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Buying a home can be an intimidating and seemingly daunting process. Whether you are a first-time home buyer, or have been a homeowner for an extended period of time, the following provides a useful guide to help you make an educated home buying decision.Mortgage_Loan

Before you begin your home search, you should obtain a pre-approval from a bank, mortgage broker, or finance company.  A pre-approval indicates that your credit qualifies you for a residential mortgage loan, and sets the maximum dollar loan amount you are eligible to borrow based on your income.

How do I obtain a pre-approval?
The first step towards obtaining a pre-approval is to submit an application with a licensed Mortgage Loan Originator (MLO). Most MLO’s are employed by a major bank or credit union, but you can also apply through an independent mortgage brokerage, such as Mariner Finance, or mortgage broker. Remember to make sure that the broker/company you are applying through is licensed with the Nationwide Mortgage Licensing System (NMLS). Every licensed business entity, and individual broker, is given a unique identifier number. You can check if a person and/or company is licensed here.

What is a mortgage broker, and why should I use one?
A mortgage broker is a licensed MLO, who instead of working directly for a bank, credit union, or finance company, works independently and “shops” around at a variety of different lenders (banks, credit unions, finance companies, etc.) to find you the best interest rate. For example, you apply for a mortgage directly at Bank 1, who approves you for a maximum mortgage of $150,000 at 5.5% interest. You submit a second application at Bank 2, who also approves you for a maximum mortgage of $150,000, BUT at an interest rate of only 4.9%. If you use a broker, you submit one application (to the broker), who in turns sends your application to EVERY mortgage lender, all of whom issues you a maximum approval amount at a certain rate. The broker is able to use this information to get you the best rate, without you having to manually apply with multiple lenders.

When shouldn’t I use a broker?
Using a broker can be extremely advantageous, as they essentially do all of the hard work for you, but there are potential pitfalls to using a broker. You should be wary of any broker that charges you an up-front fee for their services; you should not have to pay anything out of pocket for them to obtain an approval for you. If one attempts to do so, simply decline their offer and withdraw your application with them. Mortgage brokers are paid once your loan closes (you settle on your home), and are paid through your loan proceeds (not directly by you). A broker’s commission on your loan comes from the number of points that were charged on your loan, or “point spread.” A “point” is simply one percent of your loan amount.

How many loan points are too many?
It’s very rare to obtain a mortgage loan with zero points, even if you do not use a broker, as most lenders charge points even when you apply directly with them (although it’s termed differently, and is called an “origination fee”). In general, you should not pay more than one point. Be wary of dishonest brokers who may try to charge you excessive points. Since points are financed into your loan and you don’t pay them up-front, it can be very easy to simply overlook them on your pre-disclosures. The good news is that any points charged to you are tax deductible.

While buying a home can be a stressful and confusing process, Mariner Finance is here to help. We have an expertly skilled mortgage team readily available to help you with all of your mortgage needs, including mortgage loans, home refinancing, and more. Simply call 866-382-5080 today to speak with one of our licensed loan officers, or click here to learn more!

This material was prepared for general distribution. Although all blog posts are intended to be accurate, the information and third-party links provided in the Mariner Finance’s blog are intended for general knowledge and educational purposes only without any warranties, implied or express, of any kind. The posts do not constitute investment, financial or other advice. Authors may or may not be licensed financial professionals; for specific advice, seek the input of a licensed and trained financial expert. Mariner Finance’s blog entries may also be viewed at www.pioneercredit.net and www.personalfinancecompany.com.

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†We offer personal loans starting at $1,000 with a maximum up to $25,000, depending on your state of residence. Loans between $1,500 and $15,000 may be funded online. Loans less than $1,500 or greater than $15,000 are funded through our branch network.

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, under our customer identification program, we must ask for your name, street address, mailing address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

*The process uses a “soft” credit inquiry to determine whether a loan offer is available, which does not impact your credit score. If you continue with the application process online and accept a loan offer, or are referred to a branch and continue your application there, we will pull your credit report and credit score again using a “hard” credit inquiry. This “hard” credit inquiry may impact your credit score.

 

Mariner Finance, LLC, NMLS No. 166564 (www.nmlsconsumeraccess.com)
8211 Town Center Drive, Nottingham, MD 21236. Telephone Number 877-310-2373.

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