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| Applying for a Mortgage When you apply for a mortgage, shop around. Look for the best option available to you. Be prepared to fill out more forms than you ever have in your lifetime. You’ll also need a lot of paperwork to be available to the lender.
Find the right mortgage for your needs, view mortgage rates, and apply. Some of these are: 1. Proof of employment/income – Payroll stubs, tax returns, W-2 forms – no one wants to lend to an unemployed individual - too risky! 2. Expenses – canceled checks for credit card bills, utility bills for the last couple of months – the lender want to know that you will have the ability to repay the loan even with your current expenses. 3. Documentation of other loans – i.e. auto loans, personal loans – the lender will want to assess how much you have left every month to pay for the mortgage and of course your other expenses. If you have too many loans, that might work against you. 4. Account information for the last couple of months – savings/checking/money market – having some money saved up or having some type of asset other than the home will improve your chances with the lender. The savings could represent a down payment or at least something they could potentially take if you decide to default. 5. Gift Letters – If you’re getting free money for the house, definitely get it in writing that it does NOT need to be repaid – this will improve your chances just because you have a larger down payment. There are various fees associated with mortgages. Taking out a mortgage is an expensive process. These include, but are not limited to: 1. Application fee 2. Attorney fees 3. Title Search fees Find the right mortgage for your needs, view mortgage rates, and apply. 4. Point(s)– 1 point equals 1 percent of the mortgage amount you are granted, depending on the lender, you could be charged one or more points of the mortgage up-front. Volunteering to pay extra points up-front can reduce your interest rate. You need to weigh out what’s worth more to you – paying more now or later. 5. Property Appraisal – The lender will send someone to assess the value of the property, however you will end up paying for it, so you should ask the lender if you can look for your own appraiser – preferably one that doesn’t charge as much. 6. Miscellaneous Paperwork fees Always shop around; never take out a mortgage at the first bank you go to. Chances are that if you tried you could find a better deal. This way, you can actually say to a lender, “well so and so bank is giving me this rate, so why are you charging me a higher rate?” Go as many lenders as you can, but be careful. If every lender pulled a credit report on you, your report would be full of inquiries. The best thing to do is to order your credit report and ask them to discuss the mortgage with you based on that. When you actually make a decision, then you can have them pull your credit report. Having too many inquiries on your credit report will look like you’re desperate for credit and potentially lower your score. However, most lenders know that people shop around for mortgages and so will not hold too many mortgage inquiries on your report against you, but not all lenders are this sensible. Beware of lenders that advertise little or no fees. These types of mortgages usually come with high mortgage interest rates. This also works the other way around, mortgages with high fees or a lot of fees will usually have lower mortgage interest rates. Find the right mortgage for your needs, view mortgage rates, and apply. |