First Steps In Buying A New Home
47.
What Steps Need To Be Taken To Secure A Home Loan?
The first step in securing a home loan is to complete a mortgage loan application. To do so, you’ll need the following information.
Pay
stubs for the past 2-3 months
W-2
forms for the past 2 years
Information
on long-term debts
Recent
bank statements
Tax
returns for the past 2 years
Proof
of any other income
Property address
and description of the property you wish to buy
Sales
contract
During
the loan application process, the mortgage lender will order a report on your
credit history and a professional appraisal of the property you
want to purchase. The application process typically takes between
1-6 weeks.
48.
How Do I Choose The Right Lender?
Choose
your mortgage lender carefully. Look for financial stability and a reputation
for customer satisfaction. Be sure to choose a mortgage company that gives
helpful advice and that makes you feel comfortable. A mortgage lender that
has the authority to approve and process your home mortgage loan locally is preferable,
since it will be easier for you to monitor the status of your mortgage loan application
and ask questions. Plus, it’s beneficial when the mortgage lender knows home
values and conditions in the local area. Do research and ask family,
friends, and your real estate agent for recommendations.
49.
How Are Pre-Qualifying and Pre-Aprroval Different?
Pre-qualification
is an informal way to see how much money you maybe able to borrow. You
can be ’pre-qualified’ over the phone with no paperwork by telling
a mortgage lender your income, your long-term debts, and how large a down
payment you can afford. Without any obligation, this helps you arrive
at a ballpark figure of the amount you may have available to spend
on a house.
Mortgage pre-approval
is a mortgage lender’s actual commitment to lend to you. It involves assembling
the financial records mentioned in Question 47 (Without the property
description and sales contract) and going through a preliminary
approval process. Mortgage loan pre-approval gives you a definite idea of what
you can afford and shows sellers that you are serious about buying.
50.
How Can I Find Out Information About My Credit?
There
are three major credit reporting companies: Equifax, Experian, and
Trans Union. Obtaining your credit report is as easy as calling
or going online and requesting one. Once you receive the report, it’s important
to verify its accuracy. Double check the "high credit limit,"’total
loan," and ’past due" columns. It’s a good idea to get
copies from all three companies to assure there are no mistakes
since any of the three could be providing a report to your mortgage lender.
Fees, ranging from $5-$20, are usually charged to issue credit reports
but some states permit citizens to acquire a free one. Contact the
reporting companies at the numbers listed for more information.
Credit Reporting Companies
Experian
1-888-524-3666
Equifax
1-800-685-1111
Trans Union
1-800-916-8800
Credit Reporting Resources
Another Reason to Pay Your Bills on Time
More mortgage lenders, wary of taking undue credit risks, are looking at new ways to gauge whether to lend consumers money, such as how they pay their rent and utility bills. Here’s how credit bureaus and others are using nontraditional payment data:.
In addition to using data from Equifax’s own credit files, as well as data it has collected on rent and utility payments, for example, the score pulls information from LexisNexis to verify identities and flag any negative information, such as tax liens, bankruptcies and criminal records. Score range: 501 to 900.
Relies on payment data, such as telephone and utility records and catalog or Internet purchases, provided by eBureau LLC, in addition to data from its own credit files. Score range: 100 to 999.
Looks at information on how consumers pay their rent, cable and utility bills, among other things, by pulling information from several databases and public records. The score has the same range as the traditional FICO score: 300 to 850.
The score, which is used by mortgage mortgage lenders, is based on alternative payment sources, such as rental, insurance and utility payments.
At PRBC, consumers can create their own credit file by reporting monthly payments to the company, which verifies the data for a fee and creates a credit file and score for mortgage lenders. Users can also use a bill-payment service to have their bills automatically reported to PRBC for free.
In addition to using data from TransUnion’s own credit files, the score relies on data provided by L2C Inc., such as consumer’s payment histories on their rent cable and utility bills. Score range: generally between 300 and 850.
51.
What If I Find A Mistake On My Credit Report?
Simple
mistakes are easily corrected by writing to the reporting company,
pointing out the error, and providing proof of the mistake. You
can also request to have your own comments added to explain problems.
For example, if you made a payment late due to illness, explain
that for the record. mortgage lenders are usually understanding about legitimate
problems.
52.
What Is A Credit Score And How Do Mortgage Lenders Use Them?
A
credit bureau score is a number, based upon your credit history,
that represents the possibility that you will be unable to repay
a loan. mortgage lenders use it to determine your ability to qualify for
a mortgage loan. The better the score, the better your chances are
of getting a loan. Ask your mortgage lender for details.
53.
How Can I Improve My Credit Score?
There
are no easy ways to improve your credit score, but you can work
to keep it acceptable by maintaining a good credit history. This
means paying your bills on time and not overextending yourself by
buying more than you can afford.
For more helpful mortgage tips on understadning the first steps in buying a home, mortgage refinancing, home mortgages, reverse mortgages or a home equity line of credit, contact FreeLoanComparison.com today!
Last update: November 14, 2008
