Mortgage Loan: Top 7 Mistakes to Avoid When Applying for Mortgage Loan
In this content, you will learn:
- Top 7 Mistakes to Avoid When Applying for Mortgage Loan
- Top 5 tips Why It Pays to Work with a Private Mortgage Broker
- BONUS; 6 Most Common loan application mistakes and Tips
- Calculating a mortgage payment
- Do not transfer a huge deposit of money into your bank account. Your lender needs verification on it, and this process can be so lengthy if you cannot produce documentation such as a pay stub, invoice, or a letter from a gift-giver. For better safety, always consult your Loan Officer upfront for guidance if you are in this situation.
- It is also safer not to keep cash you intend to use in the transaction at home. Skip the hassle of trying to produce documentation for it and keep it safe in your bank account.
- Ensure you don’t open or close credit card account while you are applying for your home loan. The credit card companies report this to the credit bureaus. Doing so may change your credit score or ratios which can affect your loan qualification. Even if the lender pulled your credit already, bear in mind that the lender does a soft pull at the end before closing, it’s called a credit refresh, and any changes you did will show up.
- Do not change jobs after you apply. If you must change jobs for any reason best known to you, it’s recommended to wait at least 30 days after starting your new job to apply for your home loan so that you can establish your income with your lender. You will have to also show at least one pay stub to start the loan process.
- Don’t complete any major purchases while applying for your loan– especially on credit cards. Wait to buy big-ticket items like furniture or a new car until after closing. Talk to your Loan Officer if you have such plans.
- For no reason should you overdraw your checking account. This may seem obvious, but keep a watchful eye over your account balance to avoid this costly mistake as it may jeopardize the entire loan process. If your lender requests a bank statement from you, it certainly won’t look good if you have overdraft charges because they may think you have insufficient income or that you’re unable to manage your money. If this is taken care of, then you are almost 100percent done.
- And the very last but not least, do not withhold information on the mortgage loan application. Be open and sincere with your Loan Officer so as to yield maximum output. Whether that “forgetting” to disclose a previous bankruptcy, foreclosure, late mortgage payment, etc. If a financial institution were to find out after submitting the application that you have (purposely) omitted to come forward with certain information, or plainly lied about certain points, that there’s now a big shadow of untruthfulness over everything else you have supposedly fully-disclosed. More often than not, your mortgage application will be declined immediately and may jeopardize future applications as well.
With these few highlighted mistakes taken care of, you are just one step away from your mortgage loan approval.
To apply for a mortgage loan, contact a reliable loan officer Angelica Flores NMLS# 1367873 firstname.lastname@example.org
For more information contact: Angelica Flores
Top 5 tips Why It Pays to Work with a Private Mortgage Broker
One has to be resourceful to invest in real estate. More often than not, coming up with the entire capital investment by themselves is challenging for investors. In addition to the huge financial risk one would carry by investing with 100% of their personal funds, self-funding would limit an investor’s expansion potential. These are the primary reasons why investors are always on the lookout for affordable financing avenues. While new investors may consider their bank to be the best source of affordable capital, private mortgage brokers often outperform their traditional counterparts by miles. Let’s find out what makes private brokers the ideal choice for seasoned investors.
- Mortgage brokers work on your behalf
Unlike financial institutions like banks, private brokers work on your behalf. There are dozens of financial products in the market, but the banking official at your bank will only offer their own mortgage products. Your private mortgage broker, on the contrary, has access to multiple lenders and dozens of mortgage products. He would find out the most competitive mortgage for you, and often negotiate different expenses on your behalf.
- Brokers are paid by the lenders
Mortgage facilitators partner with multiple lenders on a lender-based compensation model, which means their paycheck comes out of the lender’s pocket. Although some brokers may charge from the clients as well, so make sure to inquire about their charges. Do understand that these charges may vary depending on the local market. For instance, markets with high-value properties have a small percentage fee, 0.50% to 1%, whereas affordable or comparatively cheaper markets might see charges of up to 2.75%.
- Mortgage brokers can find loans for investors with less-than-perfect credit score
Stringent lending criteria deprive investors of real estate investing opportunities. Private brokers work with a multitude of lenders, including ones that offer loans to investors with lower credit scores. Additionally, your mortgage broker puts your benefits first, finding lenders with the most competitive rates and best financing structure.
- Mortgage brokers are experts of their field
Unlike traditional bank employees, private brokers have a better idea of the local market. They have to remain competitive to survive in the market. When working with a private broker, ask them about their qualifications, and choose accordingly.
- Mortgage brokers can save you time and legwork
Real estate investing could be confusing for first-time investors, considering a large amount of paperwork and legwork it takes to process a loan. Mortgage brokers, thanks to their network, can reduce the processing time by working with flexible lenders, or at the least, can do the leg work for you. They are well-versed with the required paperwork, follow-up schedule, and other lending requirements the borrower must fulfill. Having a competitive broker will lower your anxiety and smoothen the entire process.
The right private mortgage broker can help maximize an investor’s wealth and return on capital. If you are a real estate investor or even a first-time homebuyer, working with a private mortgage broker would be an ideal choice.
For more information contact; Prakash C Pandey
BONUS; 6 Most Common loan application mistakes and Tips
Getting an application for finance approved can be daunting for first-timers and the experienced alike – the process is littered with large quantities of paperwork and requires plenty of legwork and patience. We look at 7 common loan application mistakes and how you can avoid them when you apply for a loan.
- Your credit file is littered with too many credit inquiries and notations.
As a borrower, you want the best deal. Problems may occur when you have too many marks on your credit file. Regardless of the lender, because they all have access to the same credit files, there will be alarm bells.
Tip: Do not give approval to other lenders to access your credit file until you have decided on the preferred lender. Work with your Mortgage Broker to find the best home loan, taking into consideration your needs and circumstances, and then submit your application.
- Your loan application is badly written.
An innocent error or an omission on your loan application when answering questions about your credit history can be seen as suspicious, possibly even fraudulent, by the lender.
Tip: Have your Mortgage Broker ask for the credit report for all parties to the loan before any application is submitted. Your broker can write a covering letter with explanations if required. Do not for any reason underestimate the value of your Mortgage Broker in getting your application approved. Some brokers carry a lot of trust with lenders.
- The Lender states you don’t have enough savings, too small a deposit or too low an income.
Deposit amounts and income requirements can vary from lender to lender. You also need more than the deposit when buying a home. There are conveyancing costs, mortgage insurance, stamp duty and possibly other legal costs or taxes.
Tip: Make sure you are confident that you have the required funds. Your Mortgage Broker can help you by giving you accurate costs that will be incurred with a home purchase.
If required, your broker can help find a lender that requires a smaller deposit or one that pays your mortgage insurance, or a lender that requires no mortgage insurance.
- The appraisal for the home you want to buy comes in less than the agreed purchase price.
This can be a major disappointment. Banks lend on Loan to Value Ratios (LVR’s). For example, if a property is valued at $360,000 but the asking price is $400,000. You have your 10% deposit, ($40,000) and you have money for the costs, about $8,000. The lender will only provide 90% of the $360,000. This scenario is going to leave you $30,000 short.
Tip: If a home appraises for less than its purchase price, there are a few potential outcomes:
Buyer and seller renegotiate a new, lower home sale price
Buyer increases down payment to meet new LTV and down payment minimums
Request an appraisal rebuttal (a service for which you will have to pay)
Buyer chooses neither option and cancels the home purchase contract
- Your savings history is bad or very irregular.
Lenders love seeing stable income and regular savings, at least 6 months of it. A saved deposit or at least proof that you will be able to meet monthly repayments will go a long way towards approval.
A lump sum appearance in your account, or if you are self-employed with seasonal bank movements are not as favorable with lenders.
Tip: Your Mortgage Broker will source your loan from lenders that allow unsaved deposits, gift deposits and parents help.
- Your idea of a dream home is not shared by the lender.
Apart from the low appraisals spoken about earlier, some lenders have policies about certain properties such as an unacceptable postcode, or the property is considered to be rural.
Tip: For example, a residential mortgage loan cannot be used for working farms. Smaller acreages would not be viable as a working farm, therefore may be considered as ‘residential rural’ by a lender. In addition, there are some types of apartments that the lender might find unacceptable.
Your Mortgage Broker can help you find specialist ‘niche’ lenders that are happy to lend against these types of properties.
In order to save yourself from making any of the above common loan application mistakes, Why go through all the hassles yourself when the whole deal can be done for you professionally, ethically and reasonably quickly?
Contact 02 9653 9333, email: email@example.com to arrange an obligation-free appointment.
For more information contact: Lisa S
Calculating a mortgage payment
What are the monthly costs built into a monthly mortgage payment?
If your mortgage payment included just principal and interest, you could use a bare-bones mortgage calculator. But that’s rarely the case these days. There are a lot of costs that can be built into a monthly mortgage payment. Here are the five key components in play when you calculate mortgage payments:
- Principal: Typically, this would be the home’s purchase price, less any down payment It’s the amount you borrow. If you’re buying a $500,000 home and put down $100,000, the principal would be $400,000.
- Interest: What the lender charges you to loan you the money. Interest rates are expressed as an annual percentage.
- Property taxes: The annual tax assessed by a government authority on your home and land.
- Mortgage insurance: If your down payment is less than 20% of the home’s purchase price, you’ll likely pay mortgage insurance. It protects the lender’s interest in case a borrower defaults on a mortgage. Once the equity in your property increases to 20%, the Mortgage insurance is canceled, unless you have an FHA loan.
- Homeowners Association (HOA) fee: This is paid by homeowners to an organization that assists with upkeep, property improvements and shared amenities.
These could help you to sort out calculating a mortgage payment.
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