Mortgage Application Tips #5: Required Information

We briefly mentioned some of the things that you may need to bring with you before you start your application, but here is a more detailed list of the information mortgage lenders will use to consider your loan application. For all loans: Social Security Number, for borrower and co-borrower if any Employment History for the last two years, employment dates, addresses, salary. Current pay stubs or W-2 forms. Check and Savings Accounts and Certificates of Deposit. Location of bank accounts, account numbers and balances, address of bank if out of town, last 3 months' statements. Stocks, Bonds, and Investment Accounts.  Broker's name and address, description of stocks, bonds, etc.  Last 3 months' statements or copies of stock certificates. Life Insurance Policies. Insurance...

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Mortgage Application Tips #4 - Credit Scores

Before they decide on the terms of your loan, lenders want to know two things about you: your ability to repay the loan, and if you will pay it back. To assess whether you can pay back the loan, they look at your income to debt ratio which we talked about last week. In order to assess your willingness to pay back the loan, they look at your credit score. To learn how to improve your credit score, view this article. The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (high risk) to 850 (low risk). Your credit score comes from your history of repayment. They never take into account your income, savings, amount of down payment, or demographic factors like gender, ethnicity, national origin or marital...

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Mortgage Application Tips #3 - Debt to Income Ratio

The debt to income ratio is a formula lenders use to determine how much of your income is available for a monthly mortgage payment after you meet your other monthly debt payments. This is an important aspect of the mortgage application process. Without a good number, you won't be able to qualify for your new home. About your qualifying ratio: Typically, underwriting for conventional mortgages requires a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio. The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be applied to housing...

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Mortgage Application Tips #2 - Proving your Employment and Income

Last week we discussed the basic information that you would need to bring with you in order to begin filling out your mortgage application.  Among those things is proof of your employment and income. These are very important things to lenders. Your ability to make the monthly payments on the mortgage and to afford the costs associated with owning a home are vital to the approval process. Things to prove: At least two years employment history. We will want to know all about your job including your employer's name and address, your job title or position, length of time of the job, salary, bonuses, commissions, and average overtime...

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Mortgage Application Tips #1 -The Basics

Are you planning on purchasing a home soon?  When applying for a loan or a mortgage, there is a lot of information that you will need to fill out the forms. You can't get the loan until you are approved and that can be a very intense process for some. We are here to make it more simple for you. Here are the basics of what you need to know prior to starting the loan application process: Be sure to gather all of your information together in one place so you have it easily accessible. This includes your personal finances, your bank account numbers and their balances, your current loan amounts and payments, and your credit card account numbers. Also bring your employment and financial history, and forms of identification such as your driver's license and your SSN card. You will need...

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To Refinance or Not To Refinance?

Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points lower than your current one? Maybe that was good advice several years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost many times over, considering the advantages that it brings, in addition to a reduced interest rate. Advantages When you refinance, you may be able to lower your interest rate and mortgage payment , perhaps significantly. You might also have the option to "cash out" a portion of your equity, which you will be able use to take care of higher interest debt, make home improvements, or plan a vacation. You could be able to refinance to a shorter-term...

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Tax Tip #7: Home Equity Loans

This is the last tax tip in this series of posts. Thank you for reading. If you have more questions, we urge you to seek the counsel of an experienced tax professional. #7:  Home Equity Loans Unfortunately in this economy, people sometimes need to take out a home equity loan to pay for things other than their home that they couldn't normally afford, such as tuition. Can you get a tax break for that? Perhaps. It depends on the situation. Part or all of the interest that you pay on the loan could be deductible for up to $100,000 ($50,000 if you are married filing separately). The amount that you can deduct interest on is the difference between what your home is worth and what you owe on your mortgage. (Example: if your home is worth $250,000, and your mortgage is worth $200,000, you...

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