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| It is always a good idea to pre-qualify for a mortgage before shopping for your new home. This accomplishes several things. It lets you know how much you can afford to spend, it allows you to explore financing options prior to the rush of signing a purchase contract, and the realtor knows better what you are looking for, so they can be more accurate in what the show you. |
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2. Why or why not get a fixed rate loan? |
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| A fixed rate loan is a great program for most people. This is the most well known program, and most conservative. People often choose a fixed rate based on being comfortable that it will never change. A good example of when a fixed rate loan is the best program would be when rates are down, and you are purchasing a home to plan to live in for at least 10 years. |
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3. Adjustable Rate Mortgages (ARM) can work for you. |
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| Many people in today’s market have decided to get an ARM. There are many different versions of this type of mortgage available. ARM’s are fit more specific needs than a fixed rate, and allow borrowers to keep a lower rate and payment for the set time they are going to keep the mortgage. |
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4. Understanding Risk Factors and how they affect your rate and term. |
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| Risk factors determine everything about a mortgage. Most people are familiar with the common ones: Credit, Income, Other debt, etc. There are many that are not commonly considered, but do have a large impact. Some of these can be the time you have been on your job, the market area you are purchasing in, the structure itself, the land the house is on/neighborhood, self-employed, assets, and others. Keep in mind that all of these things can affect your loan. As the risk level increases with each of these, your loan program can change, causing the rate or term to change. |
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5. Common Documentation required for a mortgage loan. |
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| * Pay stubs for previous 30 days |
| * W-2 for past 2 years |
| * Tax Returns for past 2 years (if applicable) |
| * Bank Statements for previous 2 months |
| * Credit explanation documents (if applicable) |
| * Bankruptcy Papers (if applicable) |
| * Hazard Insurance – Carrier, Agent, Phone number |
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