A mortgage a type of loan you can use to buy or refinance a home, and the lender has the right to take your property if you fail to pay off the funds you’ve borrowed + interest.
Mortgages are in demand among consumers – almost 95% of people purchase an apartment on credit.
Let’s dwell in more detail on which mortgage to choose and for what, in addition to the announced interest rate, you will have to pay.
As a rule, a mortgage loan can consist of the following additional components:
- fee for loan processing;
- account maintenance fee;
- commission for issuing a loan;
- payment for the appraisal of housing;
- mortgage transaction registration.
Choosing a mortgage program, choose a loan in dollar, not a foreign currency loan. Despite the fact that interest rates on mortgages in foreign currency may be lower, you run the risk of not paying for the loan if another currency rate goes down in the process of repayment.
When applying for a loan with floating or combined interest rates, you should typically be offered minimum mortgage rates. However, such programs should be chosen only if you are confident that you can repay your mortgage in full in the shortest possible time. Otherwise, it is not recommended to deal with floating and combined rates – banks can increase their size to unrealistic for a certain period of time, and then the mortgage will become unaffordable.
When choosing a mortgage, experts advise being guided by classic mortgage programs with an initial payment of at least 20%. In this case, the interest rate will be lower, and overpayments will be minimal, and additional financial liability insurance will not be required.
How is information about you verified?
- To begin with, the borrower’s documents are carefully checked for authenticity, legality and compliance with banking requirements;
- Next, the borrower is verified. To do this, the security service contacts the National Bureau of Credit Histories, Base of offenses (check for the presence of a criminal past), etc. In addition, the property bases are carefully studied in order to know exactly what kind of property (car, apartment, etc.) the borrower actually has;
- At the third stage, the lender checks the organization in which the borrower works. The bank’s security service makes inquiries to the Enterprise Database (to find out the legality of the work of a particular company) and interbank databases (to check the turnover of the organization).
If the security service is satisfied with the results of your verification, then you will be approved for a mortgage. If not, you will be rejected.
Reasons you can be rejected for mortgages
- you concealed information about available loans;
- you forged documents about the place of work;
- the company is not registered or closed;
- no turnovers on the company’s account (or low turnovers);
- an enterprise with a nominee director;
- the company does not pay taxes;
- the founders or managers of the enterprise were members of organized criminal gangs;
- delays or non-payments on previously taken loans;
- you have a criminal record;
- bad mental health records;
- records on drug and alcohol abuse;
- pre-retirement age;
- lack of work experience;
- lack of US registration, citizenship;
- debts on taxes, fines, utilities;
- individual entrepreneur.
Mistakes you do when obtaining a mortgage loan
Before applying for a mortgage loan, you need to spend a lot of time, effort, and also be patient because the procedure is quite long. First, you need to obtain prior loan approval. To do this, you need to provide all the documents, the bank checks your credit history and also determines the amount of the mortgage loan that you can get based on your monthly income.
Let us dwell on this important stage in more detail. Before going to the bank for a mortgage loan, you need to be sure that your credit history is good. You can request a record from the Credit Bureau. Thus you can find out what information is available to creditors. If you find errors and inaccuracies in your credit history, then you can write a statement indicating inconsistencies, it’s good if you have a document that can confirm this (cash receipt order for the timely repayment of the monthly payment, a certificate that the loan is closed, etc.). The credit bureau will make a request for data clarification and make changes to the statement, of course, this will take some time. Once a year, the borrower has the right to receive a statement free of charge.
The lender you will work with is also an important issue. You’d better choose a “reliable” person, recommended by your friends. The lender will tell you what documents you should pay special attention to, how to fill them out.
To save time, you’d better collect 4 sets of documents and submit them to 4 banks. The likelihood of approval will be higher than sitting and waiting for a response from one bank.
Also, do not forget about mandatory bank checks when considering your application. In any bank, the very first check is a check by the security service. When filling out a questionnaire, you should provide the true information (for example, if you were involved in administrative violations or have a criminal record. Indeed, the bank will reject your application if you conceal any information.
If you receive a preliminary loan approval after all these simple procedures, then this consent is a guarantor that you meet the requirements of the lender, have a positive history and sufficient income.
Best current USDA loan rates
- New American Funding – 3.07%
- Vylla – 3.07%
- Quicken Loans – 3.07%
- Costco – 3.07%
- Guaranteed Rate – 3.07%
- SunTrust – 3.07%
- Fairway – 3.07%
- Alterra – 3.07%
- Wells Fargo – 3.07%
- PNC – 3.07%