In this blog, we will explain how to shop for the best mortgage lenders. The way to do comparative shopping of mortgage lenders can save you tens of thousands. Most people normally go with the first lender they contact. Mortgage rates vary widely between lenders. Mortgage rates even vary among independent P and L mortgage branch offices within the same mortgage company.

For example, one branch of ABC Mortgage Bankers may have higher rates than another branch of ABC Mortgage Bankers. Why is it so? Branch managers can set their own margins on the back end which means higher mortgage rates to borrowers.

Shopping For The Best Mortgage Lenders in Chicago

Google Lenders Of Chicago FHA Loans… Don’t be surprised how many so-called Lenders Of Chicago FHA Loans pop up.  However, how many on the list are actual mortgage companies? How many are lead generation companies? Many mortgage companies rely on lead generation companies like Lending Tree, Zillow, and other third-party lead generation companies for purchase and refinance leads.

However, these lead companies sell leads to not just one mortgage company but dozens of companies where potential borrowers get bombarded with calls. Searching for actual lenders on the internet can be very helpful for borrowers with challenged credit. Or those looking for a specialty lender where they have no lender overlays. In this article, we will discuss and cover what lender overlays are.

Local Brick And Mortar Bank VS Find Lender On The Internet

Borrowers should also not believe everything they read. Most of these companies are simply trying to get as many leads as they can by promising programs, for the most part, they don’t have or virtually nobody qualifies for. When home buyers are looking for lenders, especially first-time home buyers, they do the following:

• Visit their local bank
• May get referrals from real estate agents, work, colleagues, friends, family
• Go on the internet to search for lenders

Most borrowers are not familiar with the mortgage process:

This is because it is not often they apply for a mortgage. Homebuyers often may purchase a home once every five to ten years and mortgage regulations change often. One important thing borrowers do not understand is that not every lender has the same guidelines. Make sure you shop around and compare rates from different lenders. It’s also important to find a lender that has experience working with the FHA program.

Understanding Mortgage Guidelines For First-Time Homebuyers

There are two types of mortgage guidelines:

1. Federal mortgage guidelines are implemented by FHA, VA, USDA, Fannie Mae, and Freddie Mac. FHA Loans are by far the most popular loan program for first-time home buyers
   It is also the loan of choice for buyers with bad credit or higher debt-to-income ratios. HUD has its minimum FHA Guidelines but most mortgage companies have lender overlays
2. Overlays are higher lending standards instituted by the individual lender than the minimum mortgage guidelines required by HUD (On FHA Loans), VA (On VA Loans), USDA (USDA Loans), Fannie Mae, and Freddie Mac (On Conventional Loans).

For example, HUD only requires borrowers have a 580 FICO credit score to qualify for a 3.5% down payment FHA home purchase loan:

1. However, most banks require a 640 FICO credit score
2. This higher credit score requirement is called an FHA Lender Overlay on credit scores

Long before you start looking for a mortgage lender and applying for a loan, give your finances a checkup, and improve your standing if needed. This means pulling your credit score and credit reports. You’re entitled to a free credit report from each of the three main reporting bureaus (Experian, Equifax, and TransUnion), which you can get through AnnualCreditReport.com. If your score could use some work, first look through your credit reports for errors, late payments, delinquent accounts in collections, and high balances.

Paying down each of your credit cards below 30 percent of the available credit and making on-time payments are the best ways to improve your score, says Jason Bates, vice president of the Purchase division for American Financing, a national mortgage lender based in Aurora, Colorado. In addition to solid credit, lenders want to see that you can handle your existing debt along with a new mortgage payment, so they’ll look at your debt-to-income ratio.

This formula adds up all your monthly debts and divides them by your gross monthly income to get a percentage. Many lenders require a DTI ratio below 43 percent, though some loan programs allow up to 50 percent. To keep your DTI ratio manageable, avoid taking on new loans or making large purchases on credit cards for at least three months before applying for a mortgage. You should stick to this rule until you’ve finalized your mortgage, as lenders can pull up your credit report at any time throughout the application process until you close.

Many home buyers will turn to Google. If you Google Lenders Of Chicago FHA Loans are going to find a bunch of lenders that are trying to do just that. Try not to be a piece of these internet marketers. Viewers have to know a little bit more about how FHA lenders think in order to make an educated guess before they even think of shopping your possible loan scenario to someone on Google.

However, when borrowers are shopping for any type of loan whether they are VA, USDA, Conventional, or  FHA Loans on the worldwide net, they need to have to exercise some caution.

Benefits of Buying a Property in Chicago With an FHA Loan

The FHA mortgage is a popular choice for first-time homebuyers. The low down payment and credit score requirements make it easier to qualify for than a conventional mortgage. Additionally, the down payment can come from a family member or friend, making it even more accessible.

1. Low Down Payment

The minimum down payment for an FHA loan is only 3.5%. This is much lower than the minimum down payment for a conventional loan, which is typically 10% or more. This makes homeownership more attainable for those who might not have a large down payment saved up.

2. Credit Score Requirements are Lower

For an FHA loan, the minimum credit score required is 580. However, if your credit score is between 500 and 579, you may still be eligible for an FHA loan, but you will need to put down a 10% down payment. For a conventional loan, the minimum credit score required is typically 620.

3. Down Payment Can Come from a Family Member or Friend

The FHA allows borrowers to use money from a family member or friend for their down payment. This makes it easier to come up with the necessary funds to buy a home. If you’re thinking of buying a home, an FHA mortgage might be a good option for you. With a low down payment and more flexible credit requirements, it can make homeownership more attainable.

IHDA Downpayment Assistance in Chicago

Deciding to buy a home is a huge decision- and one that comes with a lot of additional costs that many first-time home buyers don’t think about. In addition to the purchase price of the home, there are also closing costs, fees for inspections and appraisals, and of course- the all-important down payment.

For many people, saving up for a down payment is the biggest obstacle to homeownership. But there are programs available to help with that, too. Here’s everything you need to know about downpayment assistance programs in Chicago.

The City of Chicago offers many downpayment assistance programs to help Chicagoans purchase their homes. These programs provide either grants or low-interest loans to cover the downpayment and/or closing costs associated with buying a home in Chicago.

If you’re thinking about purchasing a home in the near future, research these programs and see if you qualify for any of them. Doing so could save you thousands of dollars and help you become a homeowner sooner than you thought possible.

Ihda Downpayment Chicago helps eligible first-time homebuyers with the purchase of their home. Click here to learn more about Ihda’s downpayment assistance programs and how they can help you achieve your dream of homeownership.

If you’re a first-time homebuyer in the market for a new home, you may be wondering how you can come up with the necessary down payment. Fortunately, there are programs available that can help. One such program is IHDA’s Downpayment Assistance Program, which provides qualifying buyers with up to $10,000 in down payment assistance.

If you’re thinking of buying a home in the near future, consider taking advantage of IHDA’s down payment assistance program. With the help of this program, you could be on your way to achieving your dream of homeownership.

Licensed Lender Or Lead Generation Company?

How Do You Know Whether The Mortgage News Website Is A Licensed Lender Or Lead Generation Company? Are they contacting an actual lender or a lead generation company?  Lead generation companies will sell information to dozens of mortgage companies. Potential borrowers can get flooded with many solicitation calls by lenders who may or may not be able to help the individual borrower.

As a leading FHA mortgage lender in Chicago, we have helped countless people realize their homeownership dreams. From first-time homebuyers to those looking to downsize or upgrade, we have the experience and knowledge to help you find the perfect loan for your unique situation. We understand that shopping for a mortgage can be overwhelming, which is why we’ve put together this list of blog titles to help guide you through the process.

Whether you’re a first-time homebuyer or you’re looking to upgrade or downsize, an FHA mortgage may be right for you. Contact us today to learn more about our FHA mortgage options and to start the application process. We look forward to helping you reach your homeownership goals!

Many Borrowers may think that just because a Lender offers FHA Loans that they all have the same lending requirements. This is not the case. Homebuyers who need an FHA Lender with no lender overlays, contact us at Capital Lending Network, Inc. at 888-900-1020 or text us for a faster response. Or email us at contact@capitallendingnetwork.com.