Buying a home is one of the largest financial decisions most people will ever make. The mortgage you choose can be just as important as the price you negotiate for the home.
I've been helping homebuyers finance homes since 1999, and one thing I've learned is that there is rarely a single mortgage option that's best for every borrower.
Your credit, income, available assets, down payment, property type and long-term plans can all affect which mortgage makes the most sense.
My job isn't simply to get you approved.
My job is to help you understand your options, compare the numbers and choose financing that makes sense for you.
— John Madden
Owner, Capital Funding Mortgage Associates
Mortgage Professional Since 1999 | NMLS #960139
For most buyers, the mortgage process should begin before you start making offers.
A good pre-approval does more than tell you how much you might be able to borrow. It helps determine an appropriate price range and identifies potential financing issues before you're under contract and facing a closing deadline.
When I review a buyer for pre-approval, I'm looking at the same fundamental areas that will eventually matter to an underwriter:
I would much rather identify a potential issue before you make an offer than discover it after you've signed an Agreement of Sale.
Different borrowers can benefit from different mortgage programs.
Capital Funding Mortgage is an independent mortgage broker, which means we aren't limited to the mortgage products and pricing of one bank.
Depending on your circumstances, we can evaluate options that may include:
Conventional financing is one of the most common choices for homebuyers and can offer considerable flexibility in down payment, mortgage insurance and loan structure.
Buyers purchasing higher-priced homes may require financing above applicable conforming loan limits. Jumbo lenders can differ significantly in both pricing and underwriting guidelines, making lender comparison particularly important.
FHA financing can be useful for certain buyers because of its down-payment and qualification characteristics. However, FHA isn't automatically the best option simply because someone is making a smaller down payment.
When appropriate, I like to compare FHA and conventional financing side-by-side.
For eligible veterans, active-duty service members and certain surviving spouses, VA financing can provide significant benefits, including the possibility of purchasing without a down payment, subject to eligibility and loan requirements.
Being a first-time buyer doesn't necessarily mean you need a special loan program.
The important question is which available financing structure provides the best combination of down payment, monthly payment, mortgage insurance, interest rate and closing costs for your particular situation.
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I frequently speak with buyers who assume they should make the largest down payment possible.
That isn't always the best financial decision.
A larger down payment can reduce the loan amount and monthly payment and may eliminate or reduce mortgage insurance.
But putting additional money into the home also means having less cash available after closing.
When evaluating a down payment, I encourage buyers to consider:
Sometimes putting more money down clearly makes sense.
Other times, keeping additional liquidity after closing can be more valuable than achieving the absolute lowest possible mortgage payment.
I can show you the numbers both ways.
This is one of the most important things I explain to buyers.
The lowest advertised mortgage rate isn't necessarily the least expensive mortgage.
Interest rates and closing costs are connected.
One lender might quote a lower rate but require substantial discount points to obtain it. Another option may have a slightly higher rate but considerably lower costs.
That's why I believe mortgage options should be compared using:
Interest Rate + Points + Lender Fees + Lender Credits + Monthly Payment + Cash Required at Closing
If you're comparing our mortgage quote with another lender's quote, I'm happy to go through the numbers with you.
I want you to understand exactly what you're paying and why.
Paying discount points generally means paying additional money upfront in exchange for a lower interest rate.
Sometimes that makes sense.
Sometimes it doesn't.
The important question is:
How long will it take the monthly savings from the lower rate to recover the additional upfront cost?
For example, if paying additional points costs $4,000 and reduces your mortgage payment by $80 per month, the simple break-even period is approximately 50 months.
If you expect to keep that mortgage considerably longer than the break-even period, paying points may deserve consideration.
If you expect to refinance, sell or pay off the mortgage sooner, the economics can be very different.
I prefer to show clients the break-even calculation rather than simply telling them to buy a lower rate.
Your cash required at closing is not the same thing as your closing costs.
Your total cash requirement can include:
Some of those items are actual transaction costs. Others are amounts you would have paid regardless of which mortgage lender you selected.
Understanding that distinction makes it much easier to compare mortgage quotes accurately.
Once you're under contract, the mortgage process moves quickly.
A typical transaction involves:
1. Finalizing your mortgage application
We update the application using the actual property and terms of your purchase.
2. Selecting and locking your mortgage rate
We'll discuss available rate and cost combinations so you can decide when and how to lock.
3. Providing required documentation
Depending on the loan, this can include income, employment, asset and other documentation.
4. Appraisal
When required, the lender orders an appraisal to evaluate the property for mortgage purposes.
5. Underwriting
The lender's underwriter reviews the complete loan file and determines whether additional documentation or explanations are required.
6. Conditional approval
Most mortgage approvals initially contain conditions that need to be satisfied before final approval.
7. Clear to close
Once underwriting requirements have been satisfied, the loan can receive final approval for closing.
8. Closing
Final documents are signed, required funds are delivered and the transaction is completed.
Throughout that process, I remain involved in your loan.
Many mortgage transactions go smoothly.
Some don't.
An appraisal can come in differently than expected. An underwriter may question income. A credit issue may surface. Documentation may need clarification. A condo may have financing issues. A closing date may suddenly change.
After more than 25 years in the mortgage business, I've dealt with many situations that don't fit neatly into a textbook mortgage process.
When an issue occurs, my approach is to determine:
What exactly is the problem?
What guideline is causing it?
What documentation might resolve it?
Is there another reasonable financing option?
And because Capital Funding works with multiple wholesale lenders, we're not necessarily limited to one lender's underwriting approach or product lineup.
When you work with Capital Funding Mortgage, you aren't being handed off to a call center or a rotating group of loan officers.
You work directly with me.
That can be especially important during a home purchase because questions and offers don't always happen Monday through Friday between 9 and 5.
Realtors may need updated pre-approval letters. You may need payment figures before making an offer. A financing question may come up over the weekend.
I believe accessibility and communication are important parts of getting a purchase transaction to closing.
After helping homebuyers since 1999, my philosophy is fairly simple:
Get the financing properly structured before the buyer makes an offer.
Compare the rate and the cost—not one without the other.
Explain the options rather than simply recommending the one with the lowest payment.
Identify potential underwriting issues early.
Stay personally involved through closing.
And most importantly:
Make sure the borrower understands the mortgage they're agreeing to.
A mortgage is too large a financial commitment to make a decision based solely on an advertised interest rate or monthly payment.
Capital Funding Mortgage Associates is an independent mortgage broker based in Newtown, Bucks County, Pennsylvania, serving homebuyers throughout Pennsylvania and New Jersey.
Whether you're buying your first home, moving to another home, purchasing a higher-priced property or simply trying to determine how much home you can comfortably afford, I'm happy to discuss your options.
You don't need to apply for a mortgage just to ask me a question.
Let's look at the numbers and determine what makes sense.
John Madden
Owner, Capital Funding Mortgage Associates
Mortgage Professional Since 1999
NMLS #960139
Newtown, Bucks County, Pennsylvania
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Personal Mortgage Guidance From Pre-Approval Through Closing
I've been helping homebuyers finance homes since 1999. My approach is simple: understand the borrower's financial situation, compare the available mortgage options, explain the differences in rate and cost, and make sure the financing is properly structured before the buyer makes an offer.
— John Madden
Owner, Capital Funding Mortgage Associates
Mortgage programs, guidelines, rates and terms are subject to change and borrower qualification. This information is provided for general educational purposes and does not constitute a commitment to lend.
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