Get a mortgage on the best terms!

The Mortgage is one of the most common types of loans not only in the USA but in the entire world. People will always consider buying a home as a priority; hence, sooner or later every middle-class person faces the question of getting a loan for purchasing a house.

With the average price of a house starting from $300K, it’s impossible to pay the whole amount upfront, and that is why every one of us is using a bank loan.

Usually, mortgages are granted for a period of 25-30 years, so before choosing a lender and applying for a loan, you should “shop around” and compare all offered terms as thorough as possible.

Develop a strategy for getting a loan

Before going to the local bank office, check loan offerings online. There are plenty of resources and platforms, connecting borrowers with lenders, based on the criteria the client states as their preferred. Compare the terms and requirements; create a list of questions you are going to ask a manager.

Evaluate your needs and financial abilities in terms of repaying a loan, taking into account a given interest rate. Better apply for a little less money than you think you will be able to repay, to ensure you will not give out everything just to to pay the loan back.

loan application

Prepare all the documents promptly. Never skip even a page, even if that is a blank page – just leave it enumerated.

Documents you will need have to apply for a mortgage

Every lender, whether it is a bank or a private financial company requires papers which confirm every aspect of your financial state. The list of required documents may vary from bank to bank, but here is the “must” list of documents you will be asked to provide by any lender:

  1. W-2 form for 2 preceding years.
    You will likely be asked Form W-2 and your tax statement for the previous two years.
  2.  Recent Federal tax return statement and paycheck stubs. You will probably be required to sign the IRS Form 4506-T to let the bank an official permission to evaluate your tax returns.
  3. If you own a business you will be asked 1099 forms which are statements of profit and loss.
  4. A full list of assets you possess: Real Estate, cars, investment and brokerage records as well as bank statements. If you are going to pledge a certain asset as collateral you will have to bring the comprehensive set of papers related to owning the asset.
  5. Recent checks of paying the rent on time. The bank may ask you to bring canceled rent check for the period of one year.
  6. Social security number.

documents

An additional and important note: if your initial down payment is going to be made by the cash you have received as a gift, the bank will require a letter from the giver, confirming that cash is actually a gift and not a loan.

Make sure you match bank’s requirements to qualify for the loan

Mortgage eligibility criteria are generally the same in every bank, so the list of questions for the mortgage qualification will look the same. Now, evaluate each criterion:

1.Down payment

Down payment is an initial amount of money you own to pay partially for your future house. While nowadays it is possible to find a loan without down payment requirement, the bank will require you to have this money anyway. The bigger the sum of the mortgage you apply for, the bigger the down payment you will be required to make.

2. Prequalification

This procedure is highly recommended if you are going to apply for a mortgage. Unlike preapproval, prequalification does not require you to reveal your personal data, so your credit is not accessed and your score is not affected.

3.  Evaluate realistically the size of the loan you’ll be able to pay back

Don’t let emotions to take over, even if you have found the house of your dreams. Be honest with your own potential when it comes to a payback and ground your evaluations of your real current income rather than on plans of getting a job promotion or a new business.

4. Credit score

 

credit score

While estimating your own credit score, take into account everything: whether you have been through bankruptcy, whether you have had late payments or issues with your credit cards, etc.

5. Collateral

This is the last but not the least criteria of your qualification. The lender will evaluate the market price of your collateral (real estate, a car, or other assets), and if the sum of the loan you apply for does not exceed the value of the collateral – the loan is likely to be approved.  In some (quite rare) cases, the borrower may be allowed to pay the difference in collateral’s market price and the sum of the loan if the value of the collateral is not enough for getting a loan.

Non-banks mortgages

There are credit unions and online lenders who offer long-term loans for any purposes, including for buying a house. There is a list of TOP-10 lenders in the USA who customers find the best in terms of rates, trustworthiness and the quality of services.