Mortgages & Loans

Real Estate Finance

A Non-Mortgage Broker’s Guide to Mortgages…

Finance 101

It’s hard to imagine a real estate transaction without some sort of financing. Most people don’t have the cash in hand necessary to buy a house and the ability to finance the purchase a home is fundamental to the functioning of the real estate market and our economic system as a whole.

I’m a Realtor, not a mortgage broker, so my vested interest here is not to make you a loan, but to make sure that you have all the information you need to get the best loan possible in order to buy a house. There are many web sites sponsored by lenders and loan brokers who are interested in making you a loan (and I’ve listed some of my favorites below for you in this page), but I waned to do something a little different and provide you with my objective advise on what you should know before you apply for a loan.

If you are thinking about financing a home, it really, really important to think a loan as a commodity that you would shop for the same as you would if you were going to by a car. Just as automobiles come in different varieties like sedans, coupes, SUVs, and mini-vans, loans come in varieties like fixed, adjustable, and interest only. In addition, just like different dealers can charge more or less for the same car, lenders and loan brokers can do the same.

As you can see from the table to the right, there are an extremely large number of choices available for you when it comes to getting a mortgage. You probably wouldn’t buy a car without researching and understanding the options, and you should feel the same way about shopping for a mortgage. Shopping for a loan is critical to purchasing a home, and finding the right loan will not only save you money, but will also cause your real estate transaction to run much more smoothly.

Of course, which loan is “right” for you is going to be different for every person, so read on to get the scoop on the things that you’re going to want to know before you apply.

What you need before you apply for a loan…

Residence History

  1. Previous addresses for the last 2 years and when you were there.
  2. If you rent, your landlords name and address for the last 12 months.

Employment History

  1. The names and addresses of your employers for the last 2 years, and the dates you worked there.
  2. Original pay stubs for the last 30 days.
  3. W-2’s and 1040 Tax Returns for the last 2 years.
  4. If self-employeed, profit and loss statement and current balance sheet.
  5. Transcript or diploma if you were a student in the last 2 years.
  6. Award letter or check for retirement, Social Security, or disability income.

Loans and Credit Cards

  1. Coupon book or most recent statement for each account you have open.

Savings, Checknig, and Investiment Accounts

  1. The name, address, and account number of each financial institution.
  2. The current balance or value of each account.
  3. Three months bank statements for each account including IRAs or Keoghs.

Personal Property You Own

  1. The next cash value of any life insurance.
  2. The make, year, and value of your automobiles.
  3. Three months bank statements for each account including IRAs or Keoghs.
  4. The value of your furnature and other personal property.

Real Estate Your Own

  1. The address for each propery you own
  2. The estimated market valuefor each property.
  3. Outstanding mortgage balances and payments
  4. The amount of rental income.

Mortgage Brokers vs. Direct Lenders

When you look for a mortgage you may either deal directly with a lender who makes real estate loans such as Indymac Bank (also known as LoanWorks) Start Loan Application, Countrywide Financial, or Washington Mutual or work through a broker who finds a lender for you and then processes the loan. Lenders wholesale loans to brokers who make a commission for arranging the loan. Mortgage brokers may further mark up or discount the loan by adding adding positive or negative points and increasing or decreasing the rate of the loan. You may thing that you might save money by dealing directly with a lender, but this is not always the case. Rates between lenders can vary and a loan broker is able to shop between many lenders looking for the your best rate, including smaller lenders that you might not be able to find on you own.

Mortgage Information Library

For more specific information, please feel free to reference the library below provided for you by Mortgage21.