What You Need to Know About the Lending Process

Hoboken Real Estate Podcast with Steven Rosado

Are you curious about when to get pre-approved or what might happen to interest rates after the election? Baret Kechian has all the answers and more.

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Today I’m joined by Baret Kechian, one of the best lenders in the country, to answer some questions you might have about the lending process if you’re thinking about buying a home.

When should you get pre-approved?

The best time for that is usually around three months before you start looking at houses. That way, if there is something amiss regarding your credit, you can address that problem and remove it before it’s time to buy.

Why use a smaller lender like Mortgage Master over a bigger firm like Wells Fargo or Bank of America?

The main benefit is that a lender like Mortgage Master has a lot more flexibility and a lot more products than a bank. If there is a program that comes into play or a situation that arises that requires something out of the norm, Mortgage Master would be better-equipped to take care of it.

They also know the local market well and their appraisers are well-versed with condos and other properties, so they’re better at evaluating those properties correctly. Condos are probably the biggest thing that would cause a problem with a loan in this market, so the fact that they are experts on them and have access to their information earlier than a bank would is a major advantage.

In terms of underwriting and acquiring a mortgage, how important is the down payment?

As one of the three major phases of the whole lending process (the other two being income and credit), it’s critical. A lot of people assume that they need 20% down to buy a property, but for anyone buying in the $400,000 to $500,000 range, that’s not the case. You can buy with as little as 5% down and still get great mortgages with reasonable PMI rates. You can even utilize a lender-paid PMI program that gets built into the interest rate.

Don’t assume you need 20% down to buy a property.

A 5% or 10% loan gets underwritten the same way as long as you cover the PMI cost. Some folks fall into the trap of waiting for that magical 20% number when they should have been buying a home earlier and building equity. On some of the larger loans, such as $1 million or $1.5 million, it’s more critical to have 20% down because that will give you more options.

After the election, what will happen with interest rates?

The reason interest rates are staying as low as they are right now is because of the uncertainty surrounding the election. From where they are, though, there’s only one place they can go, and that’s up. If you’re a buyer, you should consider that in making your decision. After the election, rates shouldn’t skyrocket, but there should be some kind of upward trickle effect once it’s determined who will take office. You could see some rates going up as much as .25% or .5%, so if you’re a buyer, taking advantage of where things stand right now is crucial. The numbers are so good, borrowing money at these rates is almost cheaper than renting.

If you want to get in touch with Baret to know more about the lending process, you can call his office at [phone] or email him at [e-mail].

If you have any other questions, feel free to give me a call or send me an email. I look forward to hearing from you!