Mortgage Loan Education

March 17th, 2017

The basic loan types are Conventional (Fannie Mae and Freddie Mac), FHA, USDA, and VA. Most  lenders typically require 640 credit scores or higher, but there are also Lenders that will go to 620 scores, and specialty lenders that will do FHA and VA loans down to 580 ... some below this on a case by case basis. It is good to have a Mortgage Broker in your arsenal that can handle all these needs. Interest rates are determined by the following criteria: 1) Credit scores (the highest category is 740+ and then they drop in 20 point categories- thus the higher the score the better the deal), 2) Loan to value = amount down on a purchase or the amount of equity on a refi, 3) Type of loan-Conventional, FHA, USDA, VA, 4) The # of years for loan-the less years the lower the rate, 5) Size of the loan-the smaller the loan means more costs, 6) Lock duration-the longer the lock = more costs, 7) Broker compensation-this is the most confusing and the least known consideration. Since the Dodd Frank Act was passed in 2011, there are 2 ways to do a mortgage loan: Borrower paid (Borrower pays the Broker and add'l fees can be added) or Lender paid (Lender pays Broker and no other costs can be added for processing or app fees, etc.) If Lender paid, the cap is 3% that can be made on a loan and the Broker MUST disclose up front what compensation plan he is under with the chosen lender to allow the Borrower to shop for a lower comp. plan- and thus a better deal (even though the Lender pays the Broker, the Lender has to adsorb what is paid to Borker in the interest rate given to Borrower the higher the Comp , the worse the deal). Before an % rate is quoted the Comp plan must be disclosed. This is so important for the Borrower to shop and not be steered to a particular Broker. FOR the BEST rates, education, and service call DIVERSIFIED MORTGAGE BROKERS-30 years of service in Central Va. Tel: 434-237-3143, Email:, Web:

Diversified Mortgage Brokers

100 Copley Place, Suite D, Lynchburg, Virginia 24502
Toll Free: 800-388-3561 | Phone: 434-237-3143 | Fax: 434-239-4852
Email: | NMLS ID# 188675 (

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