Applying For a Mortgage

By Anita Johnston,
LendersMark.org Staff Writer

Once you begin the process of applying for a mortgage you may begin to feel overwhelmed; however, understanding what is involved and what you need may help lower your stress levels a bit. To help you get started here is a list of things you will need to know before you start.

You Must :

• Know your budget.

• Know the type of mortgage you want.

• Know and understand your credit history - beware of any credit problems.

Things you will need to take to the lending company:

• Name and address of your bank.

• Your account numbers.

• Bank statements for the last three months.

• Investment statements for the past three months.

• Pay stubs, W-2 withholding forms, or other proof of employment and income.

• Balance sheets and tax returns if self employed.

• Information on any debt with account numbers and the amount due.

• Divorce papers, if neede.

You will also have to sign different authorizations that will give the lending company permission to verify your income, bank accounts and other pertinent information. You will also have to give the lending company any information on any offers for the purchase contract and a receipt or deposit that can be given to the seller.

If is generally better if you can get a prequalification or pre-approval prior to finding that dream home. This way you will know exactly what you can afford and not be dreaming over homes that are above your price range.

The most common way in which lenders determine how much you are eligible for in the way of mortgage payments is to take your monthly housing expenses which included the mortgage principal and interest, real estate taxes, and the insurance on the home should not go over 30% of your gross income.

However, remember, just because a lending company believes you can pay a certain amount in mortgage payments monthly does not mean you actually can. You should know what you feel comfortable paying per month and stick with that amount.

Prequalification only means that this is how much mortgage you can get however - this is not a pre-approval. A pre-approval gives you more credibility as a buyer and lets the seller know you can purchase their home.

After you have applied for the loan, within three business days the lending company must provide you with mortgage interest rate or the annual percentage rate. You must also receive an estimate of the closing costs, and a government publication explaining the costs.

Normally, if you do not put down 20% for your down payment you will have to also carry private mortgage insurance, so consider this when you are applying for a mortgage loan.