Looking for a New Mortgage
So, you want to find that New Mortgage Loan that fits your needs, right? Sure you do and here is the place to get some ideas of where to look and what to look for.
What should you consider?
1. Are you a first time homebuyer?
If you are a first time homebuyer, do you need minimum down payment requirements? FNMA as of 12/13/2011 will allow higher loan to values for financing. There will be a three (3) % down payment if the loan can be run through their automated underwriting system (DU). These funds may come from flexible sources; to include a gift from a relative and assistance from an employer. Certain restriction may apply but this is a step forward for lenders who sell their loan to FNMA as the prior guidelines would only allow for a minimum of 5% down payment from the applicant's own funds. With a conventional loan sold to Fannie, there is only the monthy MI (mortgage insurance) premium for loan to values greater than 80%.
FHA allows for 3.5% down payment from flexible source of funds for credit score >580. Credit score less than 580 will require a 10% down payment. Now, please note that some lender guidelines may vary with regard to minimum credit score even though FHA will allow a lower score. FHA MIP (mortgage insurance premiums) for 30 yr mortgage are: 1% upfront MIP that is added into the loan amount and then an annual MIP that is paid monthly for loan to values greater than 95% which is .90 mortgage premium.
2. Are you selling your current residence? If you are selling your home, you must realize that unless you do not have a payment; you cannot qualify without the current payment unless the house is sold or about to be sold.
3. How much down payment funds, closing cost and reserves do you have for this loan? Do you have at least 3% down payment and closing cost of another 2 or 3%? Reserves will depend upon what your credit package looks like and you could need at least 2 months reserves.
4. Do you have to sell your current residence prior to closing your new home? If you are selling your home for your closing cost and reserves you may need to have a prospective borrower lined up and ready to close prior to applying for a mortgage loan. If you do not; you have to be able to qualify for both payments
5. What does your credit look like? Have you checked your credit online or had your credit run recently? Do you know that based upon your scores only; you can possibly qualify?
What to Expect
You should expect your lender of choice to give you a preliminary decision based upon the information you have rendered. The preliminary decision is sometimes called a preliminary approval or credit approval. What this means that per your credit and the information which must be verified from the application; it appears your loan will get to a final approval. Not guaranteed; please remember. Not only does the credit file have to be processed; but the property must be evaluated also and meet certain standards.
If the information verified does not match what your information is on the application; you can could be denied. This is why the initial mortgage application process is so important. You should have accurate information to begin with. How long have you been at your current employment? What your monthly income is and how you get paid. It depends upon what is stated or shown on your pay stub and it can be figured by your. How much money you have saved for the transaction or, are you expecting to receive a gift? From whom and how much. Is it a relative, employer etc.?
You entire financial profile must be handed over the loan officer/loan representative and it must be accurate or your approval could be put at bay. You do need adequate and correct information.
What you will receive from the Loan Officer:
1. Good Faith Estimate (if not at application; it must be mailed within (3) business days.
2. Truth in Lending form, preliminary (if not at application; it must be mailed within (3) business days.
3. Transfer of Servicing disclosure (if not at application; it must be mailed within (3) business days.
If your loan is denied within the (3) business days; these disclosures are not required.
- Mortgage Loan Facts: Mortgage Facts Nationwide Licensing System for Professionals
New mortgage licensing rules and regulation to be implemented for everyone; nationwide not just state wide.
A List of the Top Lenders
Bank of America
Ally Bank (GMAC)