Home Financing in Nashville Real Estate

Home Financing is smooth and easy when you have the right mortgage company. How do we find the right company….. and what questions do we ask? This is even more important now, in light of the recent mortgage meltdown.  With so many mortgage companies folding, it's wise to choose carefully!

The Basics:

A mortgage is simply a long-term loan in which your lender uses your real estate as collateral. There are several types of mortgages……the fixed rate being the most simple and easy to understand. This mortgage will be amortized…..usually over a 15-year or 30-year term. The rate of interest will remain the same until the loan is paid off. The only change in your payment would be in the event of a change in your homeowner’s insurance premium or property tax rates.

Another popular type of mortgage is an Adjustable Rate Mortgage (ARM). This mortgage can have a term of 1-7 years before the rate changes…….or it can change monthly. It all depends on the program you choose. It should all be spelled out when you obtain the ARM. There are many adjustable rate mortgage programs available, and you should always investigate all your options before making a decision.

When you’re shopping for a home, you should always obtain a pre-approval letter from your lender. This gives us more negotiating power when you find the right home.

Mortgage Broker or Mortgage Banker?

A mortgage brokers are independent agents or corporations that have access to 30-40 lenders. The lenders in their “tool box” are both conforming (good credit….W-2 income, etc.) and non-conforming (poor credit, self-employed, etc.). The loan originator should always counsel with you to determine the program that best meets your needs.

A mortgage banker, on the other hand, works for one specific company. They will have different programs to choose from, but in my experience they don’t have a huge pool to choose from.

The big difference: MORTGAGE BANKERS ARE ON SALARY …..MORTGAGE BROKERS USUALLY WORK ON COMMISSION.

This means that the mortgage banker will get paid whether your loan closes or not……whereas the Mortgage Broker will not. Again my experience has been that the brokers work harder to get your loan approved and closed, because they want to be paid. I have worked with some very good mortgage bankers in the Nashville Tennessee area for financing a new home…..but these loans have been made to people with A+ credit.

A few lenders keep your loan “in-house”, but most of them will sell it on the open market. This is very common, so your loan could be sold several times if you live in the home very long. The terms cannot change…..just the company you send your payment to.

***ALWAYS REMEMBER***
Anytime your loan is sold, make sure you get WRITTEN notification before you send your payment to a new company. There have been scam artists that will call and tell people that their loan has been sold to them and they will now be receiving the payments. Don’t do it! Make sure the notification is in writing……and mailed to the address your lender has on file for you!

Home Financing on-Line?  OR CALLING FROM A TV COMMERCIAL?

THEY CAN SOUND REALLY GOOD……BUT BE CAREFUL!!

• I have seen many hidden costs or “junk fees” involved with these lenders….and they can add up to hundreds of dollars that you shouldn’t have to spend.

• I have seen many homeowners not be able to close on time, which leaves people with moving vans full of furniture with nowhere to go. And leaves sellers very upset! Many times they are ready to close on their new home…..and everything comes to a stop.

• I have witnessed people that have already closed on one of these loans……only to find that the lender recalled the loan. Apparently there was a 3-day period in which they had the right to do the recall. Talk about problems!!!

Many of these lenders are not accountable to anyone but themselves,
and accountability and co-operation is vital when you are purchasing a home. It’s much easier when you actually know the people you are dealing with…..but more than this……they actually know you!

We like to do business with lenders that we have worked with before…..and know that we can trust what they say. Whenever a lender tells me something that I find not to be true, or misrepresents anything…..I no longer have faith in them. I get very upset when I ask a lender if this document or that document is back in their file….and they tell me “yes”……only to find out that they haven’t even sent it out yet. Our clients are far too important to leave this to chance. There are hundreds of loan originators out there, but only a few are really good ones.

You are always free to use the lender of your choice and should always do your homework and investigate the company. But I do recommend our in-house lender, who is actually my son, Michael Rumley. He has 12 years experience as a mortgage broker and I hold him accountable for every statement and promise that he makes. You will find him very thorough and helpful to you throughout your loan process. Another good feature of doing your loan “in-house” is that we have your file right here. We have total access to what has been done and what still needs to be finalized. And you can be assured that we keep a close watch on it for you…..making sure you get the rate and terms you are promised and also being able to close on time.

Another thing you might want to be aware of is the fact that whenever someone “pulls your credit report”…..it lowers your score a bit. So you don’t want to have too many inquiries from numerous mortgage companies. Talk to them and ask all the questions you want, but don’t let them inquire into your credit report until you are fairly certain that you want to use them.

50 YEARS COMBINED EXPERIENCE US GIVES MUCH INSIGHT INTO THE MORTGAGE AND REAL ESTATE BUSINESS!

WE WORK TOGETHER TO MAKE SURE YOUR NEW HOME PURCHASE IS AS TROUBLE-FREE AS POSSIBLE!

We look forward to hearing from you. Let us prove how working together can save you a lot of money when financing your new home in Nashville Tennessee!  For any unfamiliar real estate term, please visit our glossary.