Save Money On Your Mortgage

Mortgage Application Tips

 Your mortgage application needs to be filled in correctly so find a quiet place and sit comfortably at a desk.
If you are given a paper application at the bank or credit union, ask
permission to bring it home and complete the application when
you are not under pressure, and have all of your documents
handy. If you are doing it online, use extra caution, watching
out for mistypes, misspellings and make sure that you put the
correct info into the correct form fields.

One way to smoothly go through the mortgage application process
is to create your own application package approximately one year
and no later than six months prior to applying for a residential
mortgage loan. Gather all of your information, check your credit
report and that way you can be aware of any surprises before you
speak to a lender. Here are some of the things you should
prepare during this period:

List of debts
Make sure you know exactly how much you owe and to whom the
money is owed. If you are married or you are purchasing the
home with a partner, help of a parent or some other second
party, everyone should be aware of the total sum of all
individual and joint debts.

Gather your documents for auto loans, school loans, personal
loans, other mortgage payments, alimony payments, child support
payments, credit cards and any other type outstanding debt.
Create a master list with all of the items, account numbers,
addresses, amounts owned, interest rates and monthly payments.

If you can pay off a significant portion of any one medium to
large debt perhaps you should consider waiting an additional
year before applying for the loan.

Recent addresses
If you have moved recently or have been upwardly mobile for a
while, it can be difficult to remember all the addresses,
apartment numbers and cities where you lived. Your address
history should also be on your credit report, but you need
something else such as old statements or information from your
address book to make sure that your credit report is accurate.

Credit Report
Get a copy of your credit report from all three credit bureaus.
Check the information from each report against your records and
also against each other. Sometimes when an outstanding debt has
been paid or settled, and you get out of debt, the information
might be sent to only one bureau. Call your lender and ask if
and when they information will be provided to the credit
bureau.

Then, follow up with the credit bureaus to make sure the
information has been added to your file. What type of
information are you looking for: social security numbers,
addresses, dates on accounts, opened accounts, closed accounts,
outstanding debts, negative information that is incomplete or
inaccurate.

List of assets
Frankly, how much are you worth? Do you have any stocks, bonds,
savings accounts, retirement plans or own another home? Again,
create a master list with the items, account numbers, worth or
potential worth if liquidated and addresses or contact
information.

If you are planning to sell any type of asset to use the money
as down payment, try to complete the sale at least six months
prior to filling out your mortgage application. Mortgage
lenders always want to see that you have the money on hand for
all of the costs associated with getting a mortgage. They
generally look down on last minute buying and selling to come
up with your cash. They want a snapshot of your current
financial situation going back at least six months.

Supplemental paperwork
If you are getting alimony or child support payments and want
this to be included in the calculations prepare the
documentation to show how much money you are receiving and
projections for how much you think you’ll receive in the
future.

Bankruptcies and foreclosures
Your lender will be able to find out just about everything they
want about your financial history so don’t try to hide
foreclosures and bankruptcies. Just make sure the information
is accurate. Gather all of your paperwork including dates,
settlements or outstanding balances at the time the debt was
discharged and keep it handy.

Employment History
Collect W-2 forms for the last 2 to 3 years that show your
employment history and income. As with your payment habits, try
not to make any sudden job changes within the 6 months to 1 year
period prior to applying for the loan. Income changes look
especially suspicious. If you experience a sudden dramatic
increase or decrease in income be prepared to provide a full
verbal or written explanation along with your paperwork.

Remember that the purpose of all this data collection is to
make sure that you have the most accurate and update picture of
your financial history to make the mortgage application process
smooth and easy.

At times your mortgage application might be turned down. The
possible reasons with some suggestions are mentioned:

The US finance market uses sophisticated credit searching and
credit scoring procedures to determine each applicant’s credit
worthiness. Vast databases are maintained by credit reference
agencies listing current and past misdemeanors - how you have
conducted your previous borrowing arrangements will affect
future applications for finance such as loans, mortgages and
credit cards. Any late payments, missed payments or arrears
will lower your credit score, particularly if they are recent.

Most high street mortgage lenders do not want customers who
have an imperfect financial past. Their computer systems are
set to reject applications from people who have credit problems
listed as they pose a higher risk.

In the past these lenders have offered mortgages with high fees
and interest rates to borrowers who had few other options. But
recently new lenders have come into an expanding non-conforming
market with much better interest rates and terms and they are
being closely followed by some of the larger lending
institutions. The mortgage options available for a
non-conforming borrower are now actually very good with a
reasonable ‘risk’ margin being charged through slightly higher
interest rates.

An experienced Independent Mortgage Broker will probe
extensively into your financial affairs and ask about past
credit problems. Gaining a copy of your credit report from a
credit agency will enable your broker to more accurately assess
any problems. Once all of the facts have been established your
broker can begin to search for the best lender and the best
interest rate package. They will then also continually liaise
with the new lender to ensure your mortgage application
progresses as smoothly as possible.

If all goes well, in a few years time your credit profile will
have improved and you should be able to re-mortgage onto a
“normal” mortgage rate, which will almost certainly be cheaper.

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About the Author: Suvadip Das is a research fellow in
management and a web developer. Web design is his passion. He
works for Freelance Writer Organization and various websites
including http://www.super-mortgages.com  - More information on
similar topics can be found at
http://www.super-mortgages.com /Get-Out-of-Debt and
http://www.super-mortgages.com /Residential-Mortgage-Loans

Source: http://www.isnare.com