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ORGANIZE YOUR PAPERWORK
A properly documented loan application makes your loan process go smoothly. This checklist will help you gather your paperwork.
1. Complete and sign the residential loan application, Form 1003, and the attached loan info sheet, credit authorization and fair lending notice.
2. If you are salaried: provide W-2's for the previous two years and one month of paystubs. If you are self-employed, provide tax returns for the previous two years, including all schedules, and a YTD profit and loss statement. (Note: provide copies of all requested documents. Do not provide original documents.)
3. If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules.
4. To speed up the approval process, provide bank statements for the most recent three months, and recent statements for stock, mutual funds and IRA/401K accounts.
5. If you are requesting a cash out refinance, provide a letter explaining how you will use the refinance proceeds.
6. If applicable, provide a copy of your divorce decree and settlement agreement.
7. If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors.
8. If you are applying for a home equity line of credit or loan (second loan), also include your first mortgage note. (This should be with your closing loan documents.)
APPLY FOR LOAN
Depending on the loan you choose, you may complete an application online, over the phone or in a local branch.
LOAN APPROVAL
Once your loan application has been received, we will start the loan approval process immediately. This involves verifying your:
• Credit history
• Employment history
• Assets including your bank accounts, stocks, mutual fund and retirement accounts
• Property value
• Based on your specific situation, additional documents or verifications may be required.
To improve your chances of getting a loan approval:
• Fill out the loan application completely.
• Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
• Do not make any major purchases. Do not buy a car, furniture or another house till your loan is closed.
• Anything that causes your debts to increase might have an adverse affect on your current application.
• Do not go out of town around the closing date. If you do plan to be out of town when your loan is expected to close, you may sign a power of attorney, to authorize another individual to sign on your behalf.
• Notify your loan officer before applying for any other credit, including credit cards, personal loans or even with another mortgage company. Some loan programs have strict guidelines regarding your credit score. Credit inquiries may lower your credit score and may have an adverse affect on your loan approval.
CLOSE YOUR LOAN
After your loan is approved, you will be required to sign the final loan documents. This will normally take place in the presence of a notary public.
• Bring a cashiers check for your down payment.
• Make sure that the interest rate and loan terms are what you were promised. Also, verify the accuracy of the name and address on the loan documents.
• Sign the loan documents. The notary will require that you have your picture ID with you. Some lenders also require to see your Social Security card.
Your loan will normally close shortly after you have signed the loan documents. On refinance and home equity loan transactions, federal law requires that you have three days to review the documents before your loan transaction can close. Purchase transactions do not have a three day rescission period.
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GET PREQUALIFIED
CUSTOMIZE A HOME LOAN THAT WORKS FOR YOU
ORGANIZED YOUR PAPERWORK
APPLY FOR LOAN
LOAN APPROVAL
CLOSE YOUR LOAN
GET PREQUALIFIED
⇒ Pre-Qualification is the most important
⇒ Find out how much you can expect to borrow
⇒ How much you can afford for monthly payments
Use our Pre-Qualificaton calculator to find out.
CUSTOMIZE A HOME LOAN THAT WORKS FOR YOU
Years you plan to stay in the home Recommended program
• 1-3 years - 3/1 ARM, 1 year ARM or 6 month ARM
• 3-5 years - 5/1 ARM
• 5-7 years - 7/1 ARM
• 7-10 years - 10/1 ARM, 30 year fixed or 15 year fixed
• 10+ years - 30 year fixed or 15 year fixed
LOAN PROGRAMS
Fixed Rate Mortgages
⇒ 30 year fixed
⇒ 15 year fixed
Positive side
⇒ Monthly payment are fixed over the life of the loan
⇒ Interest rate does not change
⇒ Prtotected if rates go up
⇒ Can refinance if rates go down
Negative side
⇒ Higher interest rate
⇒ Higher mortgage payments
⇒ Rate does not drop if interest rates improve
Interest Only Mortgages
Positive side
⇒ Several payment options
⇒ Lower monthly payments
⇒ Qualify for higher loan amount
⇒ Qualify at the interest only payment
⇒ Option to pay the full principal and the interest payment
⇒ Interest only payments for up to ten years
Negative side
⇒ Higher rates
⇒ Prinvipal loan balance will not decrease during the interest only payment period
⇒ Payment will be higher for the remaining term
First time buyer mortgages
Positive side
⇒ Lower down payment
⇒ Easier to qualify
⇒ Lower rates may be available
Negative side
⇒ May be subject to income and property value limitations
⇒ Some government subsidized programs may generate a recapture tax if you sell the house too soon
⇒ Education courses may be required to qualify for these loans
Stated income mortgage
Positive side
⇒ Don’t need to verify income
⇒ Faster approval
⇒ Good for borrowers who may not qualify with a full income documentation program
Negative side
⇒ Higher rates
⇒ Higher down payment
Imperfect credit mortgage
Positive side
⇒ Potential for reestablishing credit if you pay your mortgage on time
⇒ When used for debt consolidation, you may be able to reduce your monthly debt payment
Negative side
⇒ Higher rates
⇒ Terms may not be as favorable
⇒ Harder to get long-term fixed loans
⇒ Loans may have prepayment penalties
Home equity line of credit
Positive side
⇒ You only borrow what you need
⇒ Pay interest only on what you borrow
⇒ Flexible access to funds
⇒ Interest may be tax deductible
⇒ May be free of closing costs
⇒ A good source for an emergency fund, if set up in advance
⇒ Can be used for debt consolidation and lower payments
⇒ Rates are usually lower than consumaer loan or credit card rates
Negative side
⇒ Rates can change. The maximum interest rate can be relatively high
⇒ Payments can change
⇒ Harder to refinance your first mortgage
Home equity fixed mortgage
Positive side
⇒ Fixed payments
⇒ Interest may be tax deductible
⇒ Get cash out for any purpose
Negative side
⇒ Higher interest rates compared to first mortgage
⇒ Harder to refinance your first mortgage
⇒ Interest is paid on the entire loan amount, compared to an equity line of credit
Balloon mortgages
• 7 years
• 5 years
Positive side
⇒ Lower initial monthly payment
⇒ Lower payment for a predetermined period of time
⇒ Many balloon mortgages offer the option to convert to a new loan after the initial term
Negative side
⇒ Risk of rates being higher at the end of the initial fixed period
⇒ Risk of foreclosure if you cannot make balloon payment, refinance, or exercise the conversion option
⇒ Ballon payment requires you to sell or refinance after the term, as opposed to a 7/1 ot 5/1 program with a 30 year term
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