Key Advantages of the National Flood Insurance Program

Flood Insurance ProgramOver the last decade, extreme weather events have become a common occurrence across the United States. Recently, a series of nor’easters pounded the northeast with blizzard conditions and record-breaking snowfalls. Last year, Hurricane Harvey caused unprecedented torrential rain and deadly flooding far beyond Houston’s recognized flood plain areas. Traumatized flood victims told television reporters, “I don’t live in a flood plain area. Why is this happening?”

How FEMA’s National Flood Insurance Program Protects You
According to the Federal Emergency Management Agency (FEMA), the National Flood Insurance Program (NFIP) aims to reduce the impact of flooding on private and public structures. It does so by providing affordable insurance to property owners, renters and businesses and by encouraging communities to adopt and enforce floodplain management regulations.

These efforts help mitigate the effects of flooding on new and improved structures. Overall, the program reduces the socio-economic impact of disasters by promoting the purchase and retention of general risk insurance as well as flood insurance.

Statistics show that more than 20% of NFIP claims come from outside of mapped Special Flood Hazard Areas.

Managed by the Federal Emergency Management Agency, NFIP enables homeowners, business owners and renters in participating communities to purchase federally backed flood insurance. This insurance offers an insurance alternative to disaster assistance to meet the escalating costs of repairing flood damage to buildings and their contents.

There are now more than 20,600 participating communities in the U.S. and its territories. If you live in a participating community, you can apply for NFIP flood insurance and enjoy the protection of this special type of affordable insurance. Statistics show that more than 20% of NFIP claims come from outside of mapped Special Flood Hazard Areas.

The average cost of a FEMA flood insurance policy is about $600 annually or much less if you live in a moderate-to-low-risk area.

Key advantages of the National Flood Insurance Program include:

  • Flood insurance claims are paid even if the President doesn’t declare your area as a disaster.
  • It is not a loan. When you apply for disaster assistance from FEMA, you must pay it back with interest because it is a loan. When you have insurance from the National Flood Insurance Program, there is no payback requirement for the settlement you receive from your flood claim because you are paying monthly insurance premiums.
  • NFIP flood insurance policies are continuous, so your policy cannot be classified as non-renewed or canceled for repeat losses.
  • The average cost of a flood insurance policy is about $600 annually or much less if you live in a moderate-to-low-risk area.

For more information, visit: National Flood Insurance Program (NFIP).

To learn more about how the National Flood Insurance Program compares to disaster relief loans, visit: Benefits of Flood Insurance vs Disaster Relief.

To get a better idea of what your NFIP insurance premiums might be, visit:  National Flood Insurance Program Elevation Certificate and Instructions.  

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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FHA Home Loan Limits in Illinois

FHA loan ratesFHA (Federal Housing Authority) loans on single and multi-unit properties are designed for borrowers who are unable to make large down payments. Instead of the traditional 20% down payment required by banks, FHA loans only require a 3.5% down payment which helps make the dream of home ownership a reality for a larger population. The FHA does not lend money to homeowners. Instead, the FHA insures qualified loans made by private lending institutions.

FHA loans help first-time homebuyers purchase a single-family home and helps first-time real estate investors purchase a duplex, three-plex, or four-plex property where they can live in one unit and rent the other units. With an FHA-backed mortgage, buying a multi-unit property can be a smart financial move, because you will be able to pay off your mortgage with drastically lower payments and build equity much faster.

If you live outside of Illinois, visit National FHA Loan Limits to calculate the FHA mortgage loan limits for the area where you are considering purchasing a single-family house or a multi-unit (up to 5 units) property.

Illinois FHA Mortgage Lending Limits by County
The lending limits for FHA mortgages vary by county and are based on a variety of housing types and the cost of local housing.

Out of all 102 counties in Illinois, 91 counties have these FHA lending limits:

Single Family $294,515
Duplex $377,075
Three-Plex $455,800
Four-Plex $566,425

The 91 counties are: Adams, Alexander, Bond, Brown, Bureau, Calhoun, Carroll, Cass, Champaign, Christian, Clark, Clay, Clinton, Coles, Crawford, Cumberland, De Witt, Douglas, Edgar, Edwards, Effingham, Fayette, Ford, Franklin, Fulton, Gallatin, Greene, Hamilton, Hancock, Hardin, Henderson, Henry, Iroquois, Jackson, Jasper, Jefferson, Jersey, Jo Daviess, Johnson, Kankakee, Knox, LaSalle, Lawrence, Lee, Livingston, Logan, Macon, Macoupin, Madison, Marion, Marshall, Mason, Massac, McDonough, McLean, Menard, Mercer, Monroe, Montgomery, Morgan, Moultrie, Ogle, Peoria, Perry, Piatt, Pike, Pope, Pulaski, Putnam, Randolph, Richland, Rock Island, Saline, Sangamon, Schuyler, Scott, Shelby, St. Clair, Stark, Stephenson, Tazewell, Union, Vermilion, Wabash, Warren, Washington, Wayne, White, Whiteside, Williamson, Woodford

 

Two Illinois counties have these FHA lending limits:

Single Family $339,250
Duplex $434,300
Three-Plex $524,950
Four-Plex $652,400

Boone County, Winnebago County,

 

Nine Illinois counties have these FHA lending limits:

Single Family $365,700
Duplex $468,150
Three-Plex $565,900
Four-Plex $703,250

Cook County, Dekalb County, DuPage County, Grundy County, Kane County, Kendall County, Lake County, McHenry County, and Will County

Visit Illinois FHA Mortgage Lending Limits, for a complete alphabetical listing of FHA mortgage lending limits by county in Illinois.

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

 

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Summer Refinance Tips

 

Summer refinance tipsPaying your loan off in a shorter period of time is not only a surefire way to save money over the life of your loan, but it is also a way to obtain an attractive rate on your mortgage. If shortening the length of your new loan to a 15 or 20 year loan fits into your monthly budget, then consider going the short term, conventional mortgage route.

 If you don’t think you can handle higher monthly payments with a short-term loan, go with the longer term and make additional principal payments as circumstances allow. Though you may not get the best rate available, you’ll avoid getting stuck with a high contractual monthly payment that is a stretch for your monthly finances.

If you’re a homeowner with great credit and plenty of equity, odds are those lower rates are within your reach. But if your score is less than desirable, work at improving it by paying all of your bills on time, paying down your credit card debt, keeping your credit lines open and increasing your credit limits.   


You May Also Like To Read :

6 Ways To Improve Your Credit Score

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Should You Both Be Co-Signers on Your Home Loan?

It’s very tempting for spouses or partners to co-sign for a home loan. Your combined income and credit scores can help you qualify for a bigger mortgage which can pay for a bigger house in a better neighborhood. Who doesn’t find that scenario appealing? You’ve always wanted a sunroom, a guest bedroom, or space for a home office. Bigger is better, isn’t it?

As co-signers, you and your spouse or partner equally share the legal commitment to make the loan payment every month. Two incomes feel safer than one.

Why One Mortgage Signer Is Safer than Two Co-Signers

Practically speaking, being co-signers on a mortgage loan doesn’t produce the benefits you may be expecting. In fact, there is a serious financial downside to being a co-signer. Each of you is 100% responsible for the full mortgage loan should something prevent the other co-signer from helping with the mortgage payments.

…if you can just tie up one person’s income and credit for a home loan instead of both of you, you’ll have far more buying power as a couple.

If your spouse/partner can qualify alone for the mortgage, don’t become a co-signer. If you can qualify alone for the mortgage, don’t let your spouse/partner become a co-signer.

Why tie up both of your credit-and-debt-to-income ratios with one home loan? This answer is very important! Because if you can just tie up one person’s income and credit instead, you will have far more buying power as a couple.

Here’s how it works:

If your spouse/partner is the sole signer on the home loan, your own credit-and-debt-to-income ratio is not affected. You still have the buying power to qualify for a car loan or another type of loan should it become necessary in the future. That’s buying power you wouldn’t have if you had co-signed the mortgage loan.

Buying a house may easily be the biggest financial commitment you’ll ever make. Be sure it’s a smart financial decision, too.

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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How Does a Home Inspection Contingency Affect the Homebuying Process?

Although there is no single, national law governing home inspections during the homebuying process, home inspection contingencies are an essential part of the purchase contract in most states. This practice gives prospective buyers the freedom to make an offer and yet be able to cancel or alter their offer based on problems that surface during the home inspection. Additionally, homebuyers can use the home inspection findings as a valid reason for negotiating the needed repairs.   

Key Advantages of Getting a Home Loan From a Non-Bank Lender  

The average home inspection costs around $315, with condos and small homes under 1,000 square feet costing as little as $200. Larger homes over 2,000 square feet will run $400 or more.

Home Inspection Timeframe

Scheduling and paying for the home inspection are the buyer’s responsibility. Normally, the buyer must have the home inspection completed within one or two weeks depending on the deadline stated in the contingency. The timeframe for the home inspection can be lessened or increased during the offer negotiation process. Your real estate agent can help you coordinate inspections and send the findings to the seller in a timely manner.

What Does a Home Inspector Inspect?

It is imperative that an objective third-party professional inspect the house. The American Society of Home Inspectors (ASHI) trains and certifies inspectors across the country. They state that “the standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system (temperature permitting); interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.”

The home inspection report may include one or more recommendations for further inspections by licensed specialists regarding issues such as plumbing, electricity, mold, or termites and pests.

A professional home inspection is an invaluable tool for understanding a house’s real condition and value without having your judgment clouded by the strong emotions of buying a new home.   

What Are Your Rights When You Buy a “Fixer-Upper?”

You will still need a home inspection if you are interested in buying a fixer-upper for a low price. However, in your situation, you can take advantage of a special program from the Department of Housing and Urban Development. HUD’s 203(k) program provides FHA-insured loans specifically designed for homebuyers planning on repairing and occupying “handyman-specials and fixer-uppers.” The 203(k) program allows borrowers to purchase or refinance a property and include the cost of repairs and improvements in the loan.

The popular This Old House TV show cautions against buying a “fixer-upper” in need of “significant structural improvements” such as plumbing and electrical system overhauls, foundation upgrades, and extensive roof and wall work. These repairs are usually “invisible” and hardly ever raise the value of the house enough to offset renovation costs.

What Does a Home Inspection Cost?

The average home inspection costs around $315, with condos and small homes under 1,000 square feet costing as little as $200. Larger homes over 2,000 sq ft. will run $400 or more. Radon or mold testing will cost extra, but typically will cost less if you purchase them with a home inspection.

A professional home inspection is an invaluable tool for understanding a house’s real condition and value without having your judgment clouded by the strong emotions of buying a new home.

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

You May Also Like To Read :

How To Negotiate Repairs After Home Inspection?

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Why the FHA Self-Sufficiency Test Is So Important For First-time Investors in 3- or 4-Unit Properties

An FHA loan is a mortgage insured by the Federal Housing Administration. Backed by the Federal Housing Administration, an FHA loan may require a down payment as little as 3.5% for a credit score of 580 or higher versus the average 20% down payment required by bank mortgage loans.

An FHA loan is a very affordable way for first-time investors to buy a 3-to-4-unit property and occupy one of the units. In return for making a smaller down payment, you must pay mortgage insurance premiums which protect the lender should you default. As a first-time real estate investor, you must also pass the “FHA Self-Sufficiency Test” to be approved for a FHA loan.

An FHA loan is a very affordable way for first-time investors to buy a 3-to-4-unit property and also occupy one of the units.

When real estate investors ask our specialists at A and N Mortgage Services about an FHA mortgage loan for a 3-to-4-unit property, we educate them about the importance of the mortgage loan calculation as well as passing the FHA Self-Sufficiency Test to qualify.

FHA Self-Sufficiency Test Checklist
FHA guidelines for 3-to-4 units state that, regardless of occupancy, the property must be self-sufficient. This means that the maximum monthly mortgage payment is limited to 75% of the total rental income. This percentage must be at least enough to cover the mortgage payment known as PITI (Principal, Interest, Taxes, and Insurance).

  1. Zoning – The property must be zoned for residential multi-unit use.
  2. Market – The property appraiser must provide data on projected market rents. Although the loan amount can be higher for multi-units, we need to make sure that the loan calculation complies with the requirements of the FHA Self-Sufficiency Test.
  3. Net Rental Income – This is the appraiser’s estimate of the fair market rent from all units including the unit chosen by the borrower for occupancy. The calculation for the FHA Self-Sufficiency Test takes the total rental income less the vacancy factor of 25% as determined by the jurisdictional Homeownership Center (HOC).
  4. Loan Calculation –Calculating your mortgage loan correctly is very important, because it can affect the maximum mortgage amount that you will be allowed to finance.
  5. Conditional Commitment — Always double check your lender’s “Conditional Commitment” letter which states that a lender will offer the loan if certain conditions are fulfilled. Loans are always conditional in the early stages, but the conditions are cleared progressively as the loan moves through underwriting and processing.
  6. Income and Ratio Guidelines – Keep in mind that the FHA Self-Sufficiency Test calculations are used only to determine the maximum monthly payment. As the borrower, you must still qualify based on income and ratio guidelines. Please note that the projected rent may only be considered as gross income for qualifying purposes and may not be used to offset the monthly mortgage payment.

It is extremely important to calculate your mortgage loan correctly, because it can affect the maximum mortgage amount you will be allowed to finance.


Underwriting Your FHA Mortgage Loan
“As underwriters,” said Neena L. Vlamis, president of A and N Mortgage Services, “we will consider the FHA Self-Sufficiency Test calculation—regardless of the appraised value–to determine that the property can carry itself if the owner-occupied borrower were to move out.”

Specifically, Vlamis added, if the borrower’s total monthly net rental income from all units multiplied by 75% is equal to $2000.00, the total monthly PITI payment cannot exceed this amount. The mortgage loan amount will have to be adjusted accordingly to achieve this regardless of the amount for which the borrowers have qualified. Additionally, A and N Mortgage Services will need to condition for a Comparable Rent Schedule and Operating Income Statement from the appraiser to complete your calculation.

FHA Self-Sufficiency Test Helps First-Time Buyers
Guaranteed by the Federal Housing Authority, FHA loans are available to help first-time investors buy 3-to-4-unit rental properties with an attractively low 3.5% down payment. Once borrowers pass the FHA Self-Sufficiency Test, the FHA approves the mortgage loan.

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

 

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5 Homebuying Tips for Building Your New House

It’s an exciting time for you and your family. You’ve decided to build a new house instead of buying an existing one. For the first time, your new home is going to have every feature and detail you’ve ever wanted. Congratulations!

Here are some wise tips from seasoned mortgage experts which can help you avoid common pitfalls that others experience when building a new house for the first time.

Energy-saving decisions will pay big dividends in lower heating and cooling costs, reduce your family’s carbon footprint and help save our beautiful planet.

Homebuying Tip #1

Never Try to Be Your Own General Contractor
The cards are stacked against you. Sure, you could potentially save money that way, but your inexperience could cost you a fortune in countless delays, coordination and timing errors among sub-contractors, re-doing inferior work, and relying on a crew that doesn’t always show up when you expect them. Sub-contractors are loyal to certain general contractors who give them repeat work. That’s understandable. But you only have one job for them. Even if they agree to work for you, they’ll always postpone your work in favor of the steady jobs that come from professional contractors. This is a very important homebuying tip. Don’t put your house and life on hold based on the remote chance you could save some money.

Homebuying Tip #2

Invest in Energy-Efficient Home Design
Energy-saving features range from your choice of insulation, windows and window treatments, doors, floors, sunlight-reflecting roofs, skylights that improve heating, lighting, and ventilation, exterior paint colors that reflect or absorb heat, and Energy Star kitchen and bathroom fixtures and appliances. Making energy-saving decisions will pay big dividends in lower heating and cooling costs as well as reducing your family’s carbon footprint and helping to save our beautiful planet.

Invest in higher quality materials that pay you back in value with longer life-cycles and lower maintenance and repair costs.

Homebuying Tip #3

Plan for Ample Storage Space
You didn’t build your own home to end up with overstuffed closets and a garage that looks like a permanent storage room while you park your cars in the driveway. Plan for extra closets and built-in cabinets specifically for storage. Build extra storage space in the area under a staircase. Add storage cabinets in your garage and still have room for your cars.

Homebuying Tip #4

Don’t Skimp on Materials
This is a house you’re planning to live in for a long time. Invest in higher quality materials that will pay you back in value with longer life-cycles and lower maintenance and repair costs. You don’t want to have admit a few years from now that you shouldn’t have chosen that cheaper type of flooring, paint, carpeting, or siding.

Homebuying Tip #5

Plan for the Future
Life is all about change, so make sure you build your new house with that in mind. Today you may think you’ll never have another child, but never is a long time. Build a bit bigger than your current situation needs. What can now be a home office or guest bedroom can easily transform into become a beautiful nursery for your second child. Embrace the fact that life is full of surprises, and plan accordingly!

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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Can You Get a Better Home Loan From a Bank Or a Non-Bank?

The home loan landscape has changed dramatically since the financial crisis of 2008. In 2010, loan originations from non-bank lenders represented a 10% market share. By 2017, their share skyrocketed to 50%, presenting a new challenge to traditional banks.

Responding to stricter underwriting requirements, bank lenders inevitably had to raise mortgage rates and tighten qualifications, making it harder for people to qualify for a mortgage. Amidst the crisis, non-bank lenders saw a unique opportunity to come to the rescue of mortgage seekers bank lenders had turned away. Non-bank lenders range from large, online institutions like Rocket Mortgage, Quicken Loans, and PennyMac, to small, locally owned businesses.

What advantages do non-bank lenders offer to mortgage seekers that bank lenders can’t match?

Easier to Qualify
Mortgage seekers who have been or would be turned down by banks have a better chance of qualifying for a home loan from a non-bank lender. Even self-employed mortgage seekers have a better chance getting a home loan from an alternative mortgage lender.

Non-bank lenders range from large, online institutions like Rocket Mortgage, Quicken Loans, and PennyMac, to small, locally owned businesses.

Lower Rates & Fees
Compared to non-bank lenders, bank lenders have a short menu of mortgage options and a “one size fits all” approach regarding rates and fees. There is little room for compromise. When mortgage seekers talk to non-bank lenders, they are pleasantly surprised that they’ll be able to save thousands of dollars in mortgage rates and fees over the course of the home loan.

Lower Down Payment Requirements
Banks typically require a 20% down payment on mortgage loans. This higher percentage creates safer, less risky loans for bank lenders since mortgage seekers have so much more to lose should they default. In contrast, non-bank lenders usually require only a 3% to 3.5% down payment. This opens the door for home ownership for first-time buyers and many other people who would be turned away by traditional bank lenders.

Non-bank lenders’ expertise can give you more mortgage options than you ever knew existed, guiding you to the best mortgage option for your situation.

Faster Approval
Non-bank mortgage lenders are nimble and don’t have to deal with the constant red tape banks face all the time. This fast-forward approach shortens the home loan approval process so that mortgage seekers can quickly make an offer on a house they desire before somebody else does.

Non-Bank Lenders Are Specialists
By focusing on one financial service—mortgages—instead of a wide variety of very different services, non-bank lenders are more knowledgeable about all facets of the mortgage business than loan officers at banks. Non-bank lenders’ expertise can give you more home loan options than you ever knew existed, guiding you to the best mortgage program for your situation.
Talk to a mortgage broker in Chicago today and enjoy expert advice about the best non-bank lender for your unique needs.

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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Top 5 Arguments Couples Should Avoid During the Homebuying Process

Buying a house together is a huge step for couples to take. It represents one of the largest purchases they will make in their lifetime, and a financial commitment that could span 20 or 30 years.

Home Buying Process

In December 2017, the U.S. Census Bureau reported that the national median sale price of houses on the market had risen to $335,400, representing an increase of $107,700 since 2007.

That’s a serious investment, and it’s no wonder couples find plenty to argue about when they are involved in the homebuying process. These are the top 5 arguments couples should avoid.

1. How Much Debt Should You Take On?
You can’t agree on that answer until you both honestly explain how much debt and obligations each of you currently has—everything from credit card debt to alimony and child support for a previous marriage. As a couple, you also must understand how the responsibility for paying the mortgage is shared, especially since very few couples have the same income.

Once you’ve shared the hard, financial facts, you can realistically assess how much debt you are currently willing to accept. Since the mortgage payment is one major part of how you spend your money together, you must come to an agreement about what your total monthly budget will be—and stick to it.

2. What Style of House Do You Prefer?
This is a popular topic for disagreements, because women mostly prefer a cozy house in a suburban, established neighborhood while men prefer a sleeker house in an urban setting. How do you reconcile your differences? It’s a process full of surprises. First, look at the pros and cons of each preference and see which points you both agree about. You may decide to look at a sampling of houses of each type and setting. If you both are open to compromise and “meeting in the middle,” you’ll come to a decision that makes you both feel good about your homebuying process.

3. How Big Should the House Be?
Even though you could qualify for a $1-million house, you may need to set your sights on a lower-priced house so that you don’t find yourself in a tight “house-poor” situation. It’s best to live within your means and avoid the stress of living on the edge.

4. Should You Buy a “Fixer-Upper?”
It’s tempting to think of saving $50,000 and buying an older home that looks like it just needs some tender loving care—or so you think. Before you make that decision, have a contractor tour the house with you and identify exactly what needs to be done to put the house in the shape you envision. Otherwise your dream home could turn into the nightmare that unfolded in the famous Tom Hanks movie, The Money Pit.

5. Proximity to Family & Friends
How close you live to loved ones could become a big issue, especially if your proximity is seen as an open invitation for them to stop by at any time without warning. If both your family and your partner’s family live in the same town, you may disagree on whose family you should be closer to. The issue can be resolved if you agree that you simply want to find a house that you both love—even if it’s farther away from everyone you know.

Honesty, respect, and compromise are essential ingredients of a healthy relationship. Let the homebuying process be an opportunity to strengthen your relationship, showing that you work well together as a team with common goals. Enjoy your new home!

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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Key Advantages of Getting a Home Loan From a Non-Bank Lender

In 2016, non-bank lenders grabbed a bigger share of the home loan market than banks. Even though banks had a healthy 44% share of the loan market, non-bank lenders did even better with a 47% share. These statistics reflect a continuing trend toward non-bank mortgages.

Key Advantages of Getting a Home Loan From a Non-Bank Lender

We understand what banks are, but who are these “non-bank lenders?” Although they are also financial institutions, non-bank lenders differ from banks in four fundamental ways:

Many mortgage seekers who previously would have been approved were shut out by higher down payment, income, and credit score requirements.

  1. They don’t have a full banking license.
  2. They don’t take deposits.
  3. They are not government authorized institutions as are banks.
  4. Unlike banks which fund loans from customers’ deposits, non-bank lenders receive funding for loans from banks or investors.

In response to the widespread defaults on home loans during the Great Recession, banks tightened their qualifications for mortgage seekers even as the housing market rebounded. Many mortgage seekers who previously would have been approved were shut out by higher down payment, income, and credit score requirements.

Non-Bank Home Loan Lenders Step in to Fill the Void

There are many advantages of getting a mortgage from a non-bank lender:

Easier Financial Criteria to Meet
Homebuyers with average credit who are no longer acceptable for mortgage loans by banks will find it much easier to get a home loan approved by a non-bank lender. These alternative mortgage lenders range from large online institutions to small, locally owned businesses. They often provide FHA loans, too.

Typically, homebuyers will save thousands of dollars in mortgage rates and fees with a non-bank lender.

Lower Down Payment Requirements
Banks typically require a 20% down payment on mortgage loans, but non-bank lenders usually require only a 3% to 3.5% down payment. This opens the door for home ownership for many people who would be turned away by banks.

Flexible Rates & Fees
Heavily regulated, banks have more of a “one size fits all” approach to mortgage rates and fees with very little wiggle room to be creative. Non-bank lenders can be flexible and accommodate a wider range of home loan applicants. Typically, homebuyers will save thousands of dollars in mortgage rates and fees with a non-bank lender.

A Haven for Self-Employed Homebuyers
Without the harsher loan criteria of banks, alternative non-bank lenders can provide an easier approval process for many self-employed individuals with steady income and good credit scores who have previously been shut out of the homebuying process.

Faster Home Loan Approval Process
A non-bank mortgage lender will help you move through the mortgage approval process much faster than a loan officer at a large bank.

Non-Bank Lenders Are Specialists
Banks are considered “generalists” because they offer so many financial services. In contrast, non-bank lenders specialize in a specific type of product like mortgages. By focusing on one financial service, they know much more about it than a loan officer at a big bank and can provide wise insights into the best Chicago home loan options for your situation.

If you are one of the many Americans who have been turned down by a bank and shut out of the homebuying process, take heart in the fact that non-bank lenders can give you options you never had before. Talk to a mortgage broker in Chicago today and enjoy expert advice about the best non-bank lender for your unique needs.

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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