|Documents needed for a Mortgage and other
Property Loans -
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Documentation You Need to obtain a Mortgage or other Property based Loan
The recent financial turmoil had much of its origin in mortgages being extended to borrowers, who could not document basic things, such as their income, when they applied for mortgages. As a consequence, the documentation criteria for mortgages are now a little bit more strictly enforced, than they used to be before the crisis.
The vast number of reputable lenders in the market place, require to see varied levels of documentation, before they consider, whether, or not, to give you a loan. Though, while it is harder to obtain a mortgage without all the documentation, it is still possible. But you will be dealing with more risk friendly lenders, charging you, no doubt, higher fees and interest rates.
It pays to have a lender or broker that is strict with his documentation demands. The sloppier the lender, or his agent, is, in obtaining and checking your documentation and doing a proper due diligence on you as a borrower, the more likely he assess you as a high risk. As a consequence, there will be some interest rate penalty, or some fee that come into effect, under some specified and defined circumstances, which will make your mortgage more expensive and more risky for you as the borrower.
A lender or broker who is not asking for complete documentation is simply not doing his job properly. Since he is paid for doing that through the various fees he charges, he is really being negligent!
Your Credit Score (FICO Score)
Before you start taking to a potential
lender, and possibly even before you looked at your
initial house, the first thing you want to obtain
and check is your credit score. You
can obtain a credit report for free, once
a year under the Fair
Credit Reporting Act, from
Although, all credit agencies use FICO scores as the basis of their evaluation, the three main ones include some additional measures and give them different weights within the total calculations. As a consequence, you will have differing scores from the three main agencies.The differences will not be large, but 20 or 40 points can make quite a difference to the way a lender views your credit worthiness.
The credit scores can range from 300 to 950. Though, the most relevant range is to about 850.
The Credit Scores
Just as a general guide, the scores are evaluated by lenders as shown below. If you want to know more about the credit score and how they are calculated, you can also consult our special credit page.
There are ways to legally improve your scores, though they all take some time.We have a page for that.
Remember you can get a free credit score once a year from all three credit reporting agencies under the Fair Credit Reporting Act, from http://www.annualcreditreport.com .
Once you have the credit report, examine it closely. Look out for accounts that are noted as delinquent, if you have any such accounts. Also, check out how many of your accounts show late payments. Both types of incidences will lower your credit score.
A bad credit history does not necessarily prevent you from being able to get a mortgage loan. There is always FHA, where credit scores are not an important part of the evaluation of your credit worthiness. Look at your options on our page showing the types of mortgages that are commonly offered.
The Documentation needed to obtain a Mortgage
The following items are now needed to obtain a standard mortgage with a reputable lender. Be sure to hand over photo copies only and not the originals. (you might have to show the originals, to assure your credit officer that the photo copies are true copies!)
Hand the above documentation package to the lender as a clean, ordered and well organized package. That shows your seriousness as an applicant. If you apply to a local bank or a broker, try to see your loan officer with the package when you hand it over. Make an appointment and sit down with him and asking him about the up-front and all other costs.
Do not pay any fees, such as prepayments for credit reports, to the lender or the broker until they accept your loan application and give you the loan, subject to a decent credit report and you accept their offer.
Before you have the meeting with the loan officer check out the most recent current interest rates, by going to http://www.bankrate.com . Obviously, you can also look them up in the Wall Street Journal or at their website http://www.wsj.com.
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