Understanding the Home Loan Process

How do you get a new home loan or refinance Santa Clarita a mortgage? Purchasing a new home can be an exciting time but stress can also accompany it. Even if you have done it several times you can still find the process complicated, particularly when it comes to getting a new Valencia home loan. Countless qualification documents, unfamiliar terminology and uncertainty serve to temper the fun of first time home buyer Valencia or going thru the Valencia home loan refinance process.

As soon as the purchase contract is signed, obtaining the financing for the purchase becomes important. If you understand the steps required to pre-qualify for a mortgage, however, much of the stress can be avoided. The following explanation of the loan application process is intended to help you through the complexities of obtaining a mortgage loan.

Loan Application Made Easy

Once you have selected a lender, the next step will probably be a meeting with a loan officer or other lender representative, whose job is to begin the collection of information the lender needs to approve the loan. They will explain the types of mortgage loans available to you, the interest rates and fees for each type and the qualification requirements. The loan officer will fill out, or assist you in filling out, the loan application form.The total cost of a mortgage loan consists of the interest rate on the loan, origination fees, discount points, and miscellaneous other charges.

Always read the fine print before you sign a Santa Clarita mortgage contract. The loan application form asks for information on the property you are buying, terms of the purchase contract and the employment and financial history of all loan applicants, including your spouse and/or other co-borrowers. The lender will verify everything, so it is very important to make sure that it is complete and accurate. You can complete the loan application process much more easily and accurately if you prepare for it ahead of time.

If you are a veteran of the U.S. Armed Forces, you may qualify for a VA home loan Valencia. These loans are available to qualified veterans. The advantage of these loans is an easier approval process and a lower than average interest rate and lower down payment.

Details of Purchase Contract

Because the property is the security for the loan, you will need to have an appraisal done on the property, and you need to have the following information available:

• A complete copy of the sales contract, including any addendum’s, signed by all parties, showing the full names of the sellers and buyers as they will appear on the new deed, the amount of earnest money deposit and who is responsible for closing costs, origination fees, etc.

If you are refinancing the Castaic home loan,you may wish to refinance Valencia without closing costs. Many lenders will offer mortgages that have no closing costs. Lenders make up for these costs by charging you an interest rate that’s slightly higher. This slight increase sometimes translates into some extra dollars in your monthly payment, but you can save thousands in your closing costs.

Your Personal Information

The loan officer will want the social security numbers of you and your spouse (or other co-borrowers), age, number of years of schooling, your marital status, number and ages of dependents and your current address and telephone number. If you have lived at your current address less than 2 years, be prepared to furnish former addresses for up to seven years. You will also be asked to detail your current housing expenses, including rent or mortgage payments, real estate taxes and insurance.

You will need the name and address of your landlord(s) or mortgage lender(s) for the past two years. When you are going to finance a home mortgage, you will need to have some cash for a down payment. The more money you pay down, the lower your payments and interest rates. The down payment goes directly to the principal of the mortgage and is a sum you will not owe yearly interest on.

Employment History and Sources of Income

Your ability to make the regular payments on the mortgage and to afford the costs associated with owning a home are primary considerations is the lender’s loan approval process and should be your primary concern. Required information includes:

• At least two years employment history with employer’s name and address, your job title or position, length of time on the job, salary, bonuses, commissions and average overtime pay.
• Recent paycheck stubs and Federal W-2 forms for two years (some lenders may require full Federal tax returns). If you are self-employed, full tax returns and financial statements for 2 years, plus a profit and loss statement for the current year to date.

The loan officer will have you sign a Verification of Employment (VOE) form. This will be sent to your employer to verify your employment and earnings. One will be sent to previous employers if you have been on the job less than two years. Many lenders now use a general authorization form which allows them to verify employment and other financial information on the application. If you are relying on income from other sources, such as rental property, social security or disability payments, child support, etc., you must provide adequate proof of the source.

Your Assets

A detailed listing of your personal assets is required on the loan application form. You will need to have the following information available to complete the form:

• All bank accounts, checking and savings, and money market accounts, with the name and address of the institution, name(s) on the accounts, account numbers and current account balances.
• Recent bank statements for at least two months.
• Current market value of stocks, bonds, CDs and other investments.
• Vested interest in all retirement funds.

Having a high credit score means you will get a better rate. Check to see what your score is and that the credit report is correct. Banks typically don’t approve anyone with a score of less than 620 today. Make sure you have a large down payment saved up. It is always better to put a larger sum down when you get a home mortgage. The more money you have to put down on your house, the lower your payments will be in the future.

The lender will look for the source of funds with which you will make the down payment and pay closing costs and fees. Gifts from a relative, church, municipality or non-profit organization may sometimes be used, but must be verified in writing. If you are providing less than 5 percent of the sales price, the donor must be a relative and must provide a letter stating the donor’s relationship to you, the amount of the gift and the fact that no repayment is expected.

Personal Debt to Income

You will be asked to itemize all of your current bills, loans and other debts, including current balances and monthly payments. Debts include automobile loans, credit cards such as Visa, Mastercard and other retail store accounts, finance company, bank a and credit union loans and existing mortgages, including home equity loans. You should be able to give the account or loan number, the monthly payment, the number of payments remaining and the outstanding balance. The information you provide on the loan application will later be verified by a credit report ordered by the lender. Like employment and deposit information, differences between your figures and those on the credit report will raise questions and may delay the approval of your loan.

Lenders recognize that unemployment, illness, marital problems or other financial difficulties can temporarily impair your credit rating. The lender must consider such a written explanation as part of the underwriting analysis. If the problem has been corrected and your payments have been made on time for a year or more, your credit will probably be judged as satisfactory. Chronic late payments, judgments or loan defaults, however, severely damage your credit standing and may prevent you from obtaining the financing you need to complete the purchase.

After The Loan Application – What Next? After the loan application has been completed, it will be turned over to the lender’s loan processing department and then to the underwriter, where the decision to approve or reject the loan will be made. Loan processors send out the Verification’s of Employment and Deposit and order the credit report, property appraisal and other documents. The time it takes to receive these documents affects the length of time required for approval of the loan. If you are transferring from out of the local community, it may take longer to receive the credit and employment information.

Reducing The Anxiety of Waiting For many home buyers, the period of time between the submission of the loan application and receipt of the commitment letter is one of uncertainty and concern. Requests for additional information, unexpected delays and lack of communication all serve to increase the tension. Keep in mind that the lender wants to make the loan. Loan underwriters are looking for ways to approve loans, not reject them.

Obtaining a first time home buyer Valencia loan need not be an ordeal that dampens the thrill of acquiring a new home. Mortgage rates Valencia are low and lenders are behind.If you understand the lending process and are prepared to do your part, it simply becomes a key step in owning a home. An experienced Loan Professional is the key to the process. Make sure you choose wisely.