How To Apply for a Mortgage
Nov 3rd, 2010 by sophie smith
First time home owners may find the intricacies of mortgages difficult to understand. While the different mortgage products, rates, and fine print may be complicated, the actual process of acquiring the loan is fairly straightforward.
Borrowers approach a lender, either directly or through a mortgage broker to discuss which mortgage loans suit their financial needs and ability to pay. Most loans are either fixed rate or an affordable variable rate mortgage (ARM). There are also hybrid loans, which combine fixed and adjustable rates over the term of the loan. That’s the complicated part. In most cases the lender or broker can explain the different loans available and help the customer complete their application.
The application process locks in an interest rate for the loan, since interest rates change daily, and the borrower usually has a week to provide all the supporting documentation necessary to prove their credit worthiness for that particular loan. This may include bank account numbers and statement, pay stubs, details of other current debts and evidence of ability to pay current housing costs, such as canceled rent or mortgage checks. Lenders will run credit reports for all borrowers on the mortgage and require a appraisal of the home’s value . If this proves the borrower is a good risk, the loan is approved and the sale of the home goes forward. If not, the lender may offer alternative terms and require additional documentation or a broker may suggest a borrower submit a new application for a completely different product.
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