What are the best banks for first-time homebuyers to use for getting a mortgage?

My husband and I are going to be first-time homebuyers and we would like to know what banks are the best for great rates. Also which banks are fair regarding fees and which provide the best services to first-time homebuyers?

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  • 1 decade ago
    Best Answer

    oh no! not another of my long, drawn out answers, again! but:

    good for you! please go to the aarp.com site to see how buying a home is THE way to build wealth in the united states. buy for location, location, location.

    i'm surprised that nobody mentioned that a Realtor (r) can advise you which lenders she has personally closed deals with in the past year or so. depending on your circumstances, she will explain why she recommends one over another.

    another great source is your credit union, if you have one.

    some municipalities offer affordable housing programs for first time buyers, whereby they may allot so many percent of the purchase price (2-3% maybe) so that your downpayment would be higher than is usual these days--what with so much debt that we allow ourselves to live with--for first time buyers, which many times is from 0-5%. sure, you'd probably have to pay that back, but they would make it easy on you.

    your own bank is a great source of mortgage funding, if it is not strictly a commercial bank. your proven track record of not bouncing checks, putting a little aside here and there, will help you. ask first what they charge for a mortgage, at what interest rate, and how much they charge for "points" for that rate. a point is one percent of the loan balance after your downstroke. so if the house costs $200,000 and you put 10% down (i'd try to put 20% down to avoid private mortgage insurance, a/k/a PMI), your mortgage balance would then be $180,000 and one point is then $1,800. (one point will also "buydown" your rate by 1/8 of a percent. so then, if competitive 30 year fixed rates with zero points are now running, per the newspaper or via the internet sites that show you competitive rates, 6 1/8%, you can, or your seller may, pay one point so that you then get the 6% interest rate, which then qualifies you for a higher debt ratio).

    i want to tell you what you should avoid: do not be fooled by the lenders that offer something that sounds too good to be true, since it is with THEM. your best bet is to buy a metropolitan area sunday newspaper with a real estate section in it. usually, the 2nd page has a list of the lenders in the area, what the interest rate is, what points they charge for the loan, etc. you probably will find one or two of them that charge perhaps 1/16th less than the 4 - 6 lenders that charge the same rate. do you want to know that happens if you go with them?

    after you supply them with the evidence of employment, pay stubs, bank statements, etc., etc., etc., (that they use to write up the really important "preapproval letter"), they will lock you in for a given number of days, perhaps 90, to go out and get a contract for a house with that rate, etc. now then, just wait:

    here you are, one week away from the closing date. the seller is going to buy another place and move in: his contract is signed and his mortgage is on the line too. so he is counting his sales proceeds, isn't he? and you have called the movers, put all your stuff into boxes, called the utility companies, purchased the homeowner's insurance policy, etc., etc., etc., preparing to close on the date stated in the contract, right? so your lender NOW tells you that to give you the mortgage, they need:

    the past 10 years' income tax returns;

    the names, addresses, and telephone numbers of each and every single landlord that you and your husband had for the past 10 years;

    all of your combined pay stubs for the past 10 years;

    a list of simply EVERYONE that ever supervised you and your husband on the job over the past 10 years, as well as:

    every trick in the book they can think of to prevent them from giving you THAT loan (which they found, btw, via portfolio lenders),

    since:

    what lender or bank do you know whose primary business it is to NOT make as much money as it can, any legal way it can? you know of one please call me NOW!

    yes, they can close you on the closing date without all this BS documentation, but the interest rate or points will go up, not down. and so...

    i have only known in all my career of ONE married couple that EVER did obtain that loan, but they knew exactly what would happen towards the closing date, and they were prepared.

    so, go with the lender of your choice that is amongst those that have competitive rates and fees!

    service? well, my favorite loan officers or loan brokers (that can get really interesting mortgages if you are in a strange situation, say, with old debts), were always those that would offer to come to your house, after work, with their calculator and mortgage package information, to discuss all of your finances and debts with you so that they could then write you up that very, very important "preapproval letter," not a verbal prequalification. these are usually the veterans in the biz, and they sure know what they are doing! and they know all about the different loan packages and can give you honest pros and cons of that huge variety of different mortgage loans. you will get, in the mail, a "truth in lending" statement after they have given you the preapproval letter. the letter states the amount of mortgage they will give you for how many days, at what rate, etc., etc., etc.

    i say that you really need that because the good buys always sell fast. always. it doesn't matter if it's now a buyer's market: the ones that are priced to sell for their location, location, location and their condition sell, sell, sell. so that is why you may have to insist that your Realtor (r) present a copy of that letter with your offer, which, of course, if you really want the place and others do at the same time, you will also tender a check not for an initial earnest money deposit of only a grand, but for the full amount of earnest money that will be placed into a guarded escrow account by the listing broker.

    i cannot state more strongly than i will state now, and as i have so many times in the past: once you are over the lending hurdle, find yourselves a competent, experienced (in your market area), knowledgable buyer's broker/agent. you do not have to pay a penny for it, the seller will pay the commission, out of which she will get paid. then stick with her and do not be disloyal, walking into an open house or into one of those "by owner" places without stating that you have a buyer's broker, so that all the hard work she does on your behalf yields her some income to live off of. ask how agents get paid.

    how you find a good buyer's agent/broker: drive around the areas you like and can afford (you call the number on the sign and ask how much it is). then ask if they represent buyers. i'm sure the best of the best do. do not go into the office to see only the "top" producers that make ten billion a year and have 25 telephones and fax numbers. get a nice person that is willing to sit with you, after you have learned how much you can spend, to determine first what your NEEDS are, and then your wants. don't go to see a house on a sign until after you have found a buyer's broker, then go with her. unless: offers are already coming in. then go see it and have a blank check with you. i am dead serious. do not be afraid: the best of the best buyer's agents listen so well to you and then tailor suit the searches they do for you so very well that it could be that the very first house you see is the one that is "for you." then, do not be afraid to make an offer. get it, if you can.

    yes, my verbosity is going to kill my wrists, but i have this empathy for first time buyers: i love that you are going to be doing one of the best things you ever did for yourselves in your whole lives! so i am so sorry this is so long, but it is my best advice.

    AGENCY means that YOUR interests come way ahead of the interests of the Realtor (r), i.e., the bag of money at the closing. ask for her explanation of agency and of dual agency too. that is the one quality you owe to yourselves, to get someone that really, really gives a darn about YOU, since it is YOUR money, not hers.

    happy house! happy home!

    Source(s): Realtor (r), broker owner, consultant, residential and investment specialist, creative counselor (familial portfolios), 1031 tax deferred starker trader, usa, etc., 23 years.
  • 1 decade ago

    The very best way to find a lender is to get a reference from friends, family, neighbors, etc. They usually don't have any reason to hold back on their experience with a lender and will usually give you an honest answer. The least expensive option (lower fees and interest) is with a bank, however they are more conservative with their money and if your finances aren't in shape, they'll likely say no. Brokers can be more expensive, a few hundred to a few thousand dollars depending on your market, but they work with a wide range of investors and mortgage lenders and are likely to get you qualified with at least one of them. Whether you are a first time buyer or not, you can use the FHA loan. They have lower down payments (3%) and are less risky to a lender (government insured). But, they are more expensive and you will pay PMI insurance without puting 20% down. If you can swing it, go 15 years with 20% down, you'll be happy you did. Watch out for variable rates or jumbo loans and don't buy too much house or the house will own you!

    Source(s): Been there, done that - 5 houses and two re-finances ago.
  • You as a consumer have the right to shop around for the best rate and program, (Consumers Bill of Rights). There are many programs for 1st time home buyers. An FHA (government loan) is a good one and it provides the buyer with down payment assistance from a non profit organization. The down payment 3% actually comes from the sellers and the sellers can even pay for your closing costs. Another great program, "My Community Mortgage" great for 1st time home buyers and also no down payment. Closing costs will vary from Banks to Brokers. Mortgage Brokers will have more option's (programs) for you then the banks, but closing costs will be a little higher, but the rates will usually be better then the banks. Banks are limited to the programs they can offer. So my suggestion would be to shop around. I am a mtg. broker for 14 years and I am located in Michigan.

    Source(s): www.fanniemae.com
  • Anonymous
    1 decade ago

    You're wise to ask this question. The best answer is - it depends! Rates change so fast that by the time I finish answering your question, they'll have changed. Our advise is to pick a lender at a bank, mortgage brokerage or home loan company. Get their Good Faith Estimate and one or two others. Ask them to lock in a rate for a period of time. This guarantees that if rates change, you'll still get the rate they quoted you. Rembember, while price is important, there are other considerations. What is the experience level of the lender? Experience in that field equates to knowledge of more loan programs. Will the company sell your loan? You may get good terms at the lender you choose, but will they be your lender in 6 months? Will they offer the same terms if your loan is sold? So find someone you trust and stick with them. One last thing: Mortgage brokers and mortgage bankers can both help you get a loan. Brokers are not federally regulated and often have higer and more numerous fees than their federally regulated counterparts. Both are good but we suggest working with a mortgage banker if price is your primary consideration.

    Source(s): The JKL Realty Group, Inc.
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  • 1 decade ago

    try a bank that you already have a relationship with as well as a list of approved lenders for first time homebuyer mortgage programs.

    Have you also taken first time homebuyer classes? if you do there are discounts and advantages to doing so. I know it helped me greatly. I only had to put 3% down and the city gave me the other 2% as well as money off of my closing.

  • Skip
    Lv 6
    1 decade ago

    You might check with your city, or county about first time home buyers programs.

    All banks just about offer the same products and loan programs with the different qualifications in each of their programs.

    Your interest rate is based on your credit score and how well you have paid your consumer debt over time, not by the company that does your loan or even complete the paper work for your mortgage application.

    In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

    He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

    The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

    When you speak with the mortgage broker you will need the following documents to complete the loan application

    #1 One month of pay stubs for each person that will be on the mortgage.

    #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

    #3 Two years of federal income tax along with the W-2 that match.

    Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home.

    In this pre-approval letter will be the amount of house you are qualified to purchased.

    Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

    Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

    Your mortgage broker will now order an appraisal to show proof of the property value.

    The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

    After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

    I this has been of some use to you, good luck

    "FIGHT ON"

  • 1 decade ago

    I would try to go with a mortgage broker. They tend to find the best rate for you.

    But you do have to be specific on what you want. Let them k n ow what you can afford and how much you are willingto pay in fees.

    I worked at a bank.There are many people that think that banks dont charge anything. The truth is that they make their money on the rate, so they dont need to charge you anthing.

    I realized that we offered the same product to brokers but at a cheaper rate.

    Brokers have to make their money so that is why they charge it up front versus in the life of the loan.

    My suggestion to you is to do your homework.

  • 1 decade ago

    Do a search for the housing finance agency for your state. They'll have lists of lenders who they work with for their first-time buyer grants and subsidies. Those lenders will help you qualify for any government assistance you're eligible to receive.

    You'll be dealing with major banks, and some brokers who actually worked very hard to learn these programs. All of them are committed to assisting first time buyers get all the help they are able to get.

    Source(s): 10 years in mortgage banking
  • 1 decade ago

    The banks wouldn't be the best place to go. You want to got to a lending company because your rates will be whole sale. Then you want to look at REO Properties so you can be in positive situation when you buy your home. What state do you live in.

  • 1 decade ago

    a lot of times your Realtor has THE best connections for 1st time home buyers. they need to keep this info handy, actually keep a person handy with this info. after all a realtor's biz is word of mouth. See what your realtor comes up with. but also check with your local bank..

    My money is on your realtor.

    Congrats on the house!!

  • Kacky
    Lv 7
    1 decade ago

    Definitely a hometown bank. Even though they will sell your account within a year, you don't want to take a chance on starting your life with a scam lender.

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