Items to take to your Lender when you apply for a loan:

What Your Lender Needs From You

It's the million dollar question: How much do you need to borrow? Regardless of the amount of your mortgage, expect to be asked that very question – plus a whole lot more. So, it's best to be prepared. Know what your lender will ask and bring necessary documents with you to your appointment. Use our mortgage loan checklist as a reference for compiling the information and documents your lender will undoubtedly ask for. Mortgage Loan Checklist Amount of money you want to borrow The length of the loan Current address (If you've been at your present address less than two years, you'll also need to provide your previous address.) Social Security Number Employer's name and address (If you've been at your present job less than two years, you'll need to provide your former employer's address as well.) Gross monthly income All bank account numbers and their approximate balances Your assets (real estate, personal property, paid-up life insurance, etc.) A complete list of debts (include account numbers) A copy of the purchase agreement for your new home A written account of any problems that may concern your loan application, such as explanation of bankruptcy, late payments, etc Once you've begun the application process, you can expect your lender to: Verify the facts of your application Obtain a credit report Make a property appraisal Review all the details of your loan application Make a determination on your loan

Qualifying...a little more information

It's kind of ironic, but house hunting usually begins in your own living room! That's because the best house-hunting strategies start with careful planning. So, long before you start pouring over online listings and hitting the neighborhoods with your Real Living agent, first decide your price range. Knowing your housing budget upfront will quickly bring your efforts into focus. How much you can (and want) to spend depends upon two things: What you want or need your monthly payment to be. How much you're willing or able to put toward a down payment. Remember that your monthly mortgage payment will include the principal and interest on the loan as well as property taxes and insurance (both fire and hazard). These four costs are abbreviated P.I.T.I. (for principal, interest, taxes and insurance). And, depending on which home you buy, your monthly cost could also include homeowner association dues, condominium fees and Private Mortgage Insurance (PMI). Qualifying As part of the planning process, find out how much you can comfortably afford by getting pre-qualified. Keep in mind that although there are a number of loan types available, you still need to work toward finding a monthly payment that makes sense for you. As a general rule, expect your monthly mortgage to be no more than 25 to 33 percent of your gross monthly income. Use our quick and easy lending formula to figure your housing budget. Credit Scoring In deciding how much house you can afford, consider getting your credit score as early in the home-buying process as possible. Your credit score helps your lender determine the type and size of your mortgage loan; so knowing your score can save you loads of time and maybe even a little disappointment. Your credit score is a numerical measurement of your credit report and reflects your overall management of credit. Using information compiled by credit bureaus, your credit score is based on several factors including: Your payment history The amount of credit you have Information reported monthly by your creditors Any serious problems in the past with debts, such as liens, bankruptcies, collections and judgments. Your final score is used by lenders to help determine the likelihood that you'll repay your loan on a timely basis. Credit scores typically fall in a numerical range, from 300 to 900. Generally, the higher the score, the lower the risk you are for the lender. Keep in mind that credit scoring is only one factor considered by a lender. You can expect a careful analysis of all the information collected from you during the loan process. By the way, even if you're already pre-qualified, you can benefit from knowing your credit score. While pre-qualification measures your debt and income ratios to predict your qualifying loan amount, your credit score provides a clear indication of your credit standing – a major factor during the final loan approval process. -Taken from the Real Living Mortgage sight.

THINKING ABOUT BUYING A HOME?

Figuring Your Housing Budget

*Have you ever shopped for clothes, furniture or gifts without a budget and later found that you'd overspent? It's easy to do especially when looking at so many great houses with your agent. Obviously, staying on budget is very important when house hunting. That's why you'd probably like to have a ballpark idea of how much house you can afford - before you start looking and even before meeting with your mortgage broker or lender. To get a rough estimate of how much you'll qualify for, do what the lenders do – plug your budget numbers into a basic mortgage calculation formula. Lender Formulas Lenders typically use one of two formula guidelines; although most will require that you meet both sets of guidelines. Even if you don't meet the guidelines, talk with your chosen home mortgage consultant. S/he can provide additional details specific to your situation, and since there are other formulas that exist, you may qualify under another standard.  For example, VA loans are calculated on a single ratio that's based upon mortgage payment and all debts. If you have very little debt, this formula may allow you to qualify more easily for a more expensive home. Of the two usual formulas, the first compares income-to-housing costs (without including long-term debts), while the second includes all debts. 28 Percent Formula: Total monthly housing costs (P.I.T.I.) = 28 percent (or less) of gross monthly income. 36 Percent Formula: P.I.T.I. + all monthly debts = 36 percent (or less) of gross monthly Income. So, if you're a family with a monthly gross income (before taxes) of $3,500, you would multiply $3,500 by 28 and 36 percent. The result shows that you might qualify for a home mortgage with monthly payments between $980 and $1,260 a month. Note that these percentages may be slightly less if you have long-term debts (more than eight months) or alimony/child support payments. The number and ages of your children as well as household budget items may also have an impact. Now that you have a better idea of what your approximate housing budget may be, learn more about:

Type: Conventional


Characteristics: Can be obtained with as little as 5 percent down payment. If the down payment is less than 20 percent, it may be necessary for the loan to have Private Mortgage Insurance (PMI) to protect the lender.
Term: Paid off in equal monthly payments over 15, 25 or 30 years.
Interest Rate: Stays the same for the life of the loan.


Type: FHA

Characteristics: Insures loans, making lenders willing to finance home purchases on favorable terms. Down payments as low as 3 percent. Discount points may be paid by either seller or buyer. 


Term: Varies by lender; however, the FHA charges an up-front Mortgage Insurance Premium, similar to Private Mortgage Insurance that can be financed in the mortgage amount or paid in cash at settlement. The borrower must also pay an annual Mortgage Insurance Premium(MIP) of 0.50 percent, which is collected monthly.
Interest Rate: Varies by lender.Stays the same for the life of the loan.


Type: VA

Characteristics: Available to qualified veterans of the Armed Services, Reserves and National Guard. Loans can exceed $200,000 with no down payment. Flexible underwriting guidelines. Closing costs may be a gift. Can be combined with second mortgages and are assumable (upon qualifying) by future buyer.


Term: Payment fixed for the full term.
Interest Rate: Varies by lender but. Stays the same for the life of the loan.

Type: Renovation Financing Characteristics: Provides buyers money to fix up, renovate, repair, replace or remodel a home with the purchase. We loan on the "after improved value" and can do a loan on a home in ANY condition. We can combine this type of financing with FHA or Conventional financing. Available for singles, doubles, triples or quads. When you're ready to think about buying your new home, make sure you explore these primary loan options and the dozens of others available. The best lending partners will be able to find the right one for your needs.

*Taken directly from the Real Living Mortgage web site. so, if you have any questions about what you are reading, ask me and I will get you the answers or call Mark or Joel directly:  Mark Cooper  at 614-273-6342 or Joel Ghitman at 614-418-7317