Apply For A Mortgage
So you’ve researched and you’ve been observing the rates and you’re feeling you’re finally ready to apply for a mortgage… Good for you but before the whole process is completed you need to know a couple of things that will make this easy.
When you decide to go with a certain lender and are close to signing a purchase contract, you need to get an actual credit approval to verify your income, liabilities as well your ability to repay the loan.
Majority of loan applicants will remember to go for their loan interview with a signed copy of house purchase contract. This purchase contract for the house shows the amount of your down payment as well as the price you will pay for your house, and the proposed closing date. Once you go to apply for a mortgage, your lender will use all these data to figure out if the house you want to buy can work as collateral for the amount of money that you hope to borrow to finalize your purchase.
Naturally, your chances of obtaining a mortgage really depends on all the information that will be contained in the credit report. So, its a good idea to get your credit report, before you apply for a mortgage, and correct errors. If there are any inaccuracies you don’t know about, this could cost you thousands of dollars in extra interest or even cause a denial of credit. According to professional sources close to 50% of all credit reports contains errors that are significant enough for an individual to not be awarded a loan.
To make sure that your mortgage application will be processed as quickly as possible, it’s important to bring all the proper information to your loan application interview. Check with your lender for a list of documents that will be required in order to process your application.
Most likely you will complete something called the Uniform Residential Loan Application – this is widely used in the mortgage industry, during the first interview. Remember that probably you will be required to pay a small application fee as well as credit report fee and possibly something called an appraisal fee when you submit the mortgage application.
Once you apply, your lender will start to verify all the information youve provided. This is a loan approval process and it can take one to eight weeks, depending on the type of mortgage your choose and other factors that will affect your approval such as fulfillment of contract contingencies.
Once you apply for a mortgage you should be informed about the following – this will not only show your lender that you’re an educated and respectable client but will also save you a lot of money and hassle:
- Most lenders offer a lock-in policy that should guarantee the quoted interest rates since most rates fluctuate on daily basis. The points should not chance for a number of specified days. You should have time to be able to organize your documents and compare other available loans before applying. If you pay a one time lock-in fee you should save thousands if the interest rate go up during the time your plan is locked in.
- A point is calculated as one percent of the loan amount. Points that you get charged are additional to the interest rate that is charged on the loan and the point charges varies from lender to lender. A lender often makes his fees by charging points or by negotiating a lower interest rate. Make sure you ask about this when your loan has a suspiciously low interest.
- The interest rate and the annual percentage rate for your mortgage should be presented to you by allowing you to compare the loan costs of your particular mortgage with other loans you may compare against. Your loan average percentage rate is figured by combining the interest rate plus points and other fees that are divided by the loan’s term to give you annualized rate. A high interest rate with low points will cost you thousands more than low interest rate and high points.
- The processing of your mortgage starts as soon as you submit your application till the time your loan is approved. The time it takes to process a loan will be different for different loan types and it depends on your particular lender. Usually loans should be funded within 7 to 10 working days, unless there’s a holdup with your application.
- If you can’t put a 20% down payment on your new home, you will be charged insurance premium to protect the lender in case you are unable to pay back the loan. Once you are charged this, find out if it’s possible to add the insurance premiums into your financing.
- The total closing costs should be confirmed in writing within 3 days of applying for the loan. If they can’t provide this within 3 days this means that the lender has broken the law. A list of closing fees has to be provided and you need to be sure you understand each fee. Occasionally the lenders will tack on unnecessary fees to increase their profit. Lenders charge fees for the services that are relevant to the application process and closing of your mortgage. Also, make sure the closing costs that were presented to you in the beginning match the closing costs presented at closing.
- Sometimes there’s a prepayment penalty when lenders apply it to your loan if you decide to pay off your loan early. This is important, since you may really want to consider pre-paying your loan in order to reduce the costly interest overpayments. Majority of lenders don’t charge a pre-payment penalty, so there is no point to choose a lender that does.
- Be sure and ask your lender if he / she uses something called Rapid Loan Approval Software. This software allows lenders to determine a your credit risk instantly. This should allow them to be able to tell you about your mortgage loan approval as soon as possible – within hours! See if you can find a lender who this software as it will save you valuable time especially when you’re looking for the best interest rate
- Since buying a house isl most likely be the largest single purchase you will ever make, it’s important you understand the actual process of a mortgage to insure you capitalize on your investment.
- It is very important to research your mortgage company before dealing with them. Don’t be afraid to ask any questions you feel necessary and if anything strikes you as odd make sure you comment on it. Make sure you ask for references from satisfied customers.
- Ask your lender what percentage of their mortgage applications are denied – if there are more than 10%, look elsewhere. Find out what their average turn around time for processing a loan is. Majority of modern mortgage companies should be able to approve your loan within hours or even minutes. Additionally, they should be able to fund your loan within 7-10 business days.
- Perhaps you already know that there are many different types of loans that suit different types of situations and different lifestyles. Some people require a 30-year mortgage while some would rather have a 15-year term. Since not all lenders have a wide range of products, make sure to get a list of loans a lender has and have him or her sit down and explain the pros and cons of all the ones that are of interest to you. It’s common sense that you should choose a lender with the widest selection of loans so that you get the best loan possible.
- It is essential to take the time and understand all your loan options since the amount of money you place on a down payment will directly affect your monthly payment, your mortgage term and your interest rate. In the past it was common for a person to put 10% down, however presently there are many different programs that are available for different situations. Some programs will allow you to put less than 10% down or even 0 down. Keep in mind that the less you put down, the longer your mortgage term will be and your monthly payment and the interest rate will be bigger as well. Try to make a down payment that is larger than you can afford.
- Try not to make large purchases before you apply for your loan such as a car or a boat – this will definitely affect your credit.
- When you contact multiply mortgage companies for a quote this is called “over-shopping”. In order for a mortgage company to give you an accurate quote, it’s necessary for them to pull your credit report. If your credit report is pulled more than 2-3 times in a six-month period, you will decrease your credit score. Why? The fact that the credit is pulled frequently may actually affect its rating – it looks suspicious (it doesn’t show up on your credit rating why it was pulled only that it was pulled). This could keep you from obtaining the best possible rate and loan term.
- It’s crucial you are honest and up front about your personal financial information with your broker, even if you have had some problems in the past. It may be hard to discuss issues such as this to a stranger but it’s best to present and explain these matters right away. Your loan process will be slowed down if you try to hide past financial difficulties. Remember that your mortgage broker is most likely used to dealing with these issues so it’s important to work together to overcome negative financial history.
- It’s important that all credit card balances should have very low balances or none at all before applying for a mortgage. If there are large outstanding amounts you won’t be allowed to get the best rate and loan terms. You should also have a good history of paying your bill on time, especially in your most recent history.
Click here to learn more about mortgage rates in your state: Mortgage Rates
HUD Online Glossary (Source: http://www.hud.gov - July 2006)
HUD Common Questions (Source: http://www.hud.gov - July 2006)
How can I buy a HUD Home?
How do members of the housing industry access the full knowledge base?
How can FHA help me buy a home?
What are the basic eligibility requirements for FHA financing?
What impact does the recent IRS ruling have on certain down payment assistance providers?
What is the American Dream Down Payment Initiative?
How can a homebuyer get down payment or closing cost assistance?
How can FHA assist me in lowering my energy costs?
Where can I obtain a list of HUD Homes for sale?
Can an individual purchase a HUD Home for a dollar?
When can I stop paying my monthly FHA mortgage insurance premium?
How do I find non-profits who operate down payment programs?
How does HUD define a first time homebuyer?
What is the Streamlined k program?
Does HUD/FHA have grant programs available for home repair?
How can I finance the purchase of a HUD Home?
Am I eligible for a mortgage insurance refund?
How do lenders document gifts given in the form of cash?
How do I become a mortgage insurance refund tracer?
How can a police officer obtain a HUD Home at a discount?
Where can I obtain FHA forms and publications?
What FHA programs are available to purchase a manufactured or mobile home?
What is the primary FHA mortgage insurance program?
How much can a lender charge on an FHA loan?
(En Espanol) Where can I obtain a list of HUD Homes for sale?
Can I use an FHA mortgage to purchase a condominium?
Is a borrower eligible for FHA financing if they have participated in consumer credit counseling?
Can gift funds come from the seller, lender or other interested party?
Can I make major improvements to my home without getting prior approval from FHA?
What is the FHA mortgage limit in my area?
Are there age requirements for borrowers using FHA financing?
If I am listed in the Credit Alert or CAIVRS system, what does that mean?
Can I rent a HUD home?
What is the Low/Moderate Income Families Program?
Are there FHA programs available for single parents?
Do the loan limits include the Upfront MIP?
Where can I obtain copies of FHA policy documents?
What can I do if my manufactured home has defects that need to be repaired?
Can I do a FHA refinance if I own the property, but am not named on the existing loan?
How do I obtain information about the payoff or servicing of a HUD Nehemiah Housing Opportunity Grant?
What is the primary FHA program for home repair?
Where can I find FHA's policy on gift funds?
Can investors assume FHA loans?
How can a teacher obtain a HUD Home at a discount?
Is there a quick and inexpensive option to refinance my FHA mortgage?
Can I receive a loan from a family member instead of a gift?
What foreclosure prevention options are available on non-FHA insured mortgages?
How can a firefighter or EMT purchase a HUD Home at a discount?
How do I find an FHA approved lender?
Can borrowers who do their own repairs under Section 203(k) receive cash reimbursement for their labor?
Can I use FHA financing to acquire a second home?
Is it acceptable to get a loan for the downpayment?
What is the Section 235 Assistance program?
What are the penalties for a HUD Home owner-occupant purchaser that does not occupy the property?
How do I use a bridal registry account for my downpayment?
Who is eligible for a HECM loan?
When should case numbers be canceled?
What rate do borrowers qualify at when using an ARM loan?
When can I stop paying my monthly private mortgage insurance?
What is the Housing Voucher homeownership program?
Can I use the Streamline K program to purchase a HUD home?
Is there a special HUD program that allows hurricane evacuees to purchase HUD homes?
What is a HUD revitalization area?
Does FHA allow unsecured loans to be used toward the downpayment?
What FHA program allows me to lower my initial monthly mortgage payments?
What FHA program allows for a reduction of interest rates?
Can I "rent to own" a HUD home?
What property improvement programs are available through FHA?
How do lenders document cash assets?
How can FHA help me if I am behind in my mortgage payments?
Can FHA clear the CAIVRS if I have evidence supporting the debt is paid off?
Must premium pricing be disclosed to the buyer?
What are the requirements for a teacher to purchase under the Teacher Next Door Program?
What is the Good Faith Estimate?
What is the primary FHA rehabilitation mortgage insurance program?
How does HUD determine the sales price of a HUD Home?
Why is a HUD Home not listed for sale?
Does FHA have special programs for Veterans?
Does FHA allow investor participation in the 203(k) or Streamline K programs?
Where can I obtain a list of government properties for sale?
Where can I find free housing counseling services?
What if I am behind in my mortgage payments and my lender won't talk to me?
Are there restrictions on when I can pre-pay or payoff my FHA mortgage?
(En Espanol) What are the basic eligibility requirements for FHA financing?
Where can I find information about a lenders' responsibility under RESPA?
What does FHA offer to military veterans?
Do I have to pay a fee to collect my mortgage insurance refund?
Can I get my HUD Home earnest money back when my loan is denied?
How do I figure how much money the lender is allowed to require in my escrow account?
Can I still obtain a FHA reverse mortgage if I lost a home through divorce?
Who gets the MIP refund if a home is sold by assumption?
How do I make my rental property available for Section 8 tenants?
Are lenders restricted from originating FHA loans for their employees?
How does HUD determine the winning bidder on HUD Home sales?
(En Espanol) How can FHA help me buy a home?
Can an investor bid on a HUD Home?
How can I obtain a copy of the appraisal on a HUD Home?
How much is counted for the borrower's labor when calculating sweat equity?
Do FHA mortgage limits automatically increase after Freddie Mac's annual mortgage limit adjustment?
What FHA program allows me to pay my mortgage off early?
Will FHA allow a Streamline Refinance of a loan by an investor?
Will HUD contribute to seller-funded down payment assistance programs on the purchase of a HUD Home?
As a senior citizen how can I convert the equity in my home into income?
What is a self-help agreement?
Can lenders collect a fee for originating a streamline refinance that gets transferred to another lender prior to closing?
How do I place a bid on a HUD Home?
What is the FHA Urban Renewal Program?
How do I lodge a complaint about the condition of a new home?
Can a lender process a 203(k) rehabilitation mortgage for an investor?
What are the counseling requirements on an FHA reverse mortgage?
For an existing property, what are the minimum distances allowed by FHA between a well and a septic tank?
Must FHA be notified when an FHA reverse mortgage borrower dies?
How do I lodge a complaint about the condition of an existing home?
How can I file a complaint about a settlement or closing issue?
How can I obtain a rental assistance voucher that can be used anywhere?
Where can I obtain information on prepayment penalties for FHA mortgages?
How does a real estate agent register to sell HUD Homes?
How do I document the value of personal property sold for funds to close?
Can a Section 203(k) loan be refinanced to a different loan type?
How do I obtain more information about Regulation Z?
What is the status of a particular HUD Home?
How do I obtain from HUD copies of documents related to my FHA insured loan?
How do I obtain a payoff or subordination of a second lien held by HUD?
How can I have the utilities turned on in a HUD Home prior to closing?
What is mortgage insurance for disaster victims (Section 203h)?
How can I find a list of non-profit agencies that are approved to do business with FHA?
Where can I find information about HUD's multifamily (5 or more housing units) housing programs?
(En Espanol) How can I buy a HUD home?
Are there exceptions to the loss of an earnest money deposit on a HUD Home?
When can interest rate adjustments be made on FHA adjustable rate mortgages?
Where can I find policy governing rent credit?
When is a HUD Homes sales contract ratified?
Who do I contact for support on Title I servicing issues?
How do I know if I won the bid on a HUD Home?
Is a hurricane evacuee who is presently renting a HUD home eligible to buy the home?
How do I file a complaint against a lender who is not FHA approved?
How can I get information about Rural Development programs?
How can I apply for a public housing unit?
How are bids on HUD Homes processed?
How do I report fraud related to a HUD/FHA transaction?
Can an investor participate in FHA's 203(k) Rehabilitation Program?
Where can I find general information about assistance for victims of hurricanes?
How can I find a real estate agent approved to sell HUD Homes?
How does the lender disburse the remaining 203(k) escrow?
Where can I find a list of HUD-approved non-profits?
Are there programs for experimental housing?
What programs are available for outlying areas?
How can a non-profit organization purchase a HUD Home at a discount?
What is the FHA Urban Renewal Rehabilitation Program?
What programs are available for Native Americans on tribal land?
Can the lender collect from the borrower amounts the lender advanced to HUD for a required principal reduction?
Where can I find information about renting or building apartments and other multifamily housing?
How do I request copies of documents from HUD?
What are my rights when obtaining an adjustable rate mortgage?
Are there special programs for home purchases near military bases?
What are Fair Market Rents?
How can my non-profit organization work with FHA programs?
Can a Section 235 loan be refinanced?
Can lenders process loans for HUD employees?
What disaster relief is available for public housing tenants?
How can I find a property that provides below market rents?
What is the mortgage insurance for service members program?
How do I pay rent on a HUD Home?
How does a real estate agent obtain a Name Address Identifier Number (NAID)?
Can a tenant occupy an FHA property through the conveyance process to HUD?
How do I submit my annual certification for my Next Door property?
What disaster relief is available for homes with FHA insurance?
What FHA program allows for purchases on Indian Reservations?
What if I have a problem with the servicing of my escrow account?
How can I get information on HUD's homeless programs?
How do I cancel a HUD Homes sales contract?
How do I request a payoff or subordination of my Next Door lien?
What contracting opportunities are available for HUD Homes?
How do I document assets that were acquired from the sale of a home?
What programs are available in older, declining areas?
How can I extend a HUD Homes sales contract?
Can I subordinate HUD's lien on a Next Door property?
Are funds saved through savings clubs eligible?
How do I deal with a servicing issue in which the loan is not FHA insured?
What disaster relief is available for homes not FHA insured?
How can I obtain mortgage account information from my lender?
What can I do if my servicing lender is handling my escrow account properly?
What rights do I have as a renter or tenant?
Who do I contact if a HUD Home was not properly winterized?
HUD or FHA is garnishing my tax return, how can I get more information?
How do I lodge a complaint about the company selling HUD Homes?
How can I get more information on consumer protection?
What is the status of my occupied conveyance request?
How can I file a housing discrimination complaint?
How do I obtain FHA or HUD information in Spanish?
How do I file a complaint against a national bank?
How do I file a complaint against a local housing program or provider?
(En Espanol) Am I eligible for a mortgage insurance refund?
How do I collect on a bill or lien attached to a HUD Home?
Where can I get assistance if my identify has been stolen?
How can I lodge a complaint involving a Veterans Administration loan?
Who do I contact to pay off my property improvement loan?
How do I file a complaint against a Federal Savings and Loan?
How do I file a complaint against a credit union?
How do I file a complaint against my public housing agency or landlord who receives rent subsidy from HUD?