How to Find a Mortgage Lender
Know your credit score., Consider all costs., Be prepared for the down payment., Gather documents.
Step-by-Step Guide
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Step 1: Know your credit score.
When you apply for a mortgage, lenders will pull a “Residential Mortgage Credit Report,” or RMCR, to determine your credit score.
This is not a normal credit report – it’s actually much more detailed, because the risk to the lender is much bigger.
If you have good credit, you can use this to shop for a better deal.
If you don’t, you should determine what is bringing down your credit.
Try to settle any outstanding obligations to increase your credit and get a better deal.The RMCR takes scores from all three credit reporting bureaus and merges them together, both for you and for your spouse.
You’ll need to ask for a copy of this merged report from the lender when you apply for a mortgage.
You can’t order it on your own; free credit score websites and products like Credit Karma won’t give you accurate information, either.
In the current market, a credit score of 740 is ideal for mortgages, but a score higher than 620 will typically qualify you for some sort of loan.
Some programs may go as low as 580 but it’s rare to get financing with such a poor score.
In addition to fixing false charges or paying off old debts, a good way to increase your score is to pay down your credit cards.
Your credit score is based on what percentage of your available credit is used.
If you have a card with a small maximum balance – for example, a department store card – paying this down could instantly .increase your score by 20 points.There are a few ways to check your credit score.
Government regulations entitle you to a free report through annualcreditreport.com, though this will not include your actual score.
Other websites offer "free" reports that include scores, but they often have hidden fees. -
Step 2: Consider all costs.
Sometimes what looks like a low-interest rate is not so great when fees are factored in.
Ask for the annual percentage rate (APR), which includes points, broker fees, and credit charges.
Ask for a full list of fees and an explanation of their meaning.
Be sure to ask about points.
These are fees paid to the lender or the broker for the loan.
Ask for points to be quoted in a dollar amount.
Determine if the rate you are quoted is for an adjustable-rate loan.
If so, be wary because the rate might go up over time.
Ask if your loan will also go down when rates do., It used to be that 20% was a standard down payment, but conventional loans nowadays can go as low as 3%.
Still, the larger the down payment, the lower your interest rate will be. 20% will be the least expensive option, but it isn’t required for a primary residence.
If you pay less than 20% you’ll also have to purchase private mortgage insurance that might increase your monthly payments by approximately $100.If you are not able to pay 20% down, ask your lender if you qualify for programs through the FHA (Federal Housing Administration), VA (Veterans Administration), or Rural Development Services.
Loans from these organizations can ask for down payments of between 0% to
3.5%. , You will need to provide a comprehensive accounting of your income, assets, debts, and payment information in order to get a mortgage.
Requirements vary with the lender and the particulars of your financial situation.
There are, however, some standard documents that are required.
These include: your W-2's for the last two years (if you earn a paycheck), your 1099 forms (if you are self-employed), recent paycheck stubs, recent tax returns, and a complete list of assets (including bank statements, mutual funds, investments).
Your credit score will include debts, including those on credit cards, mortgages, car notes, and student loans).
In some cases, you may also have to provide records of recent mortgage or rent payments. -
Step 3: Be prepared for the down payment.
-
Step 4: Gather documents.
Detailed Guide
When you apply for a mortgage, lenders will pull a “Residential Mortgage Credit Report,” or RMCR, to determine your credit score.
This is not a normal credit report – it’s actually much more detailed, because the risk to the lender is much bigger.
If you have good credit, you can use this to shop for a better deal.
If you don’t, you should determine what is bringing down your credit.
Try to settle any outstanding obligations to increase your credit and get a better deal.The RMCR takes scores from all three credit reporting bureaus and merges them together, both for you and for your spouse.
You’ll need to ask for a copy of this merged report from the lender when you apply for a mortgage.
You can’t order it on your own; free credit score websites and products like Credit Karma won’t give you accurate information, either.
In the current market, a credit score of 740 is ideal for mortgages, but a score higher than 620 will typically qualify you for some sort of loan.
Some programs may go as low as 580 but it’s rare to get financing with such a poor score.
In addition to fixing false charges or paying off old debts, a good way to increase your score is to pay down your credit cards.
Your credit score is based on what percentage of your available credit is used.
If you have a card with a small maximum balance – for example, a department store card – paying this down could instantly .increase your score by 20 points.There are a few ways to check your credit score.
Government regulations entitle you to a free report through annualcreditreport.com, though this will not include your actual score.
Other websites offer "free" reports that include scores, but they often have hidden fees.
Sometimes what looks like a low-interest rate is not so great when fees are factored in.
Ask for the annual percentage rate (APR), which includes points, broker fees, and credit charges.
Ask for a full list of fees and an explanation of their meaning.
Be sure to ask about points.
These are fees paid to the lender or the broker for the loan.
Ask for points to be quoted in a dollar amount.
Determine if the rate you are quoted is for an adjustable-rate loan.
If so, be wary because the rate might go up over time.
Ask if your loan will also go down when rates do., It used to be that 20% was a standard down payment, but conventional loans nowadays can go as low as 3%.
Still, the larger the down payment, the lower your interest rate will be. 20% will be the least expensive option, but it isn’t required for a primary residence.
If you pay less than 20% you’ll also have to purchase private mortgage insurance that might increase your monthly payments by approximately $100.If you are not able to pay 20% down, ask your lender if you qualify for programs through the FHA (Federal Housing Administration), VA (Veterans Administration), or Rural Development Services.
Loans from these organizations can ask for down payments of between 0% to
3.5%. , You will need to provide a comprehensive accounting of your income, assets, debts, and payment information in order to get a mortgage.
Requirements vary with the lender and the particulars of your financial situation.
There are, however, some standard documents that are required.
These include: your W-2's for the last two years (if you earn a paycheck), your 1099 forms (if you are self-employed), recent paycheck stubs, recent tax returns, and a complete list of assets (including bank statements, mutual funds, investments).
Your credit score will include debts, including those on credit cards, mortgages, car notes, and student loans).
In some cases, you may also have to provide records of recent mortgage or rent payments.
About the Author
Nicholas Thompson
Specializes in breaking down complex home improvement topics into simple steps.
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