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Taft Midway Driller - Taft, CA
  • Money matters: Getting a mortgage

  • You found your dream home and you can’t wait to move in, but then the butterflies start in your stomach: The dreaded mortgage loan process looms large.
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  • You found your dream home and you can’t wait to move in, but then the butterflies start in your stomach: The dreaded mortgage loan process looms large.
    Don’t let bad news about the mortgage crisis discourage you from what has been the most frequent and tried gateway to homeownership for many decades. Very reasonable loan rates are on your side right now, and remember, behind every contract is a human being who, if he or she is a respected and trustworthy professional, has your best interest in mind.
    By now you know not to make the mistake of shopping strictly for a low interest rate that sounds too good to be true. Many lenders offer low rates, but stuff their loans with hidden fees to offset the low rate. Remember to read the fine print before signing the contract. Selecting a mortgage lender should be based on his or her track record of quality of service, length of time in business and, of course, how attractive his or her mortgage rates are.
    Not all mortgage issuers oper-ate in the same way. You have a choice between three types:
    1. A mortgage lender, be it your local bank or a national bank that specializes in mortgage lending.
    2. A mortgage broker, who represents different mortgage lenders and shops your loan around for the right fit. Mortgage brokers only originate loans. Once you have closed the deal with the broker, the mortgage contract is sold to another lending institution that collects your payments and escrow deposits, and distributes your property taxes and homeowner’s insurance premiums when they’re due.
    3. An online lender, whose headquarters may not be where you live, but it can execute home loans anywhere in the United States.
     
    Prequalification
    Once you have done your research and found a reputable mortgage broker or lender, you will have to be prequalified or pre-approved for a loan. You may think you can afford a $1,000 payment with your $70,000 annual pay check, but it’s the mort- gage broker’s job to look at the purchase price of your home, add up your income and assets on one side and your debts on the other, and run all the numbers to finally tell you if you qualify.
    Congratulations if you’re prequalified, but you still have to be pre-approved by the lender. The loan officer asks you for documentation that supports the claims you made on your application. Sometimes, if he feels aspects of your financial disclosures are questionable and may make you a risky customer, a mortgage underwriter has to sign off on the pre-approval.
    The good news is, these steps shouldn’t cost you a penny. You can give several mortgage brokers a run for their money and let them make you competing offers. Don’t give the loan officer any money for a credit check or other fee until you are sure you want to work with this person.
    Page 2 of 2 - The paper chase
    Be prepared for your first meeting with the mortgage lender you’ve selected to avoid any delays by bringing the following documents:
    - A list of your credit cards you have by issuer and balance due.
    - Payroll stubs from the last six months.
    - Tax returns from the previous two years.
    - A list of your assets, such as IRA accounts, securities, bank accounts and personal property, including jewelry and furniture. If you own other real estate, list the address- es and if you can, information about each property’s assessed market value.
    - Copies of any divorce decrees, bankruptcy discharges, student loan documents, alimony and child support obligations.
    - A list of places of employment and residences spanning the last two years.
    - Copies of the contract and of any earnest money checks, if you have an accepted offer to purchase a property.
    Bring your checkbook with you to the application meeting. It’s likely your lender will require application, credit check and appraisal fees for his services.
    Act fast
    Don’t sit on your loan application. You wouldn’t want your loan officer to lie to you, as he depends as much on the trustworthiness of your information as you do on his. Besides, every piece of information you hand over will be verified through credit report agencies, and a loan officer will find out if you have past due balances on your credit cards. Loan underwriters look for your ability to repay regularly on time. Late payments on your credit report might need to be addressed in a letter to the underwriter.
    Sometimes, you may be in for a bad surprise on your credit report for which you are not responsible. Other creditors, such as car leasing companies, fail to update their records to show you paid off your loan in full. A call or letter to that business can take care of these hiccups. A mortgage loan officer can assist you in clearing up credit report problems.
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