September 21, 2007, Newsletter Issue #82: Basic Rules for Getting a Home Loan

Tip of the Week

The process of getting a home loan can at first seem both confusing and sometimes daunting. The reality, however, of obtaining and closing a home loan is not that complicated. Some basic rules you need to learn and follow:

Know your credit status, FICO score, and the general condition of your credit report. If there are some problems, start immediately to correct them. Compute your relative debt-to-income ratio by dividing your monthly debt obligations for installment loans and credit card balances by your regular gross monthly income. Assemble all of the documentation necessary to make a complete application, including recent pay stubs, bank or credit union statements covering at least the prior twelve months, copies of your prior twelve months checks for mortgage payments or rent, and a listing of all your debts, including account numbers. Make a commitment to yourself to only deal with a lender you trust. Whether you choose to deal with a mortgage broker, mortgage company, bank, or credit union, the person and the lender should be of the highest quality and dependability. Get pre-qualified in writing by your mortgage professional. This will give you the information you need to understand regarding the amount of mortgage for which you can qualify and will give you instant credibility with real estate brokers and sellers of properties you’re considering. Carefully examine your Good Faith Estimate (GFE) of closing costs and Truth-In-Lending (TIL) statement you receive at application. Question any item that you don’t understand and only accept complete answers that make sense to you. Be patient but stay on top of your lender at all times. Constant communication should ensure that you close your mortgage in a timely fashion. Get all remaining documentation to your lender immediately. If you do your part in producing needed documentation, communicating with your lender regularly, getting any answers to your questions in a timely and complete fashion, and remaining as stress-free as possible, getting a mortgage will be a positive experience for you.

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