Tuesday, October 13, 2015

Lender Lingo - What To Know When Applying For A Mortgage


The fact of the matter is no one likes talking about borrowing money, but for many of us there comes a time when it's unavoidable. This inevitability doesn't have to be a heart-pumping, palm sweating nightmare. With the proper mindset and planning, going to a lender for a mortgage can be an easy process with minimal stress, and you'll come out knowing every possible answer. When preparing for the big day, here are some things to keep in mind.

Type A or B?

A good first step is getting to know the types of financing offered by your lender and which of those loans they believe will best suit your personal and financial situation. For instance, if you're buying a house that is in a less than perfect state, an FHA 203k may be the best choice. An FHA (or Fair Housing Administration) mortgage allows for the renovations, repairs, and the cost of the house all in one. On the other hand, if your future home is in a higher than normal cost bracket, then you may need a "jumbo mortgage", which comes with some added complications. Discussing the pros and cons of each type of advance and how they may best fit your needs will bring you to the next step.

Act of Faith

Obtaining what's called a GFE or Good Faith Estimate is a must when applying for financing. After you gain, preapproval is the best time to ask for your GFE. This mandatory document is created by the U.S. Department of Housing and Development, also known as HUD, and will provide you with information about the cost to close your mortgage, as well as the terms of the credit and the settlement charges. This form also has important dates, escrow account information, tradeoff table, and a shopping chart. You should bring any questions or concerns about your GFE to your loan officer. If you're still not sure, asking your realtor could also shed some light on any uncertainties.

Avoiding the Tar Pit

It is important to know what will slow your loan down. Many don't know that preapproval does not guarantee you to a line of credit. Make no mistake, until the full process is finalized, they don't have to give you anything. When it comes time to pony up the dough, a lender will go back through your employment status, credit scores, financial status, and other background information before concluding the transaction. Best thing to do is keep the pace. If you can help it, don't move around large sums of money, switch jobs, or start shopping for a new car after being preapproved. Take the time to go over your credit report, be available if the loan officer has any questions or concerns during the approval process, and always make sure to fill out every document to completion.

Showing your lender that you are making every possible effort to find the best mortgage for your situation, helps them gain confidence that you're a good match for their money. The loan officer is as much a person with a goal as you are, a common goal that you both share. Both of you want to see your application approved and getting all the information possible and keeping your life on a stable path ensures the best outcome.

When looking for a lender, Ann Arbor residents go to Huron Valley Financial, Inc. To learn more, visit http://www.huronvalleyfinancial.com/home.
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