Compare Mortgage Rates, What Is Needed To Start The Loan Process
January 23, 2010 by · Leave a Comment
When meeting with your loan officer or searching to compare mortgage rates to start the mortgage process you will be required to complete a mortgage application, along with providing supporting documentation that can include pay stubs, w-s2, tax returns, and bank statements.
When gathering all of your documentation for your loan officer always remember that anything you can put in his or her hand may be important. One thing that seems to slip through the cracks from time to time is the ever unpopular divorce decree. If this unfortunate situation has come up at some point during your life, your loan officer may need this paperwork to help him or her along the way to finding you the perfect loan scenario.
If you have ever had a bankruptcy then I would strongly suggest that you have a copy of your bankruptcy papers and your discharge papers ready for your loan officer when you are getting ready to start the loan process. The more necessary information that you have at the beginning of the loan process the faster your mortgage transaction should go and the quicker you should be able to close on your home loan.
Make sure that you take the time necessary to give your loan oficer the information he needs. A lot of people don’t set aside enough time for the process and spend a lot fo time looking for documents that are necessary. Make sure that you have the necessary documents handy including you latest tax stubs or tax bill from the county tax assessor.
The application that the Loan officer is going to fill out with you gives the lender a bird’s eye view of all your credit, income and asset history. The documenation that has to be provided is all the proof of what you put down on that paper. You must be able to show with documenation everything that you specified on your application. This would be your paystubs to prove income, your ID’s to prove where you live, a Verification of Rent or Mortgage Statement to prove how long you have lived in a particular place.
It is always best to give more documentation than is necessary to your loan officer. Not only does it help with all the requirements that must be fufilled in order to get your loan done, it will even speed up the process.
If your meeting is over the phone, make the request to your loan officer that they email/fax the documents and details over to you beforehand so that you can both look at the numbers at the same time. It’s much easier to have the numbers in front of you and discuss them than to try to remember all of the particulars as you discuss them over the phone.
It is a good idea to review your budget and determine how much of your income you can afford to spend on your mortgage payment. This will help your lender determine how much home you can afford to buy.
A good first step for anybody looking to take out a loan is to retreive your credit report from all 3 credit bureaus. If there are minor problems, be patient and try to fix them. If your credit is in good shape, gather together as many documents as you can such as paystubs, w-2s, bank statements, retirement accounts, mortgage statements, etc…
There’s a lot of documentation to gather, and the task may seem daunting. But with the help of an experienced mortgage loan professional, the process is narrowed down to YOUR specific needs. This is usually determined through specific questions during your initial interview.
Many federal and state laws are in place to protect you as a consumer. These laws further require banks and mortgage brokers to disclose to you your rights. As proof of having done so, your loan officer will need you to sign various federal and state disclosures, which is then made a part of the mortgage loan application package. Taking these steps when you are ready to compare mortgage rates and you will be glad you did.
Compare Mortgage Rates And Locking Them In
January 23, 2010 by · Leave a Comment
When you compare mortgage rates many brokers and lenders will often quote you in good faith in regards to what kind of interest rate and mortgage program you qualify for. You will also be given the opportunity to “lock” in for an interest rate should you qualify.
When a mortgage broker quotes a mortgage rate before receiving all pertinent information from the borrower, the borrower should assume that the rate is not yet locked.
A rate lock and range from 15, 30, 45, and 60 days. 30 days is the most common rate lock, and longer lock periods are available. You may be required to pay additional fees for a longer lock period or if you go past your rate lock expiration date.
A lock, also called a rate lock or rate commitment, is a lender’s promise to hold a certain interest rate and a certain number of points for you, usually for a specified period of time, while your loan application is processed. Depending upon the lender, you may be able to lock in the interest rate and number of points that you will be charged when you file your application, during processing of the loan, when the loan is approved, or later.
Shorter loans, such as a 20 year or 15 year note, can save you thousand of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes.
A larger down payment greater than 20% will give you the best possible rate. With a down payment of 5% or less, you should expect to pay a higher rate as you are starting with less equity as collateral. If you’ve got the cash now and want to lower your payments, you can pay points on your loan to lower your mortgage rate. It’s a simple concept, really. In exchange for more money up front, lenders are willing to lower the interest rate they charge, cutting the borrower’s payments. Closing costs are fees paid by the lender, if you do not want to pay all of the closing costs, expect a higher rate which will pay the lender additional interest over the life of the loan.
Your credit quality and debt-to-income ratio affect the terms of your loan through your FICO Score. If you have good credit and your monthly income far surpasses your monthly debt obligations, you will get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, even if you have a good credit report, you will not receive the lowest available interest rate.
On a refinance loan, be sure to factor in the 3-day recission period. Typically, the loan must come out of recission by the lock expiration date or the rate lock will expire.
Depending on the market conditions, you may want to float your rate. To float means you will wait until you are closer to the loan closing to lock your rate. Since there are costs to lock farther away from the closing date, floating can save you closing costs. If the market is favorable, float your rate.
When purchasing a home it is important to make sure that the rate is locked in for a period of time that covers you through your closing date. Often you may shop for a mortgage before you find your home. In most cases until you are under contract for a purchase your rate will be “Floating”, which means it is not locked in.
It is a very good idea to ask for a copy of your rate lock commitment from your mortgage lender or mortgage broker after your rate has been locked. This will provide you with proof that your rate really has been locked and that there are no surprises at the end in regards to your rate being what it should be.
Be careful if you’re doing a refinance and your rate lock is about to expire. There is a 3-day recission period on refinance loans, and the loan must be out of recission before the rate lock expires, or you’ll lose your pricing.
Compare Mortgage Rates After Bankruptcy
January 23, 2010 by · Leave a Comment
Not all creditors react the same way to bankruptcy, but your credit will be hurt. This does not mean that you will not be able to obtain credit. A mortgage professional can advise you on what credit you need to get a mortgage after bankruptcy.
It is a good idea to review your credit report after a bankruptcy. Some accounts that were included in your bankruptcy will still show up as active and delinquent which will hinder your scores from improving.
You can obtain a mortgage 1 day after a bankruptcy, assuming your credit score is where it needs to be.. It is a very good idea to get some small credit cards during your payoff period, even if secured cards to “re-establish” yourself.
Many credit card companies will send you applications after your bankruptcy. They know that most or all of your debt will have been eliminated. They also know you can’t declare bankruptcy again for several years. If they do approve you for a card the limit will be low and the rate will be high.
Some people are able to get a secured credit card after a bankruptcy. This means that the borrower would put up a certain amount of money (usually $250 or so)…and they would have a credit card with a $250 limit secured by this deposit.
It’s a great way to get your credit re-established after a bankruptcy.
It can be very difficult to repair your credit after filing a bankruptcy. It is usually best to have a game plan on credit repair prior to filing a bankruptcy.
When applying for a mortgage with a recent bankruptcy, your post-bankruptcy payment history is closely scrutinized. Lenders want to see that you have developed better spending habits since filing for bankruptcy. If you have numerous late payments since your bankruptcy the lender may deny your loan; if you have a perfect payment history since your bankruptcy the lender will look favorably on this and is more likely to consider your loan for approval.
The Home Mortgage Process Start To Finish
January 30, 2009 by · Leave a Comment
The Mortgage Loan Process begins with an initial consultation between the borrower and the broker. During the first conversation, it is extremely important for the borrower to discuss what they hope to accomplish with their new investment in real estate. It is then the duty of the broker to best determine how to accomplish that goal, with the current qualifications of the borrower. Unfortunately, borrowers often end up in the wrong mortgage product because their lack of communicating what they truly intend to do. Borrowers also must remember to be upfront and truthful with their broker from the start. Remember, the broker acts as the borrowers representative and structures the loan for presentation to underwriting. They will help their borrower around any weaknesses they may not want to disclose to underwriting. From the conversation the broker will take a written loan application….
After taking a complete application, one of the very first things that the loan agent must do is access the applicant’s credit report. A competent mortgage professional will examine not only the credit scores but do a line by line analysis of the report and highlight any information that could be considered derogatory. Once the report has been examined the Loan Officer will review it with the applicant and get their response to any derogatory information.
After all of the documentation is collected we will send your loan package to underwriting for evaluation. Underwriting will then decide if the proper information has been sent or if they want to see additional information to make a final determination for the mortgage.
After submitting your application to an automated underwriting system such as DU or LP, you will be given a conditional approval letter. This conditional approval will outline all the required documents needed to accompany your application.
Your application along with the required documents will be submitted to an underwriter. An underwriter is a trained credit-risk analyst who will do everything possible to help you receive loan approval. It is the responsibility of the underwriter to insure all documents supplied with the application meet the lender’s requirements.
Soon after your application is approved you will receive a commitment letter that explains the terms of your loan, including any loan conditions that need to be met prior to closing. Read your commitment letter carefully, and be sure to follow the instructions to ensure a timely closing.
In the case that your application is not approved, your loan officer or mortgage broker can help you
determine what actions need to be taken to obtain financing.
From the time the application was taken the broker has three days to send you RESPA compliance forms.
An appraisal will be ordered as to support the value of the property. The loan is based off the overall value of the property and is crucial to get the appraisal done right away. Typical time for appraisal vary from area to area depending on demand and market conditions.
Your loan officer or mortgage broker has asked you a number of questions at application. Your answers,
credit report information, and the loan program you’ve applied for will help determine if you qualify
for an instant mortgage approval using an automated underwriting system. These systems are often referred to as DU and LP. They stand for Desktop Underwriting and Loan Prospector.
Documentation requirements vary, depending on the loan program, credit profile
and various other requirements of the lending institution. In some cases only minimal documentation
is required. In other cases more detailed documentation may be required.
An appraisal will be ordered at application to determine the fair market value of the property you are
purchasing.
You can either lock in your interest rate (rate lock) or float your interest rate. It is important to discuss
these options with your loan officer or mortgage broker.
At application or shortly after, you will receive a Good Faith Estimate and a Truth-in-Lending Statement,
which will show your annual percentage rate (APR). These documents are required by federal law and
disclose the credit terms of your loan and approximate closing costs.
The underwriter may ask for additional information on a case by case basis, considered a stipulation of funding.
After deciding on the loan program, the applicant must supply the necessary income and assets documents (W2’s, paystubs, bank statements, etc.) as required by the chosen loan program. Because these documents are essential to the underwriting process, the application package cannot be submitted without them. Therefore, it is important that the applicant present them without delay.
Its important to gather all of the remaining conditions quickly as the lender may still need a few days to review them. After all conditions are met your loan will be “cleared to close”. Generally at this time the settlement agent or title attorney will take over and prepare for closing.
