Mortgage Companies in Arizona

December 21, 2021

Regardless of where you’re looking for a home – there will be mortgage companies of all sizes who would like your business. It’s important to visit multiple lenders when you’re ready to start the process of buying a home – they can offer different terms and rates based on your financials and homebuying scenario. If you’re looking for a home in Arizona – you’ll have the option of many lenders at your fingertips.

What to Look for in a Mortgage Company

Open and Honest

This might seem like a no-brainer – but some companies out there won’t have your best interest in mind. Finding a lender that you trust can sometimes be tricky. When you sit down with a lender or loan officer for the first time – make sure they explain everything clearly and respond to your questions with straightforward answers.

Excellent Communication

Going above and beyond to make sure you’re in the loop from application to closing is one of the biggest things you should look for when finding a lender. If you’re unfamiliar with the home buying process, you can quickly get lost in the new information and documents. Being able to get thorough answers when you need them will help keep you at ease and the process on schedule.

Process Driven

Running all loan processing and operations in-house lets a lender and client to always be on the same page. It makes providing documents and signatures simple – allowing for informed and on schedule home buying.

Willing to Go Above and Beyond

Your lender and loan officer should always be willing to go above and beyond (within reason) to make you feel comfortable during the homebuying process. There are many things they should and can be doing to keep you involved and informed from beginning to end.

Compassionate

Lenders need to be compassionate towards their clients because each home buying scenario is unique. If the lenders you visit don’t take the time to listen and adjust their process to your needs – then they might not be worth your hard-earned money.

The best mortgage company in Arizona is the one that works best for you! There are many unique home buying scenarios and lenders will have different programs available to you. That’s why it’s important to discuss your options and terms with multiple different Loan Officers or lenders.

The Mortgage Process

If you’re unfamiliar with the mortgage process – read below to learn about the basics from start to finish! Most lenders should follow a similar process – and it could vary slightly based on the mortgage program you qualify for.

Finding a Lender | Completing an Application | Getting Pre-Approved

Once you find a lender and are ready to start the application process – the communication and information will start flowing. Most mortgage applications are filled out online these days, but you can always request a paper application.

If you’re just starting to get familiar with applying for a mortgage – here are some of the common information and documents, you will have to supply to a lender:

  • Current and Past Employment History
  • Credit Score
  • Desired Loan Amount
  • Gross Monthly Income
  • Assets (Bank Accounts, Retirement Savings, etc.)
  • Debts (Credit Cards, Delinquencies, etc.)
  • Previous homeownership

Once you supply the lender with these documents, they will review them and hopefully come back to you with a pre-approval. Once you’re pre-approved, you’ll receive a certified letter from your lender that details how much they are willing to lend you.

Shopping for a Home | Working with a Real Estate Agent

Now that you’re pre-approved – you can start shopping for a new home with confidence. Most borrowers tend to work with a real estate agent, and with your pre-approval, they will work with you to find a home that suits all your needs and that is within your budget.

Once you find your dream home, it’s time to make an offer. Being patient while you make an offer is important – People selling their home are often reviewing multiple offers, coordinating the purchase of their new home, and living their life on top of it all. If they accept your offer, your lender will move forward with the process and order an appraisal.

Getting an Appraisal is an important part of determining your loan amount. Once you have your eyes set on a home, you want to make sure you’re paying the right amount for it. This will depend on location, the amount of money the sellers have put into the home, and the size of the property. There can be many factors that go into determining the value of a home, but an official appraisal is a requirement for every mortgage to close.

Choosing a Mortgage Program | Behind the Scenes

When it comes to choosing a Mortgage Program – there is one main factor that will determine the options available to you – your Down Payment percentage. If you can afford the traditional down payment of 20%, you will be offered mortgage programs under a conventional loan program. Conventional mortgage programs are offered by private lenders and are not backed by a government-sponsored entity (GSE).

If you’re seeking assistance with a down payment or closing costs, there are plenty of non-conventional mortgage programs that lenders can offer. If you’re looking to learn more about the different types of mortgage programs – check out this article on the most common mortgage programs – (LINK FOR POWER PAGE #1). Remember, different lenders offer different programs, making it important to meet with more than one.

Now that you’ve found the home of your dreams and know what mortgage program you’ll be using – behind the scenes work will start. While the lender should do most of the heavy lifting, they will rely on you for information they can’t obtain without your permission. During this time, your lender will verify all the information you provided to them. They will also be obtaining the title documents, preparing your closing disclosure, double-checking your insurance policies, and completing any other necessary steps to get your mortgage cleared to close.

Throughout the processing of the mortgage, the lender will determine your closing costs based on the services provided. They will present them to you on a document called the Closing Disclosure for your review. Once everything is verified and agreed to, your loan will be sent to their closing department for the final touches.

Once your mortgage is fully processed, you’ll do a Final Inspection of the home before closing. The final inspection and walkthrough are separate from the appraisal and a crucial step in the process. This is where you will double-check to make sure the appliances work, the structure is sturdy, and everything the seller said about the house is true. If you find out that the seller wasn’t being truthful, you can back out of the deal before closing.

Closing on the Home | Move-in Day

Now that your mortgage has completed the core of the process and you’ve verified the final inspection, it’s time to schedule the closing, pay the closing costs, and sign the final documents. While you’ll start to get excited to move into your new home, it’s important to be patient during this time. All parties involved will need to find a day, time, and location that works for everyone. This process can take anywhere from a week to a month (or longer) but your lender will give you an estimated closing date early on in the process.

Different Types of Mortgage Programs 

If you’re looking for information on common mortgage programs, look no further. Below there will be descriptions of the Conventional, FHA, VA, and USDA programs.

Conventional

Simply put, the conventional mortgage is the standard home loan. What separates a conventional mortgage from other programs – is that they are not offered or backed by a government entity – meaning they are available through places like private lenders and banks. Because they aren’t insured by a government entity, they don’t require private mortgage insurance (PMI).

Private Mortgage Insurance is required on mortgages where the loan-to-value (LTV) ratio is above 80%. This is added into a monthly mortgage payment in case the borrower defaults on their loan. Conventional Mortgages don’t require PMI because to meet the requirements for one, the down payment made will be at least 20% – meaning your LTV will be at least 80%.

Conventional Mortgage interest rates will always be a fixed percentage and come at a term of 30, 15, or 10 years. Having a fixed interest rate is important because once it’s locked in, it cannot be changed for the life of the loan or until the mortgage is refinanced. Since interest rates are changing every day, you won’t have to worry about yours increasing over the years. It’s important to note that even if you don’t choose a conventional mortgage – you’ll be able to find other types of home loans and programs with fixed interest rates.

If you’re not looking for any assistance and can afford a 20% down payment – the conventional mortgage is the best option for you.

FHA
The FHA Mortgage Program gets its name from The Federal Housing Administration. It was created by Congress in 1934 and became a part of the Department of Housing and Urban Development (HUD) in 1965. It was established because the housing industry and market were at a standstill – times were tough and mortgage loan terms were limited to 50% of the property’s market value. The FHA was initially able to help revive the market by providing financial assistance to borrowers – but today they insurance different mortgage programs to protect lenders in case the borrower can’t repay the loan.

Since an FHA loan is sponsored through the government, they provide a special guarantee to lenders – if FHA borrowers fail to repay the loan, the FHA will reimburse the lender for the remaining principle. They can offer this guarantee through the funds collected with PMI. This allows lenders to offer appealing mortgage terms to those who are looking to secure funding with a small down payment or average credit score.

Typically, borrowers that qualify for an FHA loan are required to make a down payment of at least 3.5% and have a minimum credit score of 580. Depending on your lender, you might be required to have a higher credit score to qualify. If your credit score is lower than 580, don’t worry, you can still qualify but may have to put more towards the down payment.

VA (Veteran Affairs) 

The United States Department of Veterans Affairs (VA) created a mortgage loan that provides financial assistance to veterans. This mortgage is guaranteed by the VA, which has helped millions of veterans and service personnel obtain a mortgage. The VA was designed to help provide housing and assistance for veterans and their families by issuing easier financial qualifications.

According to the VA guidelines, eligible applicants are specified as “Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime.” If a surviving spouse of a veteran wants to apply for a VA loan, there are specific rules and restrictions regarding their eligibility, but it is possible to qualify.

Since the VA loan is guaranteed by the federal government, it helps eligible applicants with the following:

  • Requires no down payment (unless your lender deems otherwise, or the purchase price of the home exceeds the allowed VA limit).
  • Lenders offer competitive interest rates.
  • Allow borrowers to pay off all or part of your loan in advance without penalty.
  • VA orders an appraisal on your behalf to determine the home’s value is reasonable and matches with current market conditions.
  • If defects are found, the VA will try to assist you in hiring a contractor to resolve those issues.

However, the VA does not guarantee the condition of the home you are purchasing, it guarantees the loan. This is often misinterpreted, so do not get the impression the VA will handle any damages or defects that need to be repaired. If you’re eligible, it’s recommended to take advantage of the VA Mortgage Programs.

USDA

The United States Department of Agriculture (USDA) created a loan program that allows borrowers to purchase a home with no down payment. More commonly, this mortgage product is known as the USDA loan program or the Rural Development Guaranteed Housing Loan Program.

The USDA loan program is designed to improve the economy and quality of life in rural America. The program offers low-interest rates and a zero percent down payment for eligible borrowers. Ultimately, this mortgage product helps people who can’t afford a traditional loan purchase a home in rural parts of the country.

To be eligible for a USDA loan, there are several qualifications a borrower needs to meet. For example, there are income limits, which vary based on a borrower’s property location and household size. The USDA program also requires that the funds must be used toward the owner’s primary residency. Because the program gives borrowers the option to make no down payment, they are required to have PMI.

While the USDA Mortgage program may seem niche – there are a lot of borrowers that don’t think to take advantage of this program. If you’re interested in purchasing a lot of land in a rural area, look to the USDA program first.

 

If you have any more questions about finding a lender in Arizona – or would like to start the home buying process today – reach out to Neighborhood Loans!