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Thursday, April 2, 2015

Getting a Mortgage: Frequently Asked Questions

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If you are new to the home buying process, and even if this isn't your first time, it is natural to have some questions. Instead of wondering and worrying about it, here are some of the most often heard questions along with the answers.
Is it Possible to Apply for a Mortgage before Locating a Property for Purchase?
Yes, it is and furthermore, it is recommended. When you apply for your mortgage in advance of finding the property, a pre-qualification letter will be issued to you. This letter can then be used to assure the sellers as well as the real estate agents that you are both a serious buyer and one who is qualified. It also assists you in determining the price range that you need to stay in. Yet another advantage to this is that when you do find a property and make an offer, since you have already having gotten your loan this will add more weight to your offer.
How Does a Lender Decide what is Necessary to Process a Mortgage Loan?
Most lenders will use an underwriting system that will allow for them to request various documentation to back up the information that was provided by you in the application for the loan. At the very minimum you will need to provide tax forms from the last year as well as a pay stub to verify both the source of your income as well as what your income actually is. You may need to provide bank statements or other types of documentation at the request of the lender.
Will things like Bonuses, Commissions or Overtime be a Factor when my Application is Evaluated?
If your bonus, commission or overtime is to be factored into the evaluation then it must be something that you have an established history of receiving and you must also show that is will be a continuing thing. In order to make verifications of this type of income, the lender will typically request copies of your tax forms from the last couple of years as well as a current pay stub.
Is Income from a Second Job Considered?
If you can verify that you have had this second job for more than a year then it can be considered.
What needs to be Provided for Verification of Income for People on Social Security or a Retirement Program?
If either one of these situations apply to you, then you will want to be prepared to provide copies of your most recent check stubs from your pension. You might even be asked to submit your bank statement in the event that your income is direct deposited. At times lenders ask for verification that this type of income will be continuing for a minimum of 3 years due to the fact that some of the pension and retirement plans don't continue providing the beneficiaries with the income for the duration of their life. In cases like this, the award letter will suffice. If you did not retain your award letter then the lender can easily verify this by getting in contact with the payer of this income.
These are some of the most frequently asked questions regarding mortgages. Once you have your questions answered you can make an informed decision and find the home loan which is right for you and be prepared to meet the lender's needs.
Kathryn McDowell is a finance writer and recommends gathering as much information as you can before you apply for a mortgage. Knowing what to expect will help you have the correct documentation and get your loan approved quickly.

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