The Critical First Step in Buying a House


You may be shopping for a house but did you remember to shop for a mortgage? According to the Consumer Financial Protection Bureau, “nearly half of borrowers do not shop for a mortgage…”¹ As a result, these borrowers got either a higher rate or paid more in closing costs. This is why we recommend shopping for a mortgage before you start looking for a house. Finding the right mortgage can be complicated. As with any other major purchase, you’ll want to shop around before making a decision. Choosing the right mortgage begins with choosing the right lending company and asking the right questions. However, what do you need to know to start shopping for a bank, mortgage broker or lender?

Here at Candor Mortgage, we’re here to help you discover what loan is best for you by asking the right kinds of questions, listening to your needs, understanding your goals and giving you the best advice. While other companies practice pushy sales, we practice candor. It probably helps that we designed our mortgages with competitive pricing, costing less and requiring less paperwork. We are confident Candor Mortgage is the best home loan broker, we’re telling you not only how to shop but how to get the best mortgage anywhere.

What Are Your Needs?

The first step is to sit down, assess your spending and make a budget for the new house payment. Then ask these questions: What are my needs? How much do I want to spend on a new home? How much do I have saved for a down payment and closing costs? Is this the right time to buy? Am I looking to buy a home for long-term investment purposes, or will this become my primary residence? If you are buying with someone else, talk it over. These and similar questions will help you develop a better understanding of what direction you want to go in. With these questions in mind, you’ll be better prepared to purchase a mortgage that’s right for you.

When you work with Candor Mortgage, you won’t be forced to answer these questions alone. Through our unique approval process, we’ll help you step-by-step in explaining these and other vital matters.

Do you know your credit score?

After you assess your needs, it’s time to check your credit. There are three major credit reporting companies: Equifax, Experian, and TransUnion. You may get a free credit report from all three companies at It’s an excellent place to start if you haven’t looked at your credit in awhile. You may use these reports to check for errors carefully. If you want to know your actual credit scores or FICO scores, you will have to pay. If you do check your scores, you will want to check all three scores. Your scores will likely differ between the three credit bureaus. For lending purposes, most lenders will use the middle score.

Instead of going at it alone, we can help you obtain your credit report with all three credit scores. Then we will review it with you checking for any errors or misreporting. We can even help you make corrections which will often improve your FICO scores. Credit scores range from 300 to 850. It’s important to know your credit score because the interest rates you will be offered will depend on your credit score. Borrowers with a credit score above 740, typically get the best interest rate options. Want to know your credit score?

How much money do I need for a down payment?

One of the most significant costs to weigh when shopping for a mortgage is the down payment. This principal payment is typically referred to as having to be 20%, but this is not true. A down payment can range from 3% to 20% or more. While a lower down payment may come with higher interest rates, this is not always the case. Loan options like those offered by the FHA or VA provide home buyers with a flexible way of buying a home. There are also affordable home financing programs like Fannie Mae’s HomeReady, which we feel is a better option than FHA loans for creditworthy borrowers. Here at Candor Mortgage, we are constantly on the lookout for the best ways to save you money.

If you are able, it is also important to note that it can pay off to put more than 20% down, not only to lower your interest rate as previously mentioned but also to signal to lenders that you’re more than capable of paying back the mortgage loan. Further, most sellers prefer a higher down payment. Don’t forget to budget for closing costs as well when figuring out your down payment amount. Our verified pre-approval will help determine what amount your down payment should be and where in your finances it should come from.

How can I get the best or lowest interest rate?

Another and significant factor when shopping for a mortgage will be interest rates. You’ll have to think about interest rates not only when deciding what loan schedule is best for you, but also when it comes time to consider other aspects of your mortgage, such as how much to pay as a down payment. While the market dictates the overall trend for interest rates (go up and down), this is what you can do to get the best rate options.

The first factor needed is for your credit score to be above 740. Having your credit checked early in the buying process is our top recommendation. At Candor Mortgage, we often help buyers improve their credit scores by reaching out to the three bureaus to correct any false information. The second factor that will enhance your mortgage pricing is putting more money down or qualifying for an affordable mortgage product. Putting more money down makes your mortgage less risky, and lenders often reward you by giving you a better rate. An affordable mortgage like Fannie Mae’s HomeReady usually has a better interest rate and lower private mortgage insurance, both of which will give you a lower mortgage payment. The third factor is choosing the right mortgage lending company.

There are three types of mortgage companies: 1) banks or credit unions, 2) lender or direct lender, 3) mortgage brokers. As we discussed in a previous article, traditional banks and credit unions tend to be much slower and have higher rates and costs. The person you talk to at the bank often is not the one working on your mortgage. Banks make money by charging fees and higher interest rates. Lenders and direct lenders, the second type, have one or multiple lines of credit they use to fund loans. The additional overhead and cost to operate as a direct lender are usually passed on to you. Just like banks, the person who enrolls you is often not the same person who is working on your loan. Direct lenders make money by charging higher rates, origination and lender fees. This type of company does not need to disclose certain fees and can make a big profit on the interest rate they give you. Therefore, it’s safe to say, most direct lenders will have higher rate pricing and costs. The third option is independent mortgage brokers. A mortgage broker like Candor Mortgage has access to multiple wholesale lenders without any of the overhead. Uniquely to us, we use web software to compare multiple wholesale lenders’ pricing. We use cost-saving technology to run efficiently, and this allows us to pass along any savings to you. The person with whom you speak is the same person working directly on your mortgage.

One more thing, if you are working with a real estate professional like a Realtor, there is a good chance they’ll recommend that you use their in-house or preferred lender. An in-house lender may or may not have an ownership affiliation. In the end, you may choose to work with the company who is not only giving the best mortgage but more importantly who you feel has your back. At Candor Mortgage, we’re committed to providing accurate and transparent rate quotes that are helpful for you. Our rate quotes include all associated fees and costs. You’ll never run into any ‘bait-and-switch’ tactics with us.

How much will I pay in closing costs? What fees will I pay? 

Finding a way to lower your interest rates can certainly be beneficial, but it’s not the only way of saving money. Closing costs refer to the various fees that come with your mortgage, on top of its selling price. In California, the seller chooses the title and escrow company which will determine the majority of the loan fees. Some of these fees may include lender fees, appraisal fees, title insurance fees, owner’s title insurance fee, escrow settlement fees, and homeowner’s association fees, among others. These costs can quickly add up. Choosing the right mortgage company that will not only close your loan fast but also gives you the most value is crucial. Our pre-qualification and verified pre-approval processes will be upfront with you about what closing costs to expect so that you can adequately prepare.

Loan Term and Mortgage Programs

The schedule by which you pay back your mortgage loan will vary depending on whether you opt for a fixed-rate mortgage or an adjustable rate mortgage, or ARM. Fixed-rate mortgages are typically offered in either 15-year or 30-year arrangements. These options will provide some stability and consistency to your debt payments, and may be best for you if you plan on staying in this home for the long-term. The more consistent, fixed-rate mortgage options do tend to come with higher interest rates than do ARMs. An ARM will start at a fixed rate (usually for a period of 5 or 10 years) and then transition to an adjustable rate, based on market fluctuations. A unique type of ARM is a 5/5 ARM. It has a 30-year term with a fixed interest rate for the first 60 months. It adjusts in year six and every five years after that. Therefore, you can expect adjustments in years 6, 11, 16, 21 and 26. Therefore, this may be a more stable adjustable mortgage option. If you know you will be moving in 5 years; an adjustable rate mortgage may be a good fit. Candor Mortgage’s knowledge-based approach to helping you shop for a mortgage can help separate fact from fiction about different loan options and determine what’s best for you. For more clarification, check out our guide to navigating common myths about buying a home.

Overall, when shopping for a mortgage, it’s of the utmost importance you choose the mortgage company that not only will give you the best mortgage but deliver on your loan closing. By choosing the right company, you will be able to move forward to buying a house with confidence. At Candor Mortgage, we’re committed to helping you find a mortgage and a home that’s best for you. Our expert team will work with you every step of the way.



8 Home Buyer Myths About Buying a House


Buying a home can be incredibly stressful. A little anxiety is normal; buying a house is one of your most significant investments. Fortunately, much of the worrying around buying a home is based on myth and misconception. With this helpful guide we’ve prepared for you, you’ll learn how to separate fact from fiction.

Myth 1: I Need to Save 20% for the Down-Payment to Buy a Home!

When people talk about making their down payment, they often mention something known as “the 20% rule.” The 20% rule refers to the belief that a 20% down payment is ideal or even necessary when closing on a home. If you, like many others, think this is the case, you may be worried about how to afford a 20% down payment. Fortunately for you, the 20% rule is a myth!  For conventional loans, down payments can range from 3% to 20% or more. So if 20% is too high, you can choose to pay any amount between 3% and 19%.

There are benefits to putting more money down. Most lenders will give you a lower interest rate because the more you put down, the lower the risk to the lender. There are some loan options with down payments less than 3%, and some even with 0%. You may be better off with a lower down payment versus paying rent. Talk to a mortgage adviser today to learn more.

Myth 2: I Can’t Buy a House With Student Loan and Other Debt!

If you’re looking for a mortgage or wanting to buy a home, and you have a fair amount of debt, you may be worried about whether or not you’ll qualify for financing. Don’t fret! There’s no need to worry about not getting financing simply because you currently have debt or are paying off student loans. Although there is such a thing as ‘too much’ debt, what matters when applying for a mortgage is your ability to pay your new home loan and other debts. A lender’s underwriter will look at your debt-to-income ratio (DTI), or how punctual and consistent you are with paying off your debts. Your DTI is calculated by dividing your monthly amount due by your monthly income. If this ratio is above 45%, you may run into some difficulty getting a loan with favorable terms, but improving your DTI can be fairly simple. If you do find yourself with a DTI above 45%, try to pay any outstanding payments, cut costs where you can, or search for additional sources of temporary income.

Myth 3: My Credit Score is Way Too Low! I’ll Never Qualify.

Your credit score matters, especially when looking to get a mortgage. While it is essential for some programs, it does not mean it is the defining factor of your mortgage application.  If you are concerned that your credit score is too low, you should start by checking it and checking it early.  It’s especially important to know your credit score before making an offer.  By checking it soon, it will give you and your mortgage adviser time to fix any defects.

A low score does not automatically disqualify you from receiving financing. There are many loan programs through government agencies, such as the FHA or VA, that have lower credit score requirements than conventional loans. These programs are designed with the needs of first-time or low-income homebuyers in mind, and as such have more lax requirements.

Some easy ways to optimize your score include correcting any errors on your credit report, paying your bills on time, and avoiding any new lines of credit (car loans, new credit cards, etc.)  It is highly recommended you work with an experienced mortgage adviser to avoid any potential issues.

Myth 4: If I Need a Realtor, My Best Bet is To Ask Friends and Family For a Referral

As with most things, it feels natural to ask our friends and family for their input on important decisions. When looking for a realtor, however, this is not necessarily the best choice. While recommendations from friends and family may be a starting point, you’ll want to base your selection of a realtor on more than someone’s opinion. When looking for a realtor, it’s important to consider a potential realtor both as a person and as a professional. As a person, your realtor should be someone you trust, with a personality that makes you feel comfortable. As a professional, they should not only be well-organized and practice professionalism but also provide insight to help you buy the home you want. You’ll need someone who has an understanding of the local housing market and knowledge about the kind(s) of homes you are considering.

We recommend reading online reviews as part of your realtor selection process.  Another option may be to speak to some past clients.  Most realtors will be happy to oblige if you ask, it shows you are a serious buyer.  Take a look at past closings, do any match the type of home you are looking for?  

If you need some recommendations, we would be happy to help. There is never any obligation to work with a realtor that we or anyone may recommend.  Pick the person who earns your confidence.  Save some time and energy by considering a realtor vetted by us.

Myth 5: If I Don’t Use a Realtor, I Will Save Money!

Many people shy away from getting a realtor for fear that having one is too expensive, thinking that they’re better off not getting one and should save their money. What most borrowers or buyers don’t realize, however, is that they typically don’t even need to pay for a realtor’s services – the seller does. The seller usually pays a realtor’s commission.  So as the buyer, you spend the same amount for the house regardless of whether or not the realtor is there. Additionally, having a realtor could even save you money if they help you negotiate a lower price with the seller. Furthermore, a good realtor will help you with making offers that benefit you.  

Myth 6: An ARM Sounds Too Risky. 30-Year Fixed is the Best Option For Me!

If you’re looking to buy a home, you’ve likely heard of two common mortgage options: 15-year and 30-year fixed-rate mortgages. While these are the most popular and typical choice, fixed-rate loans aren’t the only or even the best option. The best choice is choosing the mortgage that will fit your needs.

Whereas a 30-year mortgage loan has one fixed interest rate throughout its lifetime, an ARM starts at a fixed rate, switching to an adjustable rate after a specified amount of time. Fixed-rate mortgages can offer some sense of stability to your debt-paying life, but they also tend to come with higher interest rates. With an ARM, you could have a standard rate for 5 or 10 years and then switch to an even lower rate, if market conditions permit. Most ARMs are 5 or 10 years fixed; once your rate becomes adjustable, it will adjust itself a certain number of times annually (usually just once) within a set range. While an ARM comes with drawbacks of its own, in many cases it’s the better choice than a 30-year fixed-rate mortgage.  An ARM is usually a good choice if you plan on moving in the next 5 years.  

Myth 7: Buying a Home Is Too Expensive. I Should Rent Instead!

When considering whether to rent or buy a home, renting may seem like the cheaper option. Although rental payments may feel more manageable than monthly mortgage payments, this is not always the case; it also doesn’t mean renting a home is cheaper overall. It’s helpful to think of renting as a short-term option, and buying a home as more of a longer-term investment. Renting isn’t always cheaper, and over time it can become more expensive than buying a home, especially if one considers the opportunities for a return on one’s investment. As always, renting and buying each have their own pros and cons, and one option will not be the best for everyone.

Myth 8: I’ve Saved Up Enough Money to Cover My Down-Payment and That’s All I Need To Do!

There are a variety of costs that come with purchasing a home, and a down payment is one of them. If you’ve saved money to cover this important cost, that’s great! You should be aware of the other costs of buying a home, some of which may vary depending on the lender you select. In addition to your down payment, you should be prepared to pay for lender’s fees, title and escrow fees, and pre-paid fees.  Most lenders have an underwriting fee which can vary from lender to broker to bank.

these hard costs: appraisal, escrow settlement fees, lender title fees, and lender’s underwriting fee.  homeowner’s insurance.  Depending on the type of loan you choose or qualify for, you may also pay HOA. You will also pay homeowner’s insurance fees, HOA fees if applicable, as well as any utility fees (also known as utility adjustments) that the seller may ask of you. This is not intended to scare you! Although there are many different fees that can crop up throughout the course of purchasing a home, they can often be negotiated down and need not be a surprise if you manage your finances effectively. Continue saving as you have been. With money already set aside for your down payment, you’re off to a great start!

We’ve just run through some of the more common myths and misconceptions about buying a home. Although there are certainly more out there, the above guide should help to ease any unwarranted fears you may be having about purchasing a home. Here at Candor Mortgage, we’re committed to providing you with as stress-free a home-buying process as is possible.  Ready to get started?  Connect with us today!