Lenders are tightening up after the real estate and mortgage buffet earlier this decade. Obtaining a home loan is something that isn’t as easy as it was, but it can be done if you follow this advice.
The stated income loan is called the liar’s loan. Why? Well, you don’t have to provide any supporting documents to back up your claim. If you can’t legitimately qualify for a loan, there is probably a good reason. Don’t use this one.
When you apply for a mortgage, you are going to have to provide supporting documentation. Ask the lender for a list before hand. If you can’t find something, ask the lender if you can submit something else in substitution.
The mortgage industry is based on markets, which means the rates on loans change each day. This can cause a problem. If you get pre-approved for a loan on the first day of the month, but don’t close to the end of the month, the rate on your loan can change!
The interest rate is the cost to borrow the money from the entity financing you. The APR is that cost plus all other fees. The APR represents a better picture of what you are paying out, but represented as a percentage.
A great way to get sellers to give you a better deal is to have them pay down the interest rate on your mortgage. The trick to this approach is to agree to a price close to what they are asking for the home, but with the pay down included in it.
Mortgage professionals are in the business of making money, so don’t forget that when loan terms are discussed. Get them in writing if you want to be able to rely on them. Anything else is unenforceable. Mortgages are large debts, so don’t risk anything.
Lenders will look at your last two years on loan applications. They are also looking at credit card payment and installment payment histories. Check your credit report for problems in these areas and fix them.
The interest rate on an adjustable mortgage can fluctuate, but how high the rate can go and how often can it be adjusted? If a loan can only be adjusted once a year, you run a lot less risk of having problems than if it can be adjusted every quarter.
The lender has indicated that you will qualify for a bigger loan with bigger payments than you’re comfortable with. Listen to your inner voice. Buy something you feel you can afford. Don’t overspend and sweat monthly payments.
Adjustable mortgages are tied to something called indexes. These indexes deal with the cost of borrowing money. There are five different indexes. Make sure you understand which index you are tied to and how it works.
Searching for your perfect home is rewarding. Nobody has ever said the same thing about searching for the perfect mortgage. That being said, a person that understands the process is going to suffer less than one that does not.