Mortgage Process
How and Where to get Money
Locating the Right Loan
You have the option of shopping around for the best terms you can obtain. Generally, a mortgage acceptance will take about 15-30 days for conventional, 30-45 days for VA and FHA from application to approval.
Shop Smart for Mortgage Money
It used to be that qualified home buyers simply went to their nearest bank or savings and loan for the standard fixed rate, 30 year mortgage or the VA/FHA backed loan. Interest rates were not as highly competitive back then.
Now of course, things have changed. Competition among lenders is lively and smart borrowers shop carefully to find the financing that best suits their circumstances and needs. Here’s where to shop:
Mortgage Lenders. Mortgage lenders issue mortgages to borrowers. They process and sell the mortgages to large investors or into the secondary mortgage market.
Financial Institutions. Mutual savings banks, savings and loan associations, insurance companies and some commercial banks are the traditional sources of mortgage loans. Savings and Loans often offer favorable terms to their own account holders.
Private Lenders. Individuals (often home sellers) and groups (sometimes seller’s employers, if the seller is being transferred) lend money. This source is especially helpful in arranging second mortgages but can assist with other mortgage plans.
Credit Unions. Federal credit Unions can write 30 year conventional and government insured mortgages. Some will make loans and some will not. This may be a good source for credit union members.
Ten Questions Most Lenders Will Ask You
Here is the information most lenders will need.
- The amount of money you wish to borrow and the length of time you need the money.
- Your current address and any other addresses covering the previous 24 months.
- Your social security number.
- Your current employers name, address, and phone number and the same information for any other employers in the previous 24 months.
- Your gross monthly income, including documentation: most recent pay stub, final pay stub for any job you may have left in the current year, and previous years W-2 forms.
- Complete account statements (all pages) for any bank, credit union, retirement or brokerage accounts.
- Your assets (real estate, personal property, stocks and bonds, life insurance with cash value, etc.)
- A complete list of your debts including account numbers, balances, and minimum payments.
- A copy of the sales contract. ( We take care of sending that over for you)
- An account, in writing, of any problems concerning your application and any documentation of the circumstances of those problems.
With this information in hand, here are the steps the lender will have to take to process your application:
- Verify the facts.
- Get a credit report
- Make a property appraisal.
- Review your applications.
- Decide whether or not to make the loan.
Some Questions You Should Ask Lenders
- What is the interest rate?
- What are points?
- How long can I “lock-in” the financing at the current rate?
- What are the other fees associated with my loan?
- Are funds for second mortgages available?
- Is there a pre-payment penalty clause? This involves extra charges for paying off a loan before maturity. About 80% of all loans in the United States are paid off early.
- What is the grace period? How late can a monthly payment be before a late fee is charged? What will happen if a payment is missed?
- If you sell your house, will the new buyer be able to assume your mortgage at the same interest rate?
- Do you have to pay “points” to get your mortgage? Usually lenders charge points for the cost of giving you a mortgage loan. A point is 1% of the loan amount.
- Will the lender require mortgage insurance (PMI)?
