A4HB Homebuyer's Blog

5.3.1 What do I need to take with me when I apply for a mortgage?

To expedite the loan process, you should meet your lender with social security numbers for both you and your spouse; copies of your checking and savings statements for the past 6 months; evidence of any other assets like bonds or stocks; a recent paycheck stub; a list of all credit card accounts and the amounts owed on each; a list of account numbers and balances due on items such as car loans; and copies of your last 2 years’ income tax statements. Depending on your lender, you may be asked for other information.

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2.6.8 Assistance Programs

There a wide range of programs designed to help lower income home buyers, or home buyers with very limited cash, buy a home. Some programs are available nationwide or statewide, others are restricted to home purchases within a particular city or county. If you don’t find the information you need here, give a call to your local housing department or check out their web site.   Don’t assume that you’re not eligible for home buyer assistance  programs. Find out. Many programs indicate that they are set up for first time home buyers, but a “first time” home buyer for most

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2.6.7 IRA, 401(k) or other Retirement Funds

Check with your accountant, your loan officer, and your fund administrator, but in many cases you can withdraw certain amounts of money penalty free from retirement accounts if the money is used for the purchase of a primary residence. In some cases, you can even borrow money against these accounts and pay six or seven percent interest on the money you’ve borrowed back into your own retirement accounts.

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2.6.6 Write Yourself a Check Against Your Credit Card

If you do this after you’re under contract to buy a home, you’re probably not going to get the loan. If you do it far enough in advance (as in 3 or 4 months), the lender will just see cash in your checking account and a certain amount of credit card debt. If the debt isn’t too high, they will probably remain blissfully ignorant of where the money in your bank account came from and approve you for the loan. Again, if you’re doing this, talk it through with a good mortgage loan officer before you do it.

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2.6.5 Selling Other Assets

You can sell stocks, mutual funds, your car or just about anything else you own to raise the cash you need to purchase a home. If you do this while you’re looking for a home, or shortly beforehand, you may need to have detailed documentation of the sale and the transfer of the money into your bank account.

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2.6.4 Gifts from Family Members

Some loan programs, and FHA programs in particular (see Types of Loans), will allow family members to give you a gift of all or part of the money you’ll need to purchase your home. If you have family members who are this generous, they will generally need to sign documents indicating that the money is a gift and that they are not expecting repayment from you. You will also probably need documentation that the money was withdrawn from the bank account of the person making the gift before it was deposited in your account. Talk to your mortgage loan officer

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2.6.3 Cash Requirements

As outlined in our section titled Types of Loans, you may be able to qualify for loans at 97% or even 100% of the purchase price of the property you buy. Even if you qualify for these loans, however, you’ll need some cash to finalize your home purchase. If you don’t currently have the cash in hand in your bank account, here are some thoughts on where you may be able to obtain the cash you need to purchase a home. We list a few options below, but please don’t even consider pursuing any of these options without reviewing them

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2.6.2 Credit and Qualifying

The quality of your credit history is probably the most important factor in determining what mortgage loan programs you will qualify for. The amount of money that you’ll  qualify to borrow is largely a function of your income. If you have limited cash assets available, you’ll either have to explore the various assistance programs that are available or qualify for a high “loan to value” loan, borrowing  97% to 100% of the home’s value.   If you  have adequate cash, there are loans available no matter how bad your credit is. But you’re not going to like the terms if

Read More » The Source of Funds

Finally, in addition to the loan term (e.g., 15 year vs. 30 year) or the payment structure (e.g., fixed rate vs. ARM), loan types differ with respect to the “investor” who is the ultimate source of the money the mortgage company is lending you. In many cases, the buyer will not be aware of who this investor is, but it is they who determine the “wholesale”  interest rate at which your bank or mortgage broker gets the money to loan to  you. And it is they who determine the rules under which the loan is made and the qualifications you

Read More » The Payment Structure of the Loan

In addition to the loan term, loan types are differentiated by the way the payment is structured. The most common mortgage loan payment structures are: Fixed Rate Mortgages. With a fixed rate mortgage, the interest rate and the payment (excluding property taxes and insurance) are fixed, or stable, for the life of the loan. That is, if you get a $200,000 loan at 6% interest for 30 years, you know you’ll pay about $1200 each month for principle and interest for as long as you choose to keep the property and the loan. Historically, most mortgage loans in the U.S.

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