make sure you have the program right for you.
On-line mortgage brokers are available, but I have found that often times these brokerages are not local, nor familiar with our real estate market.
My recommendation will always be to work with a local broker or direct lender that you can meet in person. If you need a few referrals, let me know.
Brokers and lenders will look at various financial information to get the best snap shot they can of your financial picture. This will help them establish you as a credit risk and how much of a risk (the amount they will loan you) they will take. They will look at such things as:
- income, including documentation about additional income such as alimony, child support, or pension
- late payments
- bankruptcies or foreclosures
- your work situation, length of employment, and job changes
- two years tax returns
- bank statements
- source of your down payment (will this be your own money, proceeds from a stock or retirement account sale, or a gift from family)
- reserves and retirement plans
- credit report and FICO score