Mortgage Approvals and Compensating Factors
Mortgage loans are approved based on a fairly strict set of guidelines. Some of the guidelines are hard rules that can not be broken. An example of hard rule is the maximum loan to value ratios or down payment requirements. If a home loan for a particular 30 year fixed rate mortgage requires a 5% down payment or a loan to value of 95%, 4.75% down payment will not be accepted. On the other hand, some rules are general guidelines.
An example of a general guideline is the debt ratio requirement. Standard debt ratios are approximately 32% for the amount of the borrowers’ gross monthly income that can be used for the monthly mortgage payment and a 38% ratio representing the amount of the gross monthly income that can be allocated for the monthly mortgage payment and all other monthly debt obligations. These debt ratios are guidelines. A home loan applicant that has debt ratios of 33% and 40% may very well be approved for a mortgage loan.
In situations where a home loan borrower has debt ratios that exceed the guidelines or perhaps a credit history that is slightly below the requirements, a mortgage lender will look for compensating factors to justify making the home loan approval.
Compensating factors that may be used to justify approval of mortgage loans with ratios exceeding the benchmark guidelines are evaluated on a case by case scenario. Any compensating factor used to justify mortgage approval must be supported by documentation with the mortgage lender.
Common compensating factors that are reviewed to approve a home loan that is just marginally beneath the loan guidelines include:
The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than the proposed monthly housing expense for the new mortgage over the past 12-24 months.
The borrower makes a large down payment, one that is above the minimum established for the home loan program applied for, toward the purchase of the property.
The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward the use of credit.
A previous credit history shows that the borrower has the ability to devote a greater portion of income to housing expenses.
The borrower receives documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage, including food stamps and similar public benefits.
There is only a minimal increase in the borrower’s housing expense.
The borrower has substantial documented cash reserves (at least 3 months worth) after closing. In determining if an asset can be included as cash reserves or cash to close, the mortgage lender must judge whether or not the asset is liquid or readily convertible to cash and can be done so, absent retirement or job termination.
Funds borrowed against these accounts may be used for home loan closing, but are not to be considered as cash reserves. “Assets” such as equity in other properties and the proceeds from a cash-out refinance are not to be considered as cash reserves. Similarly, funds from gifts from any source are not to be included as cash reserves.
The borrower has substantial non-taxable income (if no adjustment was made previously in the ratio computations)
The borrower has potential for increased earnings, as indicated by job training or education in the borrower’s profession
The home is being purchased as the result of relocation of the primary wage earner and the secondary wage earner has an established history of employment is expected to return to work, and reasonable prospects exist for securing employment in a similar occupation in the new area. The mortgage loan underwriter must document the availability of such possible employment.
Mortgage Rates in New York at Ulster Savings Bank
Ulster Savings Bank is a New York based bank that is a locally owned and operated in Ulster County, New York and has been in business since 1851.
Ulster Savings Bank offers a variety of standard bank services such as checking accounts, savings accounts, telephone banking, online banking services and consumer loans. The bank loan department handles residential mortgages, new construction loans, home equity loans as well as automobile loans, commercial mortgages, and business loans.
Ulster Savings Bank offers several mortgage options and services for buying or refinancing a home. The bank mortgage department provides a wide array of residential and construction loan products to fit a number of needs. Ulster Savings Bank home loans cover loans available for first time homebuyers looking for their first home to seniors interested in reverse mortgage options.
The bank provides solutions for a wide array of lending situations with mortgage products that fit most needs with very competitive mortgage rates. Home financing options from Ulster Savings Bank have many different options to choose from. Current mortgage rates and terms from the bank include:
30 year fixed rate mortgage at 4.750% with 2.50 points and an APR of 5.031%
30 year fixed rate mortgage at 5.250% with 0 points and an APR of 5.311%
20 year fixed rate mortgage at 5.250% with 0 points and an APR of 5.332%
15 year fixed rate mortgage at 4.625% with 0 points and an APR of 4.727%
FHA 30 year fixed rate mortgage at 5.250% with 0 points and an APR of 5.986%
3 year fixed / 1 year adjustable rate mortgage 4.875% with 0 points and an APR of 3.582% for 30-year term.
Mortgage rates subject to change and additional conditions will apply. Actual mortgage interest rates and APR’s may vary based on home loan applicant’s credit history. Current mortgage rates and loan information can be obtained by contacting the bank directly at 866-440-0391
Bank CD rates offered by Ulster Savings Bank can be found at selectCDrates.com.
Mortgage Loans and the role of the Secondary Market
The secondary market is where mortgage loans are sold by mortgage lenders and banks and purchased by investors. The secondary market provides a number of benefits for mortgage originators and mortgage lenders, which in turn provides benefits to home loan borrowers.
In order for the secondary mortgage market to work effectively and efficiently, uniform mortgage lending standards needed to be established. The secondary market promoted standardization and uniformity of credit requirements, loan types and loan documents and required forms. This standardization could be a detriment to those potential home loan borrowers that needed special financing but a standardized market improves mortgage rates and greatly facilitates the home loan borrower’s process of comparing and shopping mortgage rates and terms.
Providing liquidity to the mortgage market so that mortgage lenders and investors can buy and sell home loans is the primary value and function of the secondary market. A market to buy and sells mortgage loans allows the mortgage lenders to offer competitive mortgage rates and keep and continual flow of funds available for mortgage lending.
The secondary mortgage market permits mortgage lenders to obtain cash required to fund new home loans at any time. The liquidity in the secondary market also encourages investors to participate and purchase home loan and mortgage backed securities, as the investors can be confident that the home loans can be readily sold at a later time if necessary. The liquidity in the market provides a constant flow of new money into real estate finance that helps to maintain and orderly and competitive market.
Liquidity that is inherent in the secondary market also allows the mortgage lenders to manage their interest rate risk. Mortgage lenders not only have the ability to sell the mortgage loans they originate but they can buy mortgage loans with different terms and mortgage rates to maintain a diversified mortgage loan portfolio. An investor in mortgage loans or a mortgage lender can buy home loans with different mortgage rates and within different geographic areas.
From the mortgage lenders perspective, risk that is in mortgage lending that can be ameliorated through the secondary mortgage market includes interest rate risk, liquidity of funds risks and potential default risk through loan portfolio diversification.
The major institutions that which invest in the secondary mortgage market include the Federal National Mortgage Association or FNMA, the Federal Home Loan Mortgage Corporation or FHLMC, the Government National Mortgage Association or GNMA and a variety of banks and institutional investors.
FNMA, FHLMC and GNMA are government sponsored enterprises that guarantee mortgage loans, purchase mortgage loans and establish portfolios of loans for sale as mortgage backed securities. FNMA and FHLMC operate with conforming loans while GNMA handles FHA home loans and VA home loans. The majority of home loans that are closed meet the lending criteria that are established by one of these entities. Home loans that are originated that do not meet the guidelines established by these entities are often referred to as portfolio loans since the mortgage lender is not concerned about loan resale and holds the mortgage loan for their own portfolio.
Home Equity Loans and Credit Reductions
A home equity line of credit is a form of revolving credit in which an existing owned home or property serves as the collateral. Because a home often is a consumer’s most valuable asset and a home equity loan or line is a mortgage recorded against the home, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses.
Even though home equity loans were generally used for large expenses, they became a very common consumer loan. Many homeowners obtained home equity loans as reserve line of credit just in case a situation arose that required quick access to a large sum of money. Since the home equity line of credit is secured by the property they are a mortgage and the interest rate is measurably lower than most other consumer forms of borrowing. In addition, the interest paid is generally tax deductible. Low mortgage rates, convenience and aggressive marketing by mortgage lenders fueled the growth of this home loan product.
Part of the long term appeal of the home equity loan for some borrowers was once that borrower was approved for a home equity line of credit, they would be able to borrow up to their credit limit whenever they wanted even well into the future.
Now that property values have fallen and credit is both tight and deteriorating in quality, many mortgage lenders are cutting off access to home equity lines for their existing customers.
For many homeowners the loss of credit availability couldn’t come at worse time. With less available credit and family incomes moving lower, theses home equity lines of credit are being stripped away just when they may be needed the most. The mortgage lender generally reduces the line of credit or blocks access to additional credit to simply reduce their exposure to the risk presented by falling property values.
For those homeowners that find their mortgage lender has in fact restricted the use of their home equity loan, there are steps to try and ameliorate the inconvenience this may cause. Many mortgage lenders are approaching the issue of falling property values and reduced equity with responsibility and are prudent with their decisions to avoid slashing access to hone equity indiscriminately.
The mortgage lender that originates a home equity line of credit and subsequently changes the account must provide a written notice if they have frozen or reduced a borrowers existing home equity loan. This notice will usually include information about any other changes to the terms of the loan as well as the basis for those changes. A freeze or reduction notice on an existing home equity line of credit should include specific reasons for the action taken by the mortgage lender.
The primary reason for the equity line reductions is the fall in value of the home. The mortgage lender may provide the basis for determine the drop in property value with a contact should the borrower question the assessment.
Other than a drop in the homes value, a mortgage lender may reduce or restrict the use of an existing home equity loan due to a change in the financial circumstances of the borrower such as significant reduction in the borrower’s credit score. This may be a harder to obstacle to overcome but is worth investigating with the mortgage lender.
Understanding the mortgage lender’s reasoning may help those borrowers that want to take steps to have their credit line reinstated to its original amount. Most mortgage lenders have fair appeals procedures to handle any upcoming changes to the existing terms of a home equity line. The mortgage lender may reinstate the credit privileges when the conditions permitting the freeze or reduction no longer exist or are reasonably refuted.
The borrower may need to put in writing the request to have a home equity line of credit reinstated. Once the mortgage lender receives the written request, they must promptly investigate and determine whether the HELOC can be reinstated and the grounds on why it would not.
Mortgage Rates in NY at Chemung Canal Bank
Chemung Canal Trust Company is a 175 year old financial institution headquartered in Elmira, New York. The bank operates 23 branch offices in 7 counties situated in the Southern Tier of New York and the Northern Tier of Pennsylvania.
Chemung Canal Trust Company is committed to the community banking philosophy and mission which means the bank builds long-term relationships with its clients and help to plays an important role in the communities they serve. As a community oriented bank, Chemung Canal makes lending decisions locally.
For consumers served in the region of Chemung Canal, the bank’s mortgage department offers a wide array of mortgage loans with competitive mortgage rates. Chemung Canal mortgage serves first time home buyer, existing homeowners looking to refinance their existing home loan, consumers who may be home build new or second home and more.
The bank’s website provides a great deal of information about Chemung Canal Trust Company including mortgage products and services as well as branch locations and hours of operations.
With Chemung Canal mortgage, a mortgage applicant can apply online or contact one of the bank offices to speak with a mortgage professional. The bank mortgage department can assist potential home loan borrowers find the right mortgage loan to fit their needs.
Mortgage loan rates promoted by Chemung Canal include the following terms and mortgage rates:
10 year mortgage rate 4.500%, 0 points and 4.58% APR with a minimum 5 percent down payment.
15 year mortgage rate 4.500%, 0 points and 4.56% APR with a minimum 5 percent down payment.
20 year mortgage rate 5.125%, 0 points and 5.17% APR with a minimum 5 percent down payment.
30 year mortgage rate 5.250%, 0 points and 5. 28% APR with a minimum 5 percent down payment.
Use one of the mortgage calculators located at www.selectcalculators.com to help determine which mortgage rates an home loan options are best for you. Check on the potential savings with different term home loans or making biweekly instead of monthly mortgage payments as well.
Additional mortgage rates and point options are available. Mortgage rates are subject to change without notice. All home loans are subject to credit approval. Any additional conditions will apply.
For more information on bank mortgage rates and home loan programs, contact the bank mortgage department directly at (607) 737-3815 or toll-free at (800) 836-3711. Mortgage rates and bank information is also available at the bank website located at www.chemungcanal.com.
Bank deposit rates can be viewed at www.selectcdrates.com including current CD rates and more.
Employment and Income Calculations for a Mortgage
In order to qualify for a home loan, standard ratios are applied to the borrower’s income and debt payments. For conventional conforming mortgage loans the standard ratios are 32% and 38%. To calculate these debt ratios the mortgage lender needs to measure the borrower’s debts and income.
The first debt ratio measures borrowers new monthly mortgage payment divided by gross monthly income. The second debt ratio measures the monthly mortgage payment plus all other contractual monthly payments divided into the gross monthly income. These two debt ratios are often referred to as the front end ratio and back end ratio in the mortgage lending industry.
When applying for a home mortgage, a borrower should not only be aware of these debt ratio requirements but how they are calculated. When these debt ratios are calculated, one of the hardest measurements to calculate and often improperly calculated components is the borrower’s gross monthly income. What appears to be a simple calculation is often made difficult because of the borrower’s employment history and income fluctuations as well as guidelines that are mandated by the mortgage industry.
The anticipated amount of gross monthly income and likelihood that it will continue must be established to determine a borrower’s capacity to repay a new mortgage loan. Income that can not be verified or will not continue or is not stable, can not be used to calculate debt to income ratios on a mortgage loan request.
Gross monthly income will be checked by the mortgage lender for consistency and continuity. Once a stable income and employment position is considered acceptable, the mortgage lender will need to calculate gross monthly income based on historical pay and employment verification. Standard income is calculated by analyzing the average income and hours worked as well as the contractual relationship with the employer.
If the mortgage loan borrower is paid twice a month, then the gross monthly pay from the two most recent paychecks is added together to determine monthly income. If the borrower is paid every other week, then the gross bi-weekly paycheck is multiplied by 26 then divided by 12 to determine the monthly income figure. If the home loan borrower is paid weekly, the weekly gross pay is multiplied by 52 then divided by 12 to determine gross monthly income.
Mortgage loan applicants that have stable income with set employment contracts are the easiest gross monthly income calculations for the mortgage lender. For example; a school teacher that is paid a $60,000.00 per year should have a w-2 from the previous year that reflects that income amount and pay stub that confirm and monthly income amount of $5,000.00.
However, a construction worker that is paid $25.00 per hour may or may not be as easy a calculation to determine the monthly gross income. If the worker is consistently working a set number of hours per week, the gross monthly income is achieved by multiplying the hourly wage by the number of hours worked per week, which is then multiplied by 52 weeks and divided by 12.
If a mortgage applicant receives overtime or bonus income the income can be used to qualify for the home loan with restrictions. The borrower must have received the bonus or overtime income for a period of at least two years and the income has to be determined as likely to continue at the average rate of the past two years.
Part time or seasonal income may be used to qualify for a home loan if the income has been earned for a period of at least two years and is likely to continue.
Commission income can be included if it has earned for a period of at least two years and will be determined by the mortgage lender based on an average of the past two years income. If the commission income shows a decline over the two-year period the mortgage lender may deny the inclusion of the income to qualify for the mortgage loan request. Commission income that has not be earned for more than one year will generally be excluded from gross monthly income calculations.
A borrower may qualify for the home loan request if they have earned commission income for less than one year but have earned income not including commissions that would be sufficient to qualify the borrower for the mortgage.
Commission income must be verified with two years of signed federal income tax returns along with one month of current income pay stubs. Any business expenses or unreimbursed business expenses declared on the tax return will deducted from the gross pay calculations.
Unemployment income may be used as qualifying income for a home loan request if the income is recurring and consistent. The test for recurring and consistent income is documentation of two years history in income and reasonable belief that the income will continue. Examples of recurring unemployment income includes seasonal workers or recurring factory layoffs.
Any income earned that is legal non taxable income may have the savings that would have been paid as tax added back into the monthly gross income calculations to qualify for the home loan request. The process of adding income to non taxed income sources such as social security income is referred to as grossing up the income in the mortgage lending industry
The amount of income that can b added to the regular income that is not subject to federal income taxes must not exceed the appropriate tax rate for that income amount. The mortgage lender must document and support the additions to the income. The mortgage lender should use a tax rate that is appropriate for the borrower’s income level and should not be greater than 25%.
Projecting future income to qualify for a home loan is not allowed. Projected raises or self employed income that has not been documented can not used for qualifying purposes.
There is no established limit regarding the amount of time a home loan applicant has to have on a job to qualify for the home loan. The mortgage lender is generally required to verify the home loan applicant’s most recent employment covering the past two years. Gaps or periods of time of unemployment does not mean that a borrower will declined for the mortgage loan request but employment gaps should be explained and documented.
Although a home loan applicant will have to document gaps in employment that are longer than one month, seasonal unemployment is an acceptable source of income, recent school graduation is acceptable.
Frequent job changes that are either lateral moves or advances in income and position are not considered high-risk employment and income situations. But, the mortgage lender is required to document or assess the probability of continued employment which can either be accomplished in writing or determined by reviewing the previous to years employment and income history.
Home loan applicants that have recently returned to work after a prolonged absence from the work force may pose a problem for the mortgage lender to consider the total monthly gross income of that borrower. The mortgage lender will generally try and document a two-week employment history that excludes the long employment gap and will usually require six full months of income on the new job.
Standard employment verification procedures for new home loan applicants will generally entail a process of validation that is dependent upon the source and type of income the borrower obtains.
Salaried borrowers will generally need to supply to the mortgage lender the borrower’s most recent two years W-2’s and pay stubs that cover a 30 day periods of time. The mortgage lender will generally verify employment by phone or in writing if sufficient data is not obtained over the phone.
Overtime and bonus income must be verified with two years W-2’s and a written employment verification to ascertain the rate of previous bonus and /or overtime income and the likelihood of that rate continuing.
Child support or alimony may be used to qualify for a mortgage loan. The mortgage lender will be required to validate the divorce decree and the borrower will have to supply at least three months of canceled checks verifying receipt of the income. Child support, alimony and social security that is not received for those of retirement age must be verified to continue for at least a period of three years into the future.
Social security income and pension income is often paid to individuals by direct deposit. These sources of income will be verified by reviewing the bank statements in which the funds are direct deposited. These sources of income will generally be verified by the sender with annual awards letters. The mortgage lender will request a copy of the most recent annual award letter as well.
Rental income will need to be verified with tax returns and leases. The average of the last two years of net rental income will be used as the monthly income figure. Often, this figure is negative since many rental properties generate a loss for the owners that can be used to offset other taxable income sources. Unfortunately, the only help in overcoming the loss is to add in the depreciation charges that may be on the tax return for the property to calculate an adjusted gross rental income amount.
A mortgage loan borrower that owns more than 25% of a business is considered self employed on most all mortgage programs. Self employed borrowers will have to two years of corporate tax returns f the business owned is a schedule C or S corporation. If the borrower runs a sole proprietorship, two years of personal income tax returns will be needed.
Understanding the needs of the mortgage lender to calculate and verify income will help a borrower understand the mortgage loan approval process and expedite that approval.
Mortgage Loans and Ownership of Real Property
When a potential home owner obtains a new mortgage loan, how the ownership of the home will be held at the time of the purchase or the time of a mortgage refinance is important for the home owner of the property as well as the mortgage lender. Mortgage lenders have to make sure the form of ownership is an acceptable legal method to hold title and that the titled owners match the requirements of the home loan.
It is necessary for the mortgage lender to understand the different forms of ownership. The different forms of ownership determines how a home loan borrower holds title and dramatically influences or even prohibits the property use as security for mortgage loan.
Real property can be owned by one person or by a group of two or more people. Ownership by a single person or entity is referred to as sole ownership or ownership in severalty. Severalty means to sever the property or to own it separately from anyone else. Ownership by two or more people or entities is referred to as concurrent ownership. Mortgage lenders will provide home loans in either of these cases. Sole ownership is easier to process and leaves little room for error but may not be appropriate for all borrowers.
The major types of concurrent ownership are: tenancy in common, joint tenancy, tenancy by the entirety and community property.
Tenancy in common and joint tenancy is the two most common types of concurrent ownership. The major difference between these two forms of ownership is the treatment of a co owner share at the time of his or her death. In a tenancy in common, each owner’s share of the property will be distributed to his or her heirs upon their death. In a joint tenancy, the surviving co owners have the right of survivorship. The right of survivorship means that when the co owner dies, the surviving co owners take over his or her share and the share dos not enter the deceased owner’s estate or pass to his or her heirs.
Tenancy in common, the simplest form of concurrent ownership, exists when two or more persons each have an undivided interest in the whole property without a right of survivorship. Each owner may hold title to equal or unequal shares, of the property while all owners share equal use and access to the entire property. Upon the death of an owner, the deceased owner’s interest passes to his or her heirs or beneficiaries and not to the surviving owners.
Mortgage lenders prefer to have all owners agree that a property can be pledged as security. In some instances, however, mortgage lenders may accept the pledge of an interest held in a property as a tenant in common, since the title held by each owner is independent of other owners.
Joint Tenancy
Joint tenancy differs significantly from tenancy in common. The major difference is that each owner of the joint tenancy has the right of survivorship. This means that the joint tenancy owner gives up the right to determine who will get the property at the time of his or her death. Each time a joint owner dies the remaining joint owners continue own the entire property until there is only one owner left. The last surviving owner becomes the owner in severalty.
Laws have been established in a way to protect individuals from inadvertently becoming involved in a joint ownership and unknowingly losing their right to include the property in their estate at the time of their death. To create a joint tenancy, the law requires four unities:
Possession – Equal rights of possession for each owner.
Interest – Equal interests for each owner.
Title – Each owner must acquire his interests from the same conveying instrument.
Time – Each owner must acquire his interest at the same time.
Mortgage lenders accept the use of property held in joint tenancy as security so long as all the property owners pledge their interests; however, mortgage lenders rarely accept the pledge of a single owner’s share of a property held in joint tenancy since the ownership actually terminates upon the death of that owner.
Tenancy by the Entirety
Tenancy by entirety is a type of concurrent ownership reserved for married couples. The husband and wife are considered to be a single legal entity that owns the entire estate. Tenants by the entirety have the right of survivorship. The special feature of a tenancy by the entirety is that it protects the property from foreclosure by the creditors of either spouse individually. The property can only be encumbered by the joint action of both spouses. In other words, no spouse may singularly acquire, dispose of, draw equity from, or transfer the property. The agreement of both spouses is needed for any action that could, or does, affect the ownership of the property. If a divorce were to occur, both spouses would automatically become tenants in common.
Community Property
Community property is another type of concurrent ownership that is reserved for married couples. In fact, some states compel this form of ownership upon a husband and wife. In states that do not compel community property laws, there are two legal classes of property for married couples: separate property and community property.
Separate property consists of all property not acquired by the efforts of either spouse, including gifts and inheritances received during the marriage and properties owned before the marriage which have been kept separate.
Community property, on the other hand, consists of all property earned through the efforts of either spouse during the marriage. The property is considered to be owned by both of them as equal partners. Community property is most similar to tenancy in common. Each spouse owns his or car her half of the property and each spouse’s interest will be left to his or her heirs at the time of death.
It is always best to consult an attorney before deciding how the title to real property should be held in order to properly protect your interests as long as the form of ownerships complies with the needs of the mortgage lender in order for the mortgage lender to perfect the mortgage on the home.
Tips for a Fast Home Loan Approval
As a potential home loan customer, everyone wants to search and find the best mortgage deal and the best mortgage rate that they can. It seems everyone in the market for a new home loan is looking for the best mortgage rate for the lowest costs on a loan they can have right away without delay. For some prospective borrowers that find a mortgage lender or mortgage broker that is well respected and skilled, it is likely they will not have any problems in your search.
Sometimes, however, choosing the best mortgage lender doesn’t always equal a deal that is done the most swiftly. Mortgage loans that are not completed in a timely manner may unfortunately result in higher costs. Delays may bring higher costs due to a purchase not closing on time, higher costs to pay for additional services to complete the home loan transaction or higher costs due to the expiration of a mortgage loan lock that results in a higher mortgage rate.
If your home loan is supposed to close within 30 days but it winds up taking longer you may have to pay a higher interest rate because of the delay or worse experience a lost opportunity because you didn’t get the funding in time.
It is important to be able to evaluate the services of your mortgage lender or broker so you know what the home loan approval process entails with that mortgage lender so the loan closes in a timely fashion without extra costs and headaches. The first task should be to have some knowledge about the mortgage loan process as a whole. Knowing the different steps in the mortgage process will help avoid delays and unnecessary halts in the loan process and closing.
The first part of this process is the mortgage loan application and the submission of supporting documents. If the mortgage application process is not done right, the mortgage loan approval process gets off to a rocky start that will often lead to problems and delays.
It is in your best interest to make sure that your mortgage lender or broker has all of your personal information that is needed, and that the information is accurate and correct. Often a delay can be because of simple errors that are easily avoided.
This errors may slip by because the borrower did have the accurate information to complete the loan application or supply the necessary supporting documents or the error may occur because the home loan borrower did not think it was necessary to fill in all the details on the mortgage loan application or the loan officer was more interested in getting the loan application into processing rather than making sure it was completed properly. Whatever the reason, a simple rule is that the more information there the easy the process becomes.
When you complete a mortgage loan application it is important to make sure you fill out the application completely. The mortgage loan application details, among other things, your income, assets, and a description of the home you plan to buy or refinance. The application and the supporting documents is the most important step in the home loan approval process. This is where the information is garnered to calculate income, credit and debts outstanding. A well documented application helps avoid errors and improves the speed at which the data can be verified.
The process of completing and submitting the home loan application requires documents such as W-2’s and tax returns for the last two years, pay stubs covering a 30 day period, bank statements for the last two months, the purchase contract or a mortgage statement of the mortgage loan is for a refinance. Recent credit card account statements may also be routinely required.
Here are Some Easy Steps to Submit a Complete Mortgage Loan Application:
Double check that there are no spaces or blanks left on your mortgage application before you sign.
Make sure that when you sign the agreed terms spelled out in writing are what you are expecting, and do not be afraid or be shy about asking questions before you sign.
Anything you do not understand, don’t hesitate to question your mortgage lender before you sign. If there is a delay it won’t be because you didn’t understand what the process was.
Make sure you keep copies of all the documents and important papers and have them handy to produce if required.
Make sure you have given the data requested. Stress this point with the mortgage lending institution. If you give them everything they requested, the ball is firmly in their court to close the loan.
Make sure you understand all of the mortgage loan features, what they mean, and what may be available for other home loan programs. This includes the bottom line for what you are responsible to pay. As simple as this sounds, it avoids confusion and unwanted surprises.
Before submitting a mortgage loan application, search and find the mortgage lender that will give you the best service, and offer the best quotes for a low mortgage rate on your home loan. Once you find your mortgage lender, do not hesitate to give them all the financial details they need. Give them details on assets, your income, your debt situation, and your job history. After giving your mortgage lender all the information you have to give, follow up with them frequently, and make yourself accessible should they have questions and don’t be intimidated, do your research and remember this is your request; you can control many aspects of the process.