How To Get Your First Mortgage

How To Get Your First Mortgage

How to​ Get Your First Mortgage
When it​ comes to​ lifetime markers getting a​ first mortgage is​ a​ major event .​
With a​ mortgage you''re magically transformed from occupant to​ owner and from tenant to​ titleholder .​
Applying for a​ mortgage used to​ be seen as​ a​ battle of​ sorts,​ a​ competition where the​ only winners were those who sold headache remedies and paper by the​ truckload .​
But now finding the​ right mortgage is​ faster and easier than ever -- but only if​ you​ know how to​ make the​ system work for you​ .​
If you​ compare loan applications today with the​ ordeals of​ even ten years ago you​ can see a​ marked difference .​
It used to​ take days if​ not weeks to​ obtain a​ credit report .​
Meanwhile a​ mortgage lender could not act on​ a​ loan application because information regarding debts and credit history were simply missing so loan processing times have been greatly compacted .​
In 1995 both Fannie Mae and Freddie Mac said local lenders should use the​ credit scoring system developed by industry-pioneer Fair Isaac to​ evaluate consumer credit .​
With credit scoring,​ a​ rigorous mathematical profile drawn from a​ huge number of​ credit reports is​ used to​ measure credit history -- and thus predict future credit behavior .​
Credit scoring benefits borrowers because it​ measures how credit is​ handled,​ not how much income is​ earned .​
You can be rich and have low credit scores; conversely you​ can be poor and have excellent credit .​
In practice,​ the​ higher your score the​ lower your rate .​
Many mortgage loan programs no longer require income and employment verifications,​ the​ physical process of​ confirming wages and jobs .​
A growing number of​ loan programs do not require individual appraisals -- instead lenders can use automated valuation systems based on​ tax records and past sales to​ show the​ worth of​ many properties .​
Automated appraisals are faster and less expensive when available; however they are not obtainable for all properties .​
The underwriting system itself has been automated .​
a​ conditional lending decision can often be made within an​ hour of​ receiving an​ application .​
Lending has gone online .​
The old advice used to​ be that borrowers were well served by checking with three or​ four lenders for the​ best loans; now it''s possible to​ compare huge numbers of​ lenders within minutes .​
The result is​ that mortgage lending has become more competitive -- good news for borrowers .​

Despite the​ growing use of​ computers and electrons however,​ the​ fact remains that borrower participation is​ still required .​
Essentially your job is​ to​ make sure lenders have application information which is​ complete and correct .​
If there are errors in​ the​ application you​ may suddenly face expensive and steeper mortgage costs .​
Your lender will supply you​ with a​ preliminary loan application showing income,​ assets,​ debts and required monthly payments .​
Much of​ the​ application is​ produced electronically from information received by credit reporting agencies -- but before signing anything go through this application line-by-line to​ make sure all data is​ current and correct .​
Since you​ know the​ lender will be providing an​ application for your review,​ you​ can speed the​ underwriting process by preparing your financial data in​ advance .​
First,​ make a​ list of​ all assets .​
You want to​ show the​ balances or​ fair market values for all IRAs,​ stocks,​ bonds,​ mutual funds,​ checking accounts,​ real estate,​ pensions and cars and other major assets .​
You also want to​ list account numbers and contact information .​
Second,​ make a​ list of​ all debts .​
You want to​ include all credit cards,​ car loans,​ student debts,​ mortgages,​ etc .​
As with assets,​ show account numbers and contact information for each liability .​
In addition,​ but sure to​ list required monthly payments for each debt .​
What you​ now have is​ a​ handy financial planning tool .​
It tells what you​ have,​ what you​ owe and how much you''re worth (assets less debits equal you''re net worth) .​
Because there are account numbers,​ contact information and such,​ this is​ good information to​ keep with wills and living wills .​
Also,​ if​ you​ enter this information onto a​ spreadsheet,​ it''s easy to​ update and keep current .​
Many loan programs no longer ask for income or​ employment verifications -- however for your records you​ want to​ have a​ file where you​ keep such things as​ your last two or​ three pay stubs from the​ time of​ application and copies of​ your tax returns from the​ past few years .​
Also keep information regarding other sources of​ income such as​ interest,​ dividends,​ profit-sharing,​ etc .​
You now have a​ way to​ zip through a​ loan application -- and you​ have a​ way to​ make sure that lender decisions are not being made on​ the​ basis of​ information which is​ out-of-date or​ factually incorrect.

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