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Here’s a mortgage primer on which loans are no longer the flavor of the month on Wall Street. They’re the Michael Vick’s of the mortgage world, they were once very popular on but now nobody wants to be associated with them. Okay, that’s a little bit too harsh since these loans didn’t kill dogs. Then again, these loans have put families in dire straits so lets keep the Michael Vick analogy.

Loans the Wall Street doesn’t like:

• THE LOANS WITH THE REALLY REALLY REALLY LOW RATE AND LOW MONTHLY PAYMENT

Also called: 1%, NEGATIVE AMORTIZATION, NEG AM, OPTION ARMS, PAY OPTION ARMS or

“A CAN OF WHOOP ASS WAITING TO HAPPEN”

• THE LOANS FOR BORROWERS WITH REALLY REALLY REALLY BAD CREDIT HISTORIES

Also called: SUBPRIME, NON PRIME, POOR CREDIT, 2/28s, 3/27s, or

“I GUESS THIS IS WHAT I GET FOR NOT PAYING MY BILLS”

• THE LOANS FOR BORROWERS WHO HAVE GOOD CREDIT BUT WHOSE OVERALL LOAN APPLICATION DOESN’T MEET FANNIE MAE OR FREDDIE MAC’S STANDARDS

Also called: ALT-A or

“SO I’VE GOT GOOD CREDIT AND A GOOD JOB BUT I’M PENALIZED FOR NOT SAVING ANY MONEY”

• THE LOANS FOR BORROWERS WHO CAN’T REALLY REALLY REALLY SHOW HOW MUCH MONEY THEY’VE MADE OR HOW MUCH THEY HAVE SAVED UP

Also called: STATED INCOME, STATEDSIVA, SISA, NO DOC, or

“DON’T THEY HAVE LOANS FOR PEOPLE WHO DON’T HAVE JOBS?”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY DON’T WANT TO PUT ANY MONEY DOWN

Are called: 80/20, 100% Financing, NO MONEY DOWN, 103%, 107% or

“I WANT A LOAN WHERE I GET TO KEEP MY MONEY IN CASE MY JOB GETS OUTSOURCED TO INDIA”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY DON’T WANT TO PAY AN AMORTIZED PAYMENT

Also called: INTEREST ONLY, IO, or

“IF I LIKE PAYING DOWN PRINCIPAL MY PAYMENT GETS RECAST TO A LOWER PAYMENT EVERY MONTH”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY WANT TO BUY A HOME THEY HAVE NO INTENTION OF LIVING IN

Also called: INVESTMENT PROPERTY LOANS, NON OWNER OCCUPANCY, NOO or

“I’M GOING TO BE THE NEXT DONALD TRUMP”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY MAKE A LOT OF DOUGH

Also called: JUMBO, NON CONFORMING, SUPER JUMBO, MILLION DOLLAR LOANS, ANYTHING OVER $417,000 or

“THAT’S PRETTY LOW FOR A RATE OF RETURN AND PRETTY HIGH FOR A MORTGAGE INTEREST RATE”

It remains to be seen if Wall Street still likes:

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY HAVE NO INTENTION OF LIVING IN THEIR HOMES FOR 15 to 30 YEARS

Also called: ADJUSTABLE RATE MORTGAGES, ARMS, 3/1, 5/1, 7/1, 10/1, TEASER RATE LOANS, HYBRID LOANS, BALLOONS or

“THE AVERAGE PERSON MOVES EVERY 5 to 7 YEARS, SO WHY SHOULD I GET A LOAN FOR 30 YEARS?”

Wall Street will always like:

• THE LOANS WITH REALLY REALLY REALLY NO RISK

Also called: FHA, VA, CONFORMING, FANNIE MAE, FREDDIE MAC or

“THE LOANS THAT MAKE UP THE MAJORITY OF THE AMERICAN MORTGAGE LANDSCAPE”

I’ve never been a verbose writer. I took a high level Shakespeare class during my last semester in college and the professor wrote on my final paper - “You understand quickly, you write even quicker.” I asked him what his comments meant and he said, when you write, you get right to the point.

Here’s my view of what happened to the mortgage industry. (If you want a more verbose, simply google Mortgage Collapse.)

The subprime mortgage world has fallen flat on its face. Loaning money to people who have proven that they can’t pay back a credit card let alone a mortgage was bad business. These loans started off with a 2 year introductory rate and now we’re seeing those two years expiring and now we’re getting into the adjustment phase. The mortgage entities that bought these loans are filing bankruptcy en masse. As as a result, borrowers who need these loans can’t get them anymore. The effects of these loans are moving up the risk ladder with “ALT-A” companies (the risk level between PRIME and SUBPRIME) starting to close their doors as well. It’s a mess right now and it may take years for all this to get straightened out.

Here are two videos worth watching regarding the mortgage mess:

Jim Cramer (rather calm):

Jim Cramer (going ballistic):

Everyone has heard the line, ‘When banks compete, you win!” Well, not really when it comes to a second mortgage or home equity loan. These loans rely on credit score and equity. If you have bad credit, you better have equity. If you have no equity, you better have good credit to get a 115% or 125% loan. If you have bad credit and no equity, sayonara.

So where do you go when banks won’t compete. Enter person to person lending at www.prosper.com. Featured in Inc, Newsweek, Business Week, Entrepreneur, et. al. prosper has grown exponentially.

The premise is simple: People who need money request it, and other people bid for the privilege of lending it to them. Prosper makes sure everything is safe, fair and easy. You can borrow anywhere from $50 to $25,000. Seems like an interesting lending alternative when no else is willing.

Editors Note: Due to the mortgage and credit crunch, negative amortization mortgages are more difficult to get. If you’re in need of a Denver loan contact us to discuss your mortgage options.

An explanation of Negative Amortization:

Negative Amortization means that the loan balance can actually increase.

If you make the minimum payment the difference between the minimum payment and a principal and interest payment will be added back onto the balance of the mortgage.

If the interest only payment is greater than the minimum payment in any given month, you have the option to pay either amount. If you choose to pay only the minimum payment, any additional interest which is due is deferred at that time.

When the loan is “re-cast”, usually after 5 years, any deferred interest is then added to the principal balance resulting in Negative Amortization. The deferred interest can be paid at any time prior to the re-casting of the loan and becomes tax deductible once it has been paid.

Negative amortization can be a very bad thing if it continues to happen every single month. You will not build equity in your home, but you will actually lose equity in your home. Negative amortization type loans can be a good option for borrowers who have very unstable incomes where the ability to make an ultra low payment is available. This way when they are having a low income month they can simply make the lowest payment possible and when they have better income producing months they can make a much higher payment. Negative amortization loans are not for everyone.

The maximum amount of negative amortization that can occur is limited. Depending in which state your property is located, the limit is between 110% and 125% of the original principal balance.

Option ARMs (also known as pay option or pick-a-payment ARMs) function differently than other types of loan products. In general, the minimum payment will only change once a year. The interest only payment is calculated monthly.

Editors Note: Due to the mortgage and credit crunch, alternative credit loans are no longer be available. If you’re in need of a first or second mortgage in Denver, CO contact us to discuss your mortgage options.

Alternative credit is an option available for borrowers with little or no credit history. Alternative credit usually is in the form of a letter from the company that holds an account that does not normally report to credit bureaus.

One program that was designed for limited credit depth is Fannie Mae’s “My Community” program that will allow up to 100% financing. You should discuss this program with your broker to see if it is right for you.

Examples of accounts that may qualify as alternative credit are cell phone accounts, cable TV accounts, car insurance and even cancelled rent checks all can be used as alternative credit. However they all need to be paid on time in the last 12-24 months.

Homeowners and prospective buyers with limited credit histories or artificially reduced Fair Isaac (FICO) credit scores may now obtain alternative credit reports and scores based on the timely payments they make to landlords, utilities, telecoms and cable companies and other recurring accounts which may not be included in their national credit bureau file, even child support ampersand payday loans.

Another example of a borrower who may need to use Alternative credit would be someone who did a bankruptcy and never re-established any credit accounts. Sometimes after a bankruptcy people feel it is better to pay cash for everything and not get any more credit accounts. This is not true as it is important to re-establish your credit after the BK.

Banks make a distinction between loan applicants with no credit history and those with bad credit history. Non-prime lenders are usually the only source of mortgage financing for loan borrowers with bad credit profiles, whereas home buyers with little or no consumer credit history can often get home loans with Alternative Credit features from banks. Mortgage brokers are a good source for Alternative Credit mortgage programs.

You may also here mortgage professionals refer to alternative credit such as cell phones and cable TV as Alt trade lines. This is an excellent way for someone with very little established good credit to prove their credit worthiness to a lender. It’s all about building a case for yourself to the lender. Knowing how to package your information to the lender is a better portion of the mortgage broker’s job.

These Alternative Credit programs are very useful for Foreign Nationals, who traditionally will not have established credit since they have just come to the United States.

Credit scores have become very important to consumers for a variety of different things. Your credit score determines whether you will be, approved, declined, required to place a large down payment, or have to obtain good or very unfavorable terms for not only mortgages, home loans and cars, but for a variety of other things as well. Your credit and credit scores can now play a major role in determining what premiums you pay for homeowners and auto insurance, whether or not a utility company (phone service, gas service, electric, etc…) will require you to place a deposit down to get service turned on (and how much of a deposit), your rate and determine whether you will be approved or declined on personal loans and credit cards, whether or not you are able to rent an apartment or home, amongst many other things. Many employers now look at a potential employee’s credit report before hiring them. Therefore, you can see how credit and credit scores can play an important role in your life and with bad credit it can force you to pay higher interest rates, higher payments and higher premiums on numerous different items. There are many factors that help contribute to determine a persons credit score that you will learn about here.

The number of open accounts you have influences your credit score. Less than 3 or more than 5 can decrease your score.

The companies that determine your score do not fully disclose all the inner workings of what goes into your score. Granted they tell you what percentage of types accredit help or hurt you but they don’t get into the nuts and bolts of it all. There are however some basic rules of thumb. One rule of thumb is to have your balance be lower then half the highest available balance. So if your highest available balance on a visa card is say 10k. Make sure your actual balance is below 5k. There is also a seasoning factor. Someone who has maintained good credit standings for a long period of time will generally have a higher score then someone who just established their credit.

Whether you pay all your bills on time is probably one of the more important aspects that determines your credit scores. Most companies that extend credits to you report to the major credit repositories on a regular basis. Any late payments history will have a negative effect on the credit scores. The more recent the reported “lates”, the higher the impact on scores. Lender banks consider mortgage payment “lates” much more severe than credit card late payments, and punish homeowners with mortgage “lates” accordingly with higher interest rates and/or lower loan amounts.

Your credit report will list any collection or charged-off accounts that you may have. Having these kind of accounts reporting will definitely have an adverse affect on your credit score. A word of caution though. Paying off collection accounts, especially older ones may cause your credit score to go down, at least in the very short term. If you are applying for a mortgage please consult with a mortgage professional such as myself before paying old collection accounts.

The number of recent inquires has an affect on your score as well. Although it does not carry as much leverage as many other factors in determining your credit score you should still avoid having your credit checked unless necessary.

If you have had a bankruptcy, you can expect it to stay on your credit report for up to 7 full years. Although it will still show, there are ways to still increase your credit score after a bankruptcy.

Capacity = Willingness and ability to pay back the loan Credit = Payment history and current balances; willingness to repay Character = Job stability and or time in property Collateral = Property or what the lending institution will be left with if the borrower fails to pay.

Another one of the C’s that is often over looked is Cash to Close. Liquid assets readily available to pay the down payment, closing costs, and prepaid items of a mortgage transaction.

Credit is one of the most important things a borrower must be aware of when buying a new home. The credit report is a representation of how you pay your bills. If you have great credit. A Bank is willing to finance up to 106% . Which would allow a person to purchase a house with no money down.

Character – from the standpoint of underwriting, lenders are usually looking for a minimum or two years work history at the same company. If you have changed companies in the past two years, but are in the same line of work, as long as your income has stayed the same or increased lenders will accept that. The longer you have been employed with the same company and in the same line of work the better off you are and the more lenient the lender may be on other factors.

Knowing what lenders are looking for and planning to provide them what they need in order to fund your loan is the best way to make sure you can get the best loan for you.

From an underwriting perspective, if a loan package is significantly strong in one of the “C” areas, deficiencies in another “C” can be given less weight. Example, if a borrower is putting down a large down payment the Collateral would be stronger so a weaker credit score might be tolerated.

Credit - Although there are a few programs that are not credit score driven, by far you will be able to secure a better rate if your credit rating is good. Payment history plays a big part in your credit score and this shows the lender your track record of payments to your creditors. It’s more probable that you will pay your loan on time if you pay your other bills on time. If you have high balances on your other debt such as credit cards and automobiles this can affect your Debt-to-income (DTI) ratio and put you at more risk in the eyes of the lender. The reason good credit scores are important is because you have the ability with good scores vs. bad scores to qualify for no income verification or no documentation loans.

Collateral-From the standpoint of loan underwriting, the higher the stake a homeowner has in the property, the less likely he would default on the mortgage. Statistics have shown that if homeowners have 20% or more in equity in their homes, lenders are less likely to suffer a loss as a result of default. For home buyers who have less than 20% to put down as down payment, many banks are willing to grant them loans as long as these home buyers have other compensating factors, such as a better than average credit profile, or a low debt to income ratio. As a safety measure, most banks require home buyers putting down less than 20% to carry Private Mortgage Insurance, which insures the banks against loss due to homeowner default.

Capacity - Capacity goes hand and hand with credit. When a lender reviews your credit there are 2 major factors they are looking at aside from credit scores. One is your DTI or Debt-to-income ratio and the other is your credit history. Both of these will determine your capacity to repay the loan or your risk to the lender.

Capacity also refers to the amount of debts you can realistically pay given your income. Creditors look at how long you’ve been on your job, your income level and the likelihood that it will increase over time. They also look to see that you’re in a stable job or at least a stable job industry. It’s important when you fill out a credit application to make your job sound stable, high-level and even” professional.” Are you a secretary or are you an executive secretary or the office manager? Finally, creditors examine your existing credit relationships, such as credit cards, bank loans and mortgages. They want to know your credit limits (you may be denied additional credit if you already have a lot of open credit lines), your current credit balances, how long you’ve had each account and your payment history—whether you pay late or on time.

A type of mortgage lending intended to serve borrowers who do not qualify for prime loans because of credit problems or a limited credit history.

Subprime loans that are over 80% typically don’t require Mortgage Insurance. The risk of default is already calculated in the rate.

Subprime loans are a great tool to get credit challenged borrowers into a home quickly without taking the time to clear up past credit issues. When going into a subprime loan it is often advised to opt for a 2/28 or 3/27 vs. a 30 year fixed. A 2/28 or 3/27 loan is fixed for the first 2 to 3 years then becomes an adjustable rate thereafter and offers a lower rate than the 30 year fixed. This 2 to 3 year time period gives you the time to better your situation enabling you to qualify for a conforming loan with lower rates before the rate becomes adjustable.

What’s in a name? A new term making its way in the mortgage industry in response to the term sub-prime. That new term is non-prime. Some lenders believe that calling a loan category “sub” is demeaning and turns off prospective credit challenged borrowers. The term non-prime suggests a less derogatory connotation and may be more viable as a marketing term.

If you do need to borrow over 80% over your home’s value, let us know and we will compare your total monthly payments with PMI on a prime or Alt-A program and without private mortgage insurance on a low rate subprime program for people with fair credit.

Subprime lenders are great for getting first time home buyers, with or without good credit, into a home. Subprime lenders also help borrowers with excellent credit that have other problems getting financed like, proving income, loan to value etc.

These are mortgages offered that allow for credit problems, higher loan to values, higher cash out amounts, no PMI insurance. They also have looser underwriting guidelines, ignoring charge offs, judgments and collections. Also underwriting turn around times can be much faster. Sub-prime mortgages were designed for those people who don’t fit into the small box that conventional underwriting allows for. With a Sub-prime mortgage you can secure a loan with credit scores as low as 500. Obtain no income verification loans with scores as low as 600. In many cases you can combine your first and second mortgage, secure a lower rate, avoid private mortgage insurance and save hundreds of dollars per month.

Mortgage brokers are usually the only source for subprime loans, as these loans are almost never offered by neighborhood banks. Most mortgage brokers have a network of mortgage banks that offer loan programs for all sorts of unconventional situations.

These types of loans are available to help borrowers with past credit history obtain mortgage financing. They are usually put in an ARM loan, fixed for a couple years so they can begin with a lower rate. This gives them time to work on their credit and ultimately refinance into a loan with better terms

Subprime lending refers to the extension of credit to persons who are considered to be higher-risk borrowers. In lending parlance, their credit ratings are “B” or “C” rather than “A” or “A-”. Lenders typically price subprime loans to borrowers at rates of interest and points and fees slightly higher than conventional loans.

Lenders feel that people who have not handled credit well in the past are at a greater risk of failing to repay their loans. Standard-priced loans are typically made to people with good credit history because their past record proves to lenders that they are at low risk of default.

Subprime lending offers many choices today. You can now get a home loan with credit scores in the 400’s, have late payments, bankruptcies, foreclosures, but all will reflect the interest rate that you will receive.

Subprime lenders are a huge asset to the population of people wanting to purchase homes that don’t fall under normal underwriting guidelines. Many people would not be able to purchase their dream home without Brokers providing these types of loans consequently causing less sales in the market place and a slower economy. Fill out the online form today and get started on your home search.

Loans to borrowers whose credit is less than perfect will almost always be subprime loans. There are also other circumstances that lead to subprime loans, including high outstanding debt, unproven income, etc. Even borrowers with good credit may receive subprime loans for a variety of reason, including lack of verifiable rental history or liquid cash reserve requirements.

One solution if you have a low credit score is to purchase the home with a sub-prime lender and then clean up your credit score. Once the bad credit score is improved then refinance the home with a lower rate.

Especially when borrowing more than 80% of the value of your home, the slightly higher rates which lenders charge borrowers who have less than perfect credit are more than made up for by the savings the borrower receives by not having to pay for Private Mortgage Insurance which would have been required of a borrower with perfect credit.

Do you feel you are a subprime borrower? I can understand how this can be intimidating and I want to thank you for reading the information above. If you would like to continue this conversation than please contact me so you and I can discuss your financial situation. Please read more valuable information and when you feel comfortable I would like you to contact me.

First time home buyers may opt for subprime loans when they have little savings. Typically the asset requirements for subprime loans are not as strict as prime loans.

Common subprime candidate could possibly be Bankruptcy, Foreclosure, or major Credit Card Debt. Consult a Mortgage Professional so they help you obtain a home with little money down even carrying these difficult charges against your personal history.

Subprime is not for just poor credit borrowers. Any time you go over 80% loan to value, you get non prime rates.

The key to getting a sub-prime loan is disclosure. Although you may have been turned down by a bank for a certain incident in your credit history you need to be honest with your mortgage broker and disclose all the possible occurrences in your credit history that may prevent your loan from closing. Mortgage Brokers are experts in finding the right lender to fit your needs. If anything has been omitted the lender will find it and wonder why a broker did not submit the information. Lenders do not like surprises. So, disclose everything, good or bad, from your credit history and let the Mortgage Broker find the right lender for you.

As a rule, lenders offer subprime rates to customers who have credit scores below 620. If your score is higher than that, you should be able to qualify for a better interest rate. If not, you can either accept the higher rates from lenders, or take time to improve your score by paying off some bills or resolve previous collections and charge off’s in a timely manner.

Everyone wants to qualify for loans at the lowest interest rates and with the most favorable conditions, but for those with severely blemished credit reports, the odds of doing so may not be attainable, but there may still be programs available.

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. For Example: A homeowner, who is facing foreclosure, has an existing mortgage of $300,000 and you have a buyer willing to pay $220,000, you would write up a contract between the buyer and the seller, and fax it to the lender. This could be accepted as full payment of the loan.

Borrowers should be aware that receiving a short sale from the lender will still have a detrimental effect on their credit standing. Most lenders will report the mortgage as “account settled for less than amount due” or some similar type verbiage. Such a reporting will have a derogatory effect on their credit score and may hamper their ability to get a mortgage loan in the future.

Banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can get rid of the property without it being a huge loss, they will do it. Lenders know that they could loose a lot more money if it were to go to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

Sometimes this is the only way out for a home owner rather than the home going to foreclosure. Chances are you may have to wait a few months before obtaining a mortgage but with today’s Subprime lenders just about anyone can get a mortgage.

Other sites: Loan Officer | Delinquency | How To Choose A Real Estate Agent | VA| Pay Option Arm Calculator

There are some basic financial things you can do to get prepared for buying your first home. This will make it easier for you and your mortgage broker. Start to collect and organize documentation:

• You should start to save and organize your pay stubs. You will often need the past 30 days worth of stubs.
• Go through your old tax returns and sort out your W-2s or 1099 forms. You will need the past two years W-2s/1099 and may need the past years complete returns
• Organize and gather your old bank statements. You may need these to show money to cover down payment and closing costs (last 2 months). These may also be used in lieu of other income documentation (12 months)
• If you have other assets, 401(k), Mutual Funds, Stocks, Life Insurance, etc. you may also need the past 2 months statements from those accounts.
• Check your credit. If you haven’t checked it yet, now is a good time. You can get one for free once a year. If you are working with a mortgage broker they may be able to sit down with you and go over your credit report. Start to clean it up if you can. If you have charge offs, or collections that you can pay off, or have already paid off, make sure they are accurately reporting.
• Save or get copies of your canceled rent checks. Most banks have an online check viewer. Print out or get copies from your bank of your rent checks for the past 12 months.
• If you have any student loans that are still in deferment, contact them and get a letter of deferment.

If you have experienced a major legal event that affects your finances such as a divorce or bankruptcy - keep all documents in a orderly and safe manner. There is a very good chance that some or all of the documentation from these proceedings will be needed in order to get you approved for the best possible mortgage loan. Borrowers with incomplete or missing documentation often get less favorable terms on their mortgage than ones who have such documents.

Congratulations! We would be happy to assist you on your pursuit of the American Dream.

Start saving. Having savings can help with approval in many ways. Additional funds strengthen your ability to be approved. It helps to show that you have reserves. The savings can also be used for a down payment and closing costs. There are also several out of pocket expenses you should expect to have such as the Earnest Money and Appraisal and/or Inspections. Ways to start saving:

• Pay your self first: This is a common savings technique. Pay your self first means the first thing you do on payday is put some money aside for your savings. This is a fine line you need to walk, don’t jeopardize your credit by missing payments.
• Direct Deposit: if your employer allows you to have multiple direct deposit accounts set one up for your savings account. You will miss the money less if you never see it to begin with in your checking account.
• Clip Coupons: If you don’t now, start. Every little bit of savings can help.
• Cut back on non-essential activities: Home cooking is always cheaper than going out, rent a movie rather than go to the theater, the rental is cheaper and so it the popcorn if you microwave it your self.
• Bring a bag lunch to work. If you go out to lunch or to a cafeteria every day that money can add up quickly.
• Quit or cut back on your vices. Quit smoking, besides being a healthy decision it is a smart financial decision. Do you like playing the power ball or those little scratch off tickets, put that little enjoyment aside until after you have the home.
• Cut back on your current bills. Can you do with out the full cable package for a couple months until you are in the new home? Can you do something to lower your other utility bills, lower the heat or air conditioning, or cut back on electricity and water use?

Pack a first night survival kit. Use one of your moving boxes and pack if full of things you may need your first night. Set this box aside or better yet put it in your car before you even go to closing. Your Survival Kit:

• Tools: Phillips and flat head screw driver, flashlight, pliers or wrench, utility scissors, straight edge razors (simple small tool kits can be bought for cheap at dollar stores, Ikea, and other general home stores)
• Home Essentials: Paper Towels, paper plates, plastic cups, plastic utensils, napkins, toilet paper, light bulb(s)
• Linens: towel(s), sheets, pillows, washcloths.
• Toiletries: soap, shampoo, toothbrush, hairbrush, toothpaste
• Misc: favorite board game, inflatable bed (or pool raft), reading material, deck or cards, not pad, pen, pencil, all purpose cleaner and sponge.
• Complete change of clothes or at least a change of underwear (remember what your mother always told you)

When buying your first home, or any home, please keep in mind that you will not always get the keys to your new house until the mortgage has been recorded with the county and the funding of all money has taken place. Read your purchase agreements carefully because sometimes there may be a specific date or time given that you will receive the keys after the closing (example: the buyer will receive the keys to the property 3 days after closing).

It’s possible you might not need all of the information above because some programs call for different documentation. Your Mortgage Broker’s task of find a mortgage for you will be much easier with this documentation close at hand and could mean the difference of closing on time or not closing on time. The more efficient you are the faster your loan process will be.

Determine how much mortgage you can afford. Start by analyzing you monthly spending. You should collect your current monthly spending data to see what portion of your income goes to necessary living expenses and what you can cut down on. Stop taking on new debt and trim your non-essential spending. Buying a big-ticket item or a new car can only hamper your dream of homeownership. Determine how much of your income can be allocated towards housing expenses, then consult a mortgage professional or use the mortgage calculators on this or other websites to determine how much mortgage can you afford. Be realistic, when estimating housing expenses, in addition to monthly mortgage payments, do not neglect other inevitable expenses such as property tax, homeowner insurance, maintenance and the occasional home improvement costs.

Other sites: Loan Officer | Delinquency | What not to do after you apply for a Mortgage | Why is my credit bad | MIP | VA | Fixed-rate mortgage| Pay Option Arm Calculator

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