The secret life of your mortgage application
Mortgage Learning Center

The first step, and most important step in
buying a home: Is
getting Pre-Qualify for a home loan.
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By getting pre-qualified you immediately find
yourself in a
stronger negotiation position.
You made yourself more attractive to sellers.
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Pre-approval can speed up the buying
process and increase
your chance of reaching an agreement on
the purchase
price.
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MORTGAGE . (SOUTH FLORIDA)

We have for commitment to break down the
barriers to
owning a home.
We have helped many find their ways
already, and we will
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We are here to turn traditional renters into
property owners
and landlords.

Real Estate is a road map to riches, it's one
of the best way to
build wealth.
The ultra rich always invest in real estate;
there is no other
investment than real estate despites the ups
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outperforms all other investments
8 Reasons to Get Pre-
Approved for a Home Loan

Learn why pre-approval is one
of the smartest moves you can make when
shopping for a home. You wouldn’t head to a cash-
only farmer’s
market or craft fair without knowing how much
cash you had in your wallet. So why would you
start shopping for the biggest purchase of your
life,
a new home, without knowing how much you
could spend?

Fortunately, knowing how much you can spend is
easy: Get pre-approved for a mortgage before you
start any serious home-shopping.
Here’s why getting your loan pre-approved is so
important:  

1. The pre-approval process establishes an all-
important relationship between you and your
lender.  

2. Getting pre-approved tells you the maximum the
lender is likely to loan you, which helps you
narrow down your home search to
affordableproperties.

3. You can get an idea of what your monthly
payments would be.

4. You’ll have more credibility with real estate
agents and with sellers if your loan is pre-
approved. Some agents won’t take you seriously
until you
have the pre-approval. They don’t want to waste
their time, or yours.  

5. Mortgage loan approval takes time. If you wait to
apply until you’re ready to make an offer, you
could lose out on the home to someone who is
pre-approved.  

6. The lender often will lock in an interest rate,
which protects you if rates rise while you are
shopping for a home.  

7. If your circumstances don’t qualify you for a low
interest rate, you’ll know that going in. You might
decide to look in a lower price range to
makeup the difference.  

8. Pre-approval gives you at least some peace of
mind, which you will appreciate during the often-
stressful process of buying a home.

Don’t confuse loan pre-approval with pre-
qualifying for a loan. Lenders will often pre-qualify
a would-be buyer based on what you tell them
about
your income, employment and basic credit
information, like how much you currently owe on
credit cards or other loans. The lender is not
agreeing to loan you money or committing to an
interest rate. But the process can tell you whether
it makes sense to move forward in your home
search.
Loan pre-approval is a more formal process. You’ll
need to provide the lender a lot of information
about yourself, especially about your spending
and saving habits. Prospective lenders will
generally make inquiries into your credit history
and obtain your credit score.

If you get pre-approved, you’ll receive a letter
telling you the maximum loan you can get and the
interest rate you’ll qualify for. In some cases, you
can lock the interest rate in. Be sure you
understand whether the interest rate is locked and
when you can lock it when you get the pre-
approval.
That pre-approval letter gives you a lot of power
as a home buyer. Use it wisely.
                                                                                                                  
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Negotiating Power:

Because you're
pre-approved, you'll be in a
much stronger position in
negotiating and presenting
your offer to the seller.
Sellers are much more
likely to consider your offer
first... because your loan is
already approved. They
know you're ready to buy.

Teamwork: Your Realtor
will be motivated to work
harder for you. Again,
because your loan has
already been approved,
your Realtor will know
exactly how much you can
afford to spend. So they
can search far more
effectively for just the right
home.
Assurance:

Pre-Approval Plus will help you be
more efficient in your personal
search for a new home, too. When
your loan is approved, you'll get a
certificate and written loan
commitment from us. This tells you
the maximum amount you can
borrow. Finding your new home will
be much easier when you know the
price range of home that fits within
your budget.

Finalization: Pre-Approval Plus saves
you time. Once you've found a new
home and your offer has been
accepted by the seller, you'll be able
to close the sale within days rather
than weeks.
How Pre-Approval Plus works

Pre-Approval  is available on any of
our regular mortgage programs
including fixed and adjustable rate
loans.
All you have to do is select the house
you want and enter into a valid
purchase agreement.
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IN SOUTH FL.

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MORE SHOWING,

MORE OFFERS,

MORE MONEY FOR YOUR
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South Florida, Please CALL
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CONSULTATION AT:
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The secret life of your mortgage application

Meeting with a loan officer and completing paperwork are just the beginning. What
happens once everything has been submitted?

Here's a look at 5 steps your application takes as it marches toward a decision from
your lender, and what to do if your application is rejected.
To lift the veil of mystery around the
mortgage-approval process,


We peeked behind the scenes at an application's five-step journey with a lender.
We also learned three tips for helping to speed your application toward approval
and five ways to improve an application if your loan is rejected.


Step 1: Talk with a loan officer.
Your first and probably only contact with your lender is your loan officer, the
salesperson who takes your application.

When you first meet, the questions on your mind are likely to be, "Do I qualify for a
loan?" and "How much can I borrow?" The loan officer is probably wondering, "Am
I going to be able to sell a loan?" It's a courtship.

This first meeting is a simple, no-commitment step, conducted in an office or on the phone,
or you may fill out a form online. You reveal a few basics — your name, your income, your
debts and your estimated credit score. Your lender looks up your "tri-merge" credit score,
which includes scores from the three biggest credit-reporting agencies.

-----------------
You're itching to get a "thumbs up" or "thumbs down." Do you qualify or don't you? But the
loan officer has only your word to go on at this point, so don't expect to get an ironclad
approval. Not yet.  The answers you'll get at this stage will be versions of, "It depends."

The loan officer might say, "If what you've told me about your income, credit score and
debts all checks out, yes, you'll qualify for a loan.

Let's submit the application and find out." Or you might hear, "It looks like you'll qualify, but
for less money than you're hoping for." Or, "You're probably not eligible right now, but your
chances would improve if you save up a larger down payment or pay off your car loan."

At this stage you can be "preapproved" and get an estimate — not a promise — of how
much you can borrow.

If you're refinancing, your application is ready for the next stage of the process. If you're
buying, you may not be able to get a good faith estimate (GFE) and a preapproval without
choosing a home to buy, because the home, too, must pass muster.
The bank needs to know what it's worth and what shape it's in. After all, if you default, the
bank will become the owner.

---------------

Still, it's a good idea to apply before house hunting, with one or several lenders. That way, the
process can move quickly when you find a home.

Savvy borrower tip No. 1: Look for a lender who takes your application seriously enough at
the preapproval stage to run your application through Desktop Underwriter or Loan
Prospector, software programs used to qualify borrowers, says Bryan Wiley, loan officer at
Guild Mortgage Co.'s office in Bellevue, Wash. This will speed up the approval process by
providing an early warning of problems
Step 2: Fill out your application.
Here's where your real work begins. You answer the questions in the borrower information
sections (Sections III, IV, V and VI) of the Uniform Residential Loan Application.

(All lenders use the same form. It's here, at FannieMae.com.) It asks your name, address and
Social Security number, housing and employment history, income and housing expenses,
assets and debts.

Your loan officer can help you with some questions, but you'll need to take it home to add up
your monthly expenses and find documents such as old W2 forms, tax records, 401(k) and
IRA documents, bank statements and addresses of old employers.
---------------

Whether refinancing or purchasing, you'll need to hire an appraiser at this point to get an
expert valuation of what the home is worth.

Savvy borrower tip No. 2: With home values uncertain these days, your best
chance for an accurate appraisal is with a local appraiser who knows your neighborhood.
Avoid lenders who use out-of-town appraisers. Don't know? Just ask.
Step 3: Submit your application.
When you hand your application to a loan officer, the clock starts ticking. Within three days,
the lender must give you a packet of "disclosures" including:
------------------

A good faith estimate (Here's the GFE,
A truth-in-lending form, disclosing the loan's annual percentage rate, the number to use in
comparing competing loan offers.

The lender's offer is conditional. The information on your application has to check out.

After you submit the application, the loan officer passes it to the operations department, the
guts of the operation, usually hidden from public view in cubicles or even in offices in other
states.

If you're working with a mortgage broker, your broker now submits your application to one
or more lenders and they take over.
Next, your application goes under the microscope for review by two kinds of banking
professionals, loan processors and underwriters.

Step 4: Processors give your application the third degree
Processing is a strange term; it sounds more like sausage making than banking. The
processing team double-checks your file to make sure it's complete and true.
----------------

Processors look for errors, misinformation, discrepancies and
hidden flaws that could make you a risky candidate for a loan.
They check the liabilities you listed against those on your credit
report. They scan your credit history for bankruptcies, foreclosures or a history of bills in
collection, all likely deal killers.
Your income is scrutinized, too. Processors ask your employer to confirm that you're actively
employed, and they obtain your tax filings from the IRS to compare them with your mortgage
application.

They also search for debts you may not have disclosed, contacting courts and lawyers to confirm
whether you are married or divorced and if you owe child support, alimony or a court-awarded
judgment.

"On a pay stub you'll sometimes see a loan, child support, garnishments -- it's amazing the
things that may be payroll deducted,"  says Scarlett Miller, director of underwriting for Columbus,
Ohio-based Residential Finance Corp.

------------------
Credit reporting agencies will tell the lender if, after applying for the
mortgage, you take on a new loan or credit card. "That could disqualify the borrower for a
mortgage," she says.

Your down payment gets the once-over, too. The lender wants to know it's really your money and
not a recent credit-card advance or a loan from a friend or relative in disguise, since your overall
debt level is a big factor in the approval of your application.

The processor engages title-company professionals to search for hidden claims, liens and loans
attached to the property to ensure that the title on the home you want to buy is free and clear.

Wiley, who prides himself on a quick turnaround, says his company often decides on a loan
application in less than a week. But just as often, a problem can turn up. Maybe your application
says — correctly — that you're unmarried, but a loan processor finds that you used to be married.
The processor may need to take a detour to ensure you don't owe undisclosed child support.

If you're buying a condo, the processor must also confirm that no more than 15% of the
homeowners association members are behind on their dues and that fewer than 49% of the
units are rentals -- requirements of the giant government-sponsored companies that buy and
guarantee mortgages from lenders.

Step 5: The underwriter makes the decision
You'd think your application would be home free once the processing is done. But there's one final hurdle: underwriting.

The underwriter weighs the risk of lending money to you and decides if it's in the lender's interest. The underwriter may already be familiar
with your application.

To speed things along, processors often consult with the underwriting department. The idea is that it helps the underwriter anticipate what
he will need to make a judgment.
------------------

Since your lender probably will sell your loan to another company, the underwriter needs to make certain your application meets mortgage
lending guidelines from Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs, all of which
purchase loans.
Each agency has slightly different requirements for, say, the size of a down payment or credit score required. Your lender may have
guidelines, too.
If your application is simple, it's processed quickly, sometimes in just a few days. Typically, it's solid if:

Your assets, income and debts listed on the application check out.
The home you're buying has a clear title and passes a home inspector's scrutiny, and the appraised value isn't less than what you've
agreed to pay.

But plenty of glitches, surprises and problems can crop up, even at this stage. You may get a request from the lender for still more
information.

For example: Let's say your salary is $48,000. It's late June, and your pay stub's year-to-date notation should show you've received $24,000
to $30,000. But, for some reason, it shows only $10,000. Alarm bells ring. The lender needs to solve the discrepancy.

"Were they off work because of surgery? Was it because they were not at the job very long?" Miller says. Or maybe it's just a mistake.

Savvy borrower tip No. 3: When choosing a lender,

advises asking if there's an underwriter on site, allowing the company to process applications faster.
Also, a decision on your loan by an on-site underwriter is less likely to be subjected to second-guessing by underwriters further up the
corporate food chain, she says.

What to do if you're rejected
If your application is accepted, congratulations. If not, don't feel as if you're alone. Lenders have become very fussy. More than 2 million
mortgage applications were rejected last year, according to the Federal Financial Institutions Examination Council.

There are things you can do, though, to help improve your chances next time:
1. Understand what went wrong. Sit down with your loan officer to ask why your application was rejected and what you can do to improve
your chances.
------------------

2. Try another lender. Another lender may offer a different loan program with guidelines that better fit your situation. Credit unions and small
local banks often have more freedom to work with a client. Look for a lender that does not sell its mortgages on the secondary market; these
loans may be easier to qualify for, although they may carry higher fees and interest rates.

3. Revisit the appraisal. If your problem is a too-low appraisal, you and your loan officer are prohibited by federal law from
ordering a new appraisal. Occasionally, though, an appraiser will reconsider when given new evidence. If you know of nearby homes like
yours that recently sold for more, your real-estate agent may be able to offer the appraiser evidence that persuades her to revise her
valuation. Otherwise, the only way to get a different appraiser to value your home is to make a fresh mortgage application.

4. Repair your credit. If your credit score was slightly too low to qualify, paying off a credit card or loan may help. It takes up to 90 days for the
result to show up in your score. Other strategies that take longer are:

Close credit card accounts you're not using.
Make every single payment on time; eventually, late payments will "age" off your credit score.
Reduce the proportion of your available credit that you're using.

5. Improve your debt-to-income ratio. Big monthly payment obligations compared with your income jeopardize an application. Fixes include:

Paying off an outstanding loan by, for example, selling your newer car and using the proceeds to get a cheaper vehicle and pay off the loan.
Asking a free credit counselor approved by the Department of Housing and Urban Development (find one here) for help consolidating your
debts.

You'll pay more
The best interest rates go to mortgage borrowers with scores of 720 and above. However, many people are surprised to learn that home
loans do still exist for people with flawed credit.
''''News Letter / Income Tax Info  - Tax Saving - Tax Help - ''Ways to
Make Money on Taxes.    . / '12 Tempting Tax Tips to Save You Money
This Year.               ''
Documents you'll need to
provide to get a true pre-approval

•Your W2 from the past two years
•Your paystubs for the past three months
•

•Your tax returns from the past two years
•Your checking or savings bank statements for the past three
months (this will likely have your down payment funds in them as
well)
•

•Your statements for all your other assets (stocks, bonds,
retirement accounts) for the last two months
•The name and phone number of your landlord (if you are renting)
or your current mortgage documents
•

•Your divorcee decree, if applicable
•If you are self-employed: Your business tax returns for the past
two years in addition to your year-to-date profit and loss statement
and year-to-date balance sheet
Pre-approval

When you are pre-approved for a mortgage, it
means that a lender has looked closely at your credit report, your employment history and your
income and has then determined which loan programs you qualify for, the maximum amount that
you can borrow, and the interest rates you will be offered.

Be aware, however, that your loan representative is not the one who will ultimately approve
your loan.


That is the underwriter's role, and these days underwriting is automated.


In order for your loan representative to submit your application for pre-approval, you must
provide your last two years' tax returns and W-2s, your most recent pay stubs, bank account
statements, and a signed authorization to order your credit report.

The automated underwriting system will deliver a pre-approval letter within minutes, and will list
any conditions that need to be met for full approval.
The process of getting pre-approved

The process of getting pre-approved is
actually quite simple.


All you have to do is provide your lender the documentation that they require.


Be prepared to supply your loan representative with


pay stubs, bank account statements,


tax returns and W-2 forms from the previous 2 years,


and documents to show other sources of income (which could include a second job, overtime,
commissions and bonuses,

interest and dividend income,

Social Security payments,


VA and retirement benefits,

alimony, and child support).


Beyond that, the ball is in the underwriter's court.
''Mortgage Home Loans Pre-qualification Made Easy:
Conventional Loans, VA Loans,
USDA Home Loans, FHA Mortgage Loans. How to Get
Pre-Approved for a Mortgage Home Loan....
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