Guide to Mortgages
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Qualify for a mortgage
Qualifying for a mortgage can be intimidating, especially if you’ve never applied for one before — but that’s what this mortgage guide is for — to demystify the process. Applying for a home loan is not as difficult as some nervous borrowers expect it to be. In fact, qualifying for a mortgage is mostly a matter of paperwork, filling out forms and submitting documents to the lender.
The process starts with a quick credit check (get your free credit score first) and some basic information about your income, assets and monthly debt obligations. Examples of income include wages, salaries, bonuses, commissions, interest and dividends. Examples of assets include checking accounts, savings accounts, retirement accounts and investments. Debts may include car loans, credit cards and some student loans.
The qualifying process continues with a complete package that includes a loan application and copies of documents that support your financial data. Examples of documents include W-2s, paycheck stubs, tax returns, bank account statements and gift letters.
Once all the paperwork is in, the lender can approve the loan and issue you a mortgage pre-approval letter . Having a pre-approved mortgage makes your offers much stronger when you shop for your home.
Refinance a mortgage
Homeowners’ needs can change over time, so it’s a good idea to review your mortgage periodically and consider whether it might make sense to refinance into a new loan, perhaps with a lower rate or different term. Three common reasons to refinance are to lower the interest rate, switch from an adjustable-rate mortgage to a fixed-rate mortgage, and remove mortgage insurance, which is required with most low down payment mortgages.
Refinancing involves some costs, but can also be a money saver for homeowners. In most cases, borrowers are not required to pay these costs out of pocket.
A good mortgage guide can help home buyers get started, and a conversation with a lender can take it from there.