Applying for a Mortgage
September 20, 2006
If you haven't had the joy (ok, not really) of applying for a mortgage let me
save you some time by outlining the process as best I can in the hopes of saving
you the time and I money that I wasted during the process. Your mileage may
vary but at least you won't be as surprised as I was.
Find a good broker
Ask friends and family who they used if they live in town with you. My friend
had a fantastic experience because he went on the recommendation of another friend.
I used a deadly combination of the internet and the phone book in choosing mine
and the result was less than stellar. If you're not sure where to start, and
don't have anyone you can ask for recommendations, most brokers are certified
through the National Association
of Mortgage Brokers. That site is a great start for helping you find the right
person for your area. Additionally, you can ask your real estate agent if they
know anyone (they will) but because sometimes brokers give a commission to the
agents take their advice with a grain of salt.
Pre-Qualifying
Get ready for a more difficult process than you're expecting. I am self-employed
so perhaps my experience was a little more arduous than most. This process determined
how large of a loan I could get. I've made in the mid-$60's in salary for the past year
but before that I was barely making $30k. I was required to submit my W2's for the past
two years. Had I been on a regularly salary I simply would have had to have offered a
month's worth of pay stubs. The good news was that loaning me money is in the best
interest of a loan company and since I was going to be living in the house (instead of
just renting it out) and had a credit score in the mid-700's I qualified for "A+ Credit"
and they were willing to loan me the full $180,000 I needed for the purchase. With a
lower credit score and my apparently sketchy employment history I would have only qualified
for about $110k. Ouch. So remember to pay those electric bills and your rent on time.
Know The Current Rates
For my personal situation I knew I was not going to live here for very long. With my wife
in law school and my self-employment it made more sense for us to pick up and leave when she
was done so she could take a high paying job somewhere else. We elected to go with a balloon
payment with the idea we wouldn't be here long enough for the interest rates to...well, balloon.
The down side to the balloon payment was that we had to pay more points initially but that's
how it goes. In the long run the interest savings make up the difference.
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