Note: This blog was originally published in June 2013 and has been updated.
Reaching the closing stage in the homebuying process is always exciting! Closing officially marks the beginning of your new life in your new home, but there’s more involved than just getting the keys–here’s what you can expect at closing.
Final Walkthrough
A few days before attending closing, you need to perform a final walkthrough of the home with your real estate agent. Final walkthroughs give you the opportunity to ensure there are no outstanding issues with the property and that the sellers made appropriate repairs if they were part of the negotiation. Check that major appliances, electricity, HVAC systems, and plumbing work properly. If you find something that needs to be addressed, it may delay the sale. Regardless of the home type or whether it’s a new build or is pre-owned, doing a final walkthrough is highly encouraged. It’s better to check beforehand than to sign the papers and discover a problem when you move in.
Reviewing and Signing Documents
At least three business days before your closing date, you’ll receive a closing disclosure (CD) from your lender. The CD gives a breakdown of your loan terms, loan costs, closing costs, projected payments, cash needed at closing, and more. Review your CD carefully to ensure you understand the loan terms and that everything is accurate. Even something as seemingly insignificant as a misspelling will be an issue if left uncorrected. If you see any errors or have questions, contact your loan originator immediately.
When you arrive at the closing table, bring a valid photo ID and proof of homeowner’s insurance. These will be needed to verify your identity and show that the property is protected from accidents. On closing day, you’ll be signing more key documents in the loan package, like the promissory note, the mortgage itself, the deed, title transfer papers, the bill of sale, and the notice of servicing disclosure. Your lender and real estate agent should inform you of all the documents you’ll need to sign and what they mean prior to closing. Let your real estate and lending team know if you see errors or are unsure about anything.
Pay Cash to Close
The cash to close consists of closing costs, the down payment, and prepaid costs (like HOA dues), minus any credits you receive. You’ll know the exact figure from the details in your CD; contact your lender if you see a mistake. If you’re paying any of these costs out-of-pocket, bring a cashier’s or certified check, or have the amount wired to the title company a day or two before closing. When doing a wire transfer, avoid scams by confirming the address directly with your title agent. After the money has been disbursed and all the documents have been signed,the property transfer will be complete. The title company or real estate attorney will submit the documents to your local government’s public land records for recording. Congratulations—you just closed on your new home!
It takes a lot of hard work to get to the closing table, so celebration is definitely in order! No matter how eager you are to finish signing papers and get your keys, it’s imperative to take your time reading everything thoroughly. Having everything in order before the closing date will help reduce last-minute snags or surprises.
If you have any questions about closing, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!
If you have questions about closing on a home, contact one of our licensed Mortgage Loan Originators. If you’re ready to begin the home buying process, click here to get started!
LINTHICUM, MD, May 8, 2023—NFM Lending is pleased to announce the promotion of Jordan Nutter to Vice President of their Influencer Division.
Nutter joined the division in April 2022 as a Loan Originator and has seen extraordinary growth in her following since then. Her informational and personable TikTok videos have garnered over 4 million likes and over 212,000 followers.
“To say that I am honored to have been promoted to the role of Vice President of the Influencer Division here at NFM would be an understatement,” said Nutter. “I am eager to continue driving growth and innovation in our marketing strategies, leveraging the power of social media to connect with our audience, and delivering valuable insights to our clients. Our amazing team is at the forefront of a rapidly growing industry, and I am excited to continue to further elevate our brand in the mortgage industry.”
“From the minute Jordan joined the team, it was obvious that she was someone who worked nonstop to perfect her craft,” said Influencer Division President Bryan Harrison. “From her loan production to her social media content, there is no detail that is overlooked, which evident by her social media following and the countless positive reviews she receives from her clients. We are so excited for her to step into this new role and know she will make huge impact in our future success.”
Through partnerships with mortgage and real estate content creators, the Influencer Division leverages the power of social media and short form video to share entertaining and engaging content about mortgages and real estate. Its loan originator influencers have not only generated strong leads from their numerous followers, but also valuable discussion about various homebuying topics among the public.
NFM congratulates Nutter on her promotion and wishes her continued success.
For more information on the division, contact influencerdivision@nfmlending.com.
About NFM Lending
NFM Lending is a mortgage lending company currently licensed in 49 states in the U.S. and Washington, D.C. The company was founded in Baltimore, Maryland in 1998. NFM Lending and its family of companies includes Main Street Home Loans, BluPrint Home Loans, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit nfmlending.com, like our Facebook page, or follow us on Instagram.
LINTHICUM, MD, May 4, 2023 – NFM Lending is proud to announce that it has received five Culture Excellence awards from Top Workplaces USA by Energage for 2023.
For the third consecutive year, Top Workplaces recognized NFM for its Compensation & Benefits, Innovation, Leadership, Purpose & Values, and Work-Life Flexibility. NFM prides itself in creating a company culture where employees thrive and feel like valued family members. The company has also been honored with the national Top Workplace USA award each year since 2021.
“It’s an honor to be recognized with the Culture Excellence awards,” said NFM Managing Director Greg Sher. “NFM strives every day to create a top culture, and it’s nice to see that hard work manifest itself in these accolades. From benefits to work-life balance to a clearly-defined vision, our employees come to work every day with a purpose to give their all for our customers, business partners, and each other.”
The Top Workplaces program distributes a survey to the employees of each nominated company, asking them to evaluate their workplaces. The survey asks participants to rank their companies on the quality of leadership, work-life balance, pay and benefits, and more. The Culture Excellence Awards focus on key aspects of the workplace environment and are released throughout the year. NFM Lending is consistently recognized for its exceptional company culture. Other awards include: ‘Top Workplace USA’ by Energage, ‘Top Mortgage Employer’ by National Mortgage Professional Magazine; ‘Top Workplace’ by The Baltimore Sun and the Washington Post; ‘Great Place to Work’ by Great Place to Work, and ‘Best Mortgage Companies to Work For’ by National Mortgage News, and ‘50 Best Places to Work For’ by Mortgage Professional Magazine. NFM Lending is proud of these accomplishments and each team member for their work to make NFM a Top Workplace.
About NFM Lending
NFM Lending is a national mortgage lending company currently licensed in 49 states and the District of Columbia. The company was founded in Baltimore, Maryland in 1998. NFM Lending and its family of companies includes Main Street Home Loans, Bluprint Home Loans, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit www.nfmlending.com, like our Facebook page, or follow us on Instagram.
LINTHICUM, MD, April 28, 2023- NFM Lending and its Family of Lenders are pleased to name Stephanie L. Herring as its Chief Human Resources Officer. Herring will lead companywide recruitment and retention strategies to grow NFM further.
Herring joins NFM with over 23 years of experience in human resources, 12 of which have been as an HR Executive. She is an award-winning HR professional, recognized as a top C-Suite Executive by the Pittsburgh Business Times in 2022. Herring is a certified professional through the Human Resource Certification Institute (HRCI), Society for HR Management (SHRM) and the Human Capital Institute (HCI) and skilled in HR compliance, corporate strategy, conflict resolution, employee wellness and benefits and more.
“I am beyond excited to join NFM Lending!” said Herring. “Their championing of talent has been a key to their growth factor and is why they celebrate 25 years of service this year! The organization’s people-first stance and top employer recognitions demonstrate that HR must continually evolve, allowing people to have a sense of belonging and the ability to thrive personally and professionally. I am honored to have the opportunity to lead the next level of people evolution for NFM.”
Herring is passionate about building a “people-first” culture that values employees at every organizational level. She believes that creating an environment of transparency, mutual respect, and integrity is vital to creating a thriving workplace.
“I am tremendously excited to work with Stephanie,” said NFM Chief Compliance Counsel and General Counsel LaTasha Waddy. “She is a proven Human Resources professional that will absolutely elevate the employee experience and culture at the NFM Family of Lenders. I look forward to having her as a strategic ally at the organization.”
Herring holds degrees from Point Park University and is a graduate of Carnegie Mellon University Executive Leadership Academy through the Tepper School of Business. In her spare time, Herring mentors fellow professionals through Pittsburgh Women’s Alliance, The Advanced Leadership Institute, and volunteers. She resides in Pittsburgh, PA with her two sons.
About NFM Lending
NFM Lending is a mortgage lending company currently licensed in 49 states in the U.S. and Washington, D.C. The company was founded in Baltimore, Maryland in 1998. NFM Lending and its family of companies includes Main Street Home Loans, BluPrint Home Loans, Freedmont Mortgage Group, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit nfmlending.com, like our Facebook page, or follow us on Instagram.
LINTHUCIM, MD, April 21, 2023— NFM Lending is proud to announce Bryan Harrison’s promotion to Influencer Division President. Harrison has been with NFM since 2009, serving as a Branch Manager at one of their Maryland locations. In 2021, he began managing the industry’s first-ever Influencer Division.
“There has been a lot of hard work put in by many talented people over the past two years in getting the Influencer Division up and running,” said Harrison. “NFM has been unwavering in its support along the way, and I appreciate their confidence in me leading this talented team moving forward. I’m proud of what we have been able to accomplish so far and am even more excited about what the future holds as we continue to make homeownership a reality for the next generation of home buyers.”
“From the very beginning in late 2021, when the concept of an ‘Influencer Division’ was without a single influencer or employee, Bryan shared my vision and took a major risk focusing most of his attention on the unchartered road ahead,” said Managing Director and Influencer Division Co-Creator, Greg Sher. “He has since had an instrumental hand transforming that vision into production, having eclipsed 600 mortgage originations in a challenging 2022 market. Bryan helps to oversee 12 mortgage influencers and four branches that help to support the production produced by the influencer team. I commend him on his well-earned role and am confident the best is yet to come.”
The groundbreaking Influencer Division was co-founded by Sher and leading mortgage influencer and Division Vice President Scott Betley in 2022. Through partnerships with mortgage and real estate content creators, the Division leverages the power of social media and short form video to share entertaining and engaging content about mortgages and real estate. Its loan originator influencers have not only generated strong leads from their numerous followers, but also valuable discussion about various homebuying topics among the public.
NFM congratulates Harrison on his promotion and wishes him continued success.
For more information on the division, contact influencerdiv@nfmlending.com.
About NFM Lending
NFM Lending is a mortgage lending company currently licensed in 49 states in the U.S. and Washington, D.C. The company was founded in Baltimore, Maryland in 1998. NFM Lending and its family of companies includes Main Street Home Loans, BluPrint Home Loans, Freedmont Mortgage Group, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit nfmlending.com, like our Facebook page, or follow us on Instagram.
LINTHICUM, MD, April 18, 2023 — NFM Lending is pleased to announce the opening of a new branch in Kansas City, MO. The branch is located at 800 E. 101st Terrace Suite 350, Office 329 and will be led by Branch Manager Chadd Johnson. Johnson will be joining NFM’s Influencer Division, where he and his team will create engaging social media content to educate followers on home buying topics such as getting pre-approved, types of loan products, and creditworthiness.
The NFM Lending branch will focus on expanding NFM’s flexible and powerful lending platform to better serve community families with exceptional customer service. NFM Lending offers Conventional, FHA, VA, USDA, FNMA, Jumbo, and many other loan options to fit every borrower’s need.
“I am absolutely thrilled to be joining NFM Lending and the Influencer Division,” said Johnson. “It’s so refreshing to be part of a company dedicated to improving the homebuyer experience. The high energy and enthusiasm here is infectious. There is a sense that we are on the forefront of changing this industry for the better, and it’s exciting to be part of it. I can’t wait to see what the future holds for us!”
The branch’s goal is to continue to provide the same commitment and dedication to borrowers, ranging from first-time homebuyers to seasoned buyers looking for their next home, a second home, or investment property.
“Chadd Johnson is a pioneer and visionary, and in many ways, a representation of what the future is going to look like in mortgage,” said Managing Director Greg Sher. “He has over 275,000 loyal followers on his social media accounts and an extremely solid stable of realtor partners that drive massive results. NFM is honored to have him in the fold as we continue to heighten our focus toward the fast-changing behavior of the next generation of homebuyers. To that end, Chadd is the perfect fit to help us get there faster.”
Johnson is currently seeking qualified Mortgage Loan Originators for full and part-time positions. For more information, please contact:
Chadd Johnson Branch Manager NMLS# 1429824 816-810-9464 chadd@nfmlending.com www.nfmlending.com/cjohnson
About NFM Lending
NFM Lending is a mortgage lending company currently licensed in 49 states in the U.S. and Washington, D.C. The company was founded in Baltimore, Maryland in 1998. NFM Lending and its family of companies includes Main Street Home Loans, BluPrint Home Loans, Freedmont Mortgage Group, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit http://www.nfmlending.com/, like our Facebook page, or follow us on Instagram.
Declaring bankruptcy is financially and emotionally stressful—it’s a situation no one wants to be in. Filing for bankruptcy is a tough decision, but you can bounce back from it and even become a homeowner.
Bankruptcy Types
Individuals can either file for Chapter 7 or Chapter 13 bankruptcy, and they have different implications for your finances and when you can start the mortgage process. After the initial filing, a bankruptcy court can declare it as discharged (eligible debts are removed) or dismissed (the court is not proceeding with bankruptcy filings because of unmet requirements). Your bankruptcy status plays a large role in your timeline for mortgage application.
Chapter 7 Bankruptcy
When you file for Chapter 7 bankruptcy, certain assets are sold to repay creditors, and any leftover debt is discharged. This is the more severe of the two, and the bankruptcy will remain on your credit report for 7 years. You’ll need to wait a minimum of two years before applying for a mortgage, but it can be more depending on the loan program. The wait is two years for FHA and VA loans, three years for USDA loans, and four years for conventional loans. Individual lenders may set their own waiting periods, as well. The waiting period starts after your bankruptcy is dismissed or discharged.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is not as extreme as Chapter 7; you can keep your assets and must adhere to a court-ordered debt repayment plan. As long as you continue making payments, your assets won’t be seized. It stays on your credit report for 7 years, but the waiting period to get a mortgage can be as little as 1-2 years depending on the loan program, the status of your bankruptcy (dismissed or discharged), and lender requirements. For FHA, VA, and USDA loans, you have to be at least one year into your repayment plan before trying to get a mortgage. For conventional loans, you must wait two years after your bankruptcy was discharged, and 4 years after a dismissal. Generally, you’ll need the court’s approval before applying for a mortgage if you’re still in Chapter 13 bankruptcy.
Improving your Finances
No matter what type of bankruptcy is on your record, it’s crucial to take measures to rebuild your finances and make smart financial choices. The mandatory waiting period is a prime time to improve your credit profile and show lenders that you’re responsible and financially secure enough to handle a mortgage. First, create and stick to a budget that covers your basic needs and any recurring bills. Gradually, you should ideally see more money in your pocket. Put some of that extra cash into savings so it can be used for a down payment or other housing costs. Strengthen your credit score by always making on-time payments, paying in full whenever possible. Don’t max out your credit cards or apply for new ones to keep spending. Avoid taking on unnecessary debt, and lower your debt-to-income ratio (DTI) by paying down existing debts. Repairing your finances won’t happen overnight—it takes time and consistent work.
Things to Consider
When you’re in a better position to start the homebuying process, government-sponsored loans are an excellent choice to consider, as the waiting periods are shorter and have more flexible requirements than conventional loans. Bankruptcy can be caused by a number of issues, both within and outside of your control. Some loan programs may reduce the waiting period if your bankruptcy was caused by a one-time, extenuating circumstance that is well-documented (such as a medical emergency). You might need to provide your lender with a letter of explanation if an extenuating event caused your bankruptcy. Regardless of what type of bankruptcy is on your record, speak with a loan originator to see what options are available for your situation.
Bankruptcy may feel like a death sentence, but it doesn’t have to be. The speed bump that bankruptcy puts in front of homeownership can be used to your advantage by taking steps to restore your finances. When you’re financially, mentally, and emotionally prepared for homeownership, you’ll be set up for success.
If you have any questions about the home buying process, contact one of our licensed Mortgage Loan Originators. If you are ready to buy a home, click here to get started!
NFM Lending is not a debt settlement company or credit repair agency. Speak with a licensed financial advisor regarding your unique financial situation.
LTV’s can be as high as 96.5% for FHA loans. FHA minimum FICO score required. Fixed rate loans only. W2 transcript option not permitted. Veterans Affairs loans require a funding fee, which is based on various loan characteristics. For USDA loans, 100% financing, no down payment is required. The loan amount may not exceed 100% of the appraised value, plus the guarantee fee may be included. Loan is limited to the appraised value without the pool, if applicable. Qualifying credit score needed for conventional loans.
LINTHICUM, MD, April 12, 2023 – NFM Lending and its Family of Lenders are pleased to announce that Bob Tyson has been promoted to President and Chief Operating Officer (COO), and Greg Sher has moved up into the role of Managing Director for the company.
Tyson has served as NFM’s COO and Chief Administrative Officer (CAO) since 2015. He previously served as NFM’s Executive Vice President of Lending and COO from 2009 to 2013.
Sher moves into the Managing Director role after serving as Chief Business Development Officer for the last 14 years. He is also the Creator, Host, and Executive Producer of NFM TV and the co-creator of the much-heralded Influencer Division.
“I am excited to announce that Bob Tyson has been promoted to President and COO and Greg Sher has been promoted to Managing Director,” said NFM Lending Founder/CEO David Silverman. “Bob’s experience and knowledge is unmatched. He has worked in almost every facet of the mortgage industry, including being a very successful loan originator, before transitioning to capital markets and operations. Greg has proven to be a true visionary in the mortgage industry, especially with regards to recruiting and marketing. With their leadership, NFM navigated through the pandemic and an unprecedented rise in interest rates, and we are now properly positioned to propel to the next level.”
NFM Lending has flourished under Tyson’s leadership: the company has added five divisions, developed a comprehensive servicing portfolio, expanded its product offerings, improved quality control, and transitioned from a whole loan basis model to a hybrid model, including direct agency sales. Tyson’s strategic innovation was crucial in positioning NFM Lending as a nationally recognized top mortgage lender. He boasts over 22 years as a mortgage industry leader, with extensive experience in both the financial and operational aspects of lending. He has held several executive positions throughout his career and has sat on Freddie Mac’s Regional Lender Advisory Board and Loan Manufacturing Operations Advisory Board. In addition, Tyson is a proud Veteran of the U.S. Marine Corps, serving as an officer from 1995 to 1999.
“It’s an honor to step into this role and continue to lead NFM Lending into the future,” said Tyson. “We are positioned for great success due to our leadership group, tech innovations, and most of all, our people. We don’t want to be the biggest, just the best. That means culture comes first and NFM makes it a priority to combine employee satisfaction with business growth.”
As Chief Business Development Officer, Sher helped the company grow from a small correspondent lender with 100 employees to a top 25 mortgage powerhouse boasting more than 1300 employees nationwide. His recruiting and marketing efforts have attracted the attention of some of the leading producers in home lending, who have joined forces with NFM and its family of lenders to propel the company to the forefront of the mortgage industry. In January 2020, he launched the Influencer Division, comprised of some of the top mortgage influencers in social media who have generated over 50,000 exclusive purchase leads through their various channels since inception just 20 months ago. Additionally, in 2017, he launched NFM TV, a media production company dedicated to industry news and featuring top thought leaders in home lending. NFM TV has received recognition nationally, having won several Telly Awards for exceptional story telling surrounding the NFM Salute series, which honors our Veterans.
“I just love this business and can’t wait to see what’s around the bend for all of us in this industry. NFM has always encouraged me to think outside of the box and innovate. This appointment heightens that expectation and I’m ready to meet the challenge head-on.”
NFM congratulates Bob and Greg on these well-deserved promotions and wishes them success in their new roles.
About NFM Lending
NFM Lending is a national mortgage lending company currently licensed in 49 states in the U.S. and the District of Columbia. The company was founded in Baltimore, Maryland, in 1998 by David Silverman and his wife, Sandy. It is currently celebrating its 25th anniversary.
NFM Lending and its family of companies include Main Street Home Loans, Bluprint Home Loans, Freedmont Mortgage Group, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit www.nfmlending.com, like our Facebook page, or follow us on Instagram.
LINTHICUM, MD, April 10, 2023 — NFM Lending and its Family of Lenders is proud to congratulate their loan originators who were recognized in the Scotsman Guide Top Originators 2023 lists.
Each year, Scotsman Guide recognizes the nation’s top-producing mortgage loan originators. Originators are ranked in ten categories, including Top Dollar Volume, Most Loans Closed, and Top Purchase Volume. Each set of rankings is thoroughly audited, making Scotsman Guide the mortgage industry’s “most intensely reviewed, accurate and substantiated rankings of its kind.” To be considered, entrants must either have done at least $40 million in loan volume or personally closed 100 or more home loans in the 2022 calendar year.
Oleg Tkach led the Top Dollar Volume category for the company with $199,147,063 in production, followed by Jane Floyd with $164,581,671, and Tina Konidaris with $100,310,846. Tkach and Floyd also made the Most Loans Closed category, along with Daniel Sa. Their total closed loans for 2022 were 434, 384, and 320, respectively.
“What an incredible year it was for these top salespeople!” said NFM Lending President and Chief Operating Officer, Bob Tyson. “Everyone in the mortgage industry knows the headwinds we faced last year, and yet these individuals faced the challenges head-on and came out on top. Congratulations to them and all our originators. We are looking forward to a great 2023.”
NFM Lending would like to recognize and congratulate all the loan originators within the NFM Family for this incredible achievement.
Top Dollar Volume
David Arocho, Andrew Beigel, Trevor Bennett, Ryan Bundy, Brian Burnham, Michael Colagrossi, Gregory Cowart, Mario Cua, Mack Dadyan, Rich Dillman, Jane Floyd, Ronald Gosewisch, Dana Gounaris, Tina Konidaris, Sean Maloney, Jeff Miltenberger, Craig Pollard, Danell Riggs, Kevin Rudrud, Daniel Sa, Shanon Schinkel, Matthew Shiner, Shane Staples, Rob Stettler, Blane Stewart, Oleg Tkach, Raquel Wilson, Tammy Wittren
Darran Anthony, Neil Bourdelaise, Karen Dulmage, Derek Evans, Jolene Moore, Salvatore Savastano
John Acton
Meinoh Kim
Chris Magnotta
DeAnn Ellis
Most Loans Closed
NFM Lending
Rodney Anderson, David Arocho, Andrew Beigel, Trevor Bennett, Ryan Bundy, Stacey Cobb, Jerry Cook, Gregory Cowart, Mario Cua, Mack Dadyan, Rich Dillman, Jane Floyd, Ronald Gosewisch, Dana Gounaris, Tina Konidaris, Sean Maloney, Jeff Miltenberger, Todd Novosel, Jesse Perrone, Bryan Raiford, Suzie Reed, Danell Riggs, Gregory Riordan, Daniel Sa, Shanon Schinkel, Justus Sharp, Shane Staples, Rob Stettler, Blane Stewart, Oleg Tkach, Raquel Wilson, Tammy Wittren
Main Street Home Loans
Darran Anthony, Neil Bourdelaise, Clay Carroll, Karen Dulmage, Derek Evans, Rita Hairston, David Licciardi, Amy Lott, Jolene Moore, Peter O’Donnell, Salvatore Savastano, John Savastano
Freedmont Mortgage Group
John Acton
Elevate Home Loans
Mike Bowen
Element Home Loans
Kevin Blair, DeAnn Ellis, Charles Favoroso
NFM Lending is proud of these loan originators’ accomplishments and wishes them continued success.
About NFM Lending
NFM Lending is a national mortgage lending company currently licensed in 49 states in the U.S. and Washington, D.C. The company was founded in Baltimore, Maryland in 1998. NFM Lending and its family of companies includes Main Street Home Loans, BluPrint Home Loans, Freedmont Mortgage Group, Elevate Home Loans, and Element Home Loans. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. For more information about NFM Lending, visit www.nfmlending.com, like our Facebook page, or follow us on Instagram.
Every homebuyer wants a great mortgage rate, but what exactly goes into how the rates are set? No, it’s not astrological movements or cloud formations; it’s a variety of financial and economic elements. Learn how these factors impact how mortgage rates are determined.
Your Finances
Credit Score
You don’t need a “perfect” credit score to buy a home, but having a strong score gives you access to more competitive interest rates and programs. Your credit score is a significant metric in predicting how likely you’ll be able to pay back the mortgage. Even if you’re not thinking of buying a home in the near future, build up your credit score now so it’s primed for when you’re ready.
Debt-to-Income Ratio (DTI)
Having a high debt-to-income ratio (DTI) means you have little money left after paying your current bills, and it can lead to paying higher interest rates. Take steps to pay off debts, especially high interest ones like credit cards.
Loan-to-Value Ratio (LTV)
The loan-to-value ratio (LTV) also factors into your rate. If you’re seeking a mortgage that covers over 80% of the home’s price, it’s considered a high LTV and is considered riskier. You’re more likely to be offered a lower rate if your LTV is 80% or under, and you won’t need to pay private mortgage insurance (PMI).
Down Payment
Though having a 20% down payment is not necessary for all home buying programs, the amount you’re able to contribute to a down payment can affect your mortgage interest rate. Lenders view borrowers who can put down more money upfront to be less risky, and can offer lower rates. The down payment amount can also lower your LTV.
Mortgage Points
Though it is entirely optional, paying mortgage points at closing (aka, buying down the rate) is another way to lower your interest rate. One point equals 1% of your mortgage, and buying additional points will minimize your rate even further. The discounted rate stays with the loan until you refinance or pay it off.
Federal Reserve Actions
The Federal Reserve is always a hot topic whenever mortgage rates shift, but they don’t actually set mortgage rates. Instead, they determine the federal funds rate, which is how much interest banks are charged for borrowing from the Fed and when exchanging money with other depository institutions. The Fed considers various market indicators when they decide to change the federal funds rate. These factors include: economic growth, inflation, unemployment, the housing market, and the overall health of the economy.
The funds rate has a direct effect on rates for adjustable-rate mortgages (ARMs), home equity lines of credit (HELOCs), and home equity loans, all of which are based on an index. When it comes to fixed-rate mortgages, the funds rate has a more indirect impact as it can spur demand in the bond market. For example, a lower funds rate boosts bond prices and investor demand, leading to lower mortgage rates. Conversely, increasing the funds rate can lessen bond prices and demand, resulting in higher mortgage rates.
The Bond Market
Mortgages are largely based in the mortgage-backed securities market (investors buy groups of mortgages), which is influenced by U.S. Treasury securities (government bonds). Bond prices and rates have an inverse relationship, and shifts in the bond rate often cause similar movements for fixed-mortgage rates. Mortgage lenders use bond market activity as a guideline to set their lending rates.
Your Lender and Loan Programs
Another thing that makes mortgage rates hard to pin down is that lenders have different criteria for eligibility and don’t all offer the same programs and incentives. Rates and requirements are not uniform across all loan programs. Mortgages with shorter repayment terms tend to have lower rates than those with longer terms, but the monthly payment is usually higher. When deciding which lender and mortgage program to work with, be aware that the advertised rate may reflect a best-case-scenario and can differ from what you may be eligible for. Be sure to work with a loan originator to see what options are available for your unique situation.
There’s no such thing as a universal mortgage rate; rates differ depending on individual circumstances, economic conditions, lenders, and loan programs. Even though you can’t control every aspect that affects interest rates, it’s important to manage the ones you can. Working with a reliable lender and improving your finances will give you an edge when you’re ready to buy a home.
If you have any questions about using mortgage points, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!