Preparing For Your Loan

Consumers must prepare for their loan prior to contacting a mortgage lender or broker. Although “Successfully Navigating the Mortgage Maze” explains in detail all the information needed to protect yourself from unscrupulous mortgage lenders and brokers, consumers must have the following information to have a worth while discussion with a loan officer. The key documents to collect prior to shopping for a mortgage professional are their credit reports with FICO scores, monthly gross income for all borrowers and a realistic estimate of the value of their home.

 

 

Consumers should not wait until they talk to a loan officer to find out where their credit stands. Many loan officers know that if they can get you to disclose your Social Security number they have a better chance of stopping you from searching for better loan terms. Too many credit inquires over a period of time can affect your credit scores adversely and you may lower your FICO scores and the interest rate that you can receive. Consumers can visit www.experian.com, www.transunion.com or www.equifax.com to obtain all three scores and reports. The best route to use to get all three scores and all three reports is to go to www.myfico.com , but make sure you purchase the product that gives all three scores and reports because it is the middle FICO score that lenders will use to determine the interest rate for which you qualify.

 

If your middle FICO score is above 740, you will qualify for the best rates available. Many consumers that have scores ranging from 680-739 will also be able to qualify for the best rates, depending on other parameters of their loan.

 

 

Consumers must be able to tell the loan officer their monthly income without fudging on the numbers. Your income determines the size of the loan for which you qualify. Wage earners can look at their pay stubs for their gross monthly income, while self-employed and business owners must look at their income after deductions. The lenders will look at your income and your total monthly debt payments (mortgage, property taxes, homeowner’s insurance, credit cards, cars, etc.) to determine if you will be able to make you mortgage payments without defaulting on your loan sometime in the future.

 

 

You can check the value of your home on many websites to get a rough estimate of your home’s value. Considering that home prices have been in decline over the past year, you may not get an accurate assessment of the true value. Also, don’t assume that the asking price of a home in your neighborhood will reflect your home’s value, what they ask and the price that was accepted may be two different numbers. Visit http://realestate.yahoo.com/Homevalues  and go to the home values tab to get a rough estimate of your home’s value. All estimates on the web are by no means reliable because there are many factors that appraisers use to value your home, such as, upgrades (tile floors, granite counter tops, etc.), condition of home and square footage. Due to the declining values over the last year, a similar home sold a year ago may give you an unrealistic value, so make sure you are looking at homes that sold in the last three months.

 

A professional loan officer will be able to give you a general idea of your home’s value, but a licensed appraiser will be the ultimate determiner of the true value of your home. The Loan to Value (LTV) can have a great impact on the interest rate that is offered to you.