LENDER CHECKLIST:  WHAT YOU WILL NEED FOR A MORTGAGE

· W-2 forms – or business tax return forms if you’re self-employed – for the last two or three years for every person signing the loan.

· Copies of at least one pay stub for each person signing the loan.
· Account numbers of all your credit cards and the amounts for any outstanding balances.

· Copies of 2-4 months of bank or credit union statements for both checking and savings accounts.

· Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.

· Addresses where you’ve lived for the last 5-7 years, with names of landlords if applicable.

· Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.

· Copies of your most recent 401(k) or other retirement account statement.

· Documentation to verify additional income, such as child support or a pension.

· Copies of personal tax forms for the last two to three years.

TYPES OF LOANS

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

· Mortgage terms.

Mortgages are generally available at 15-,20-, or 30- year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.

· Fixed or adjustable interest rates.

A fixed rate allows you to lock into a rate for as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage (ARM) is designed so that your loan’s interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years.

· Government-backed loans.

These loans are sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payments.

FIVE FACTORS THAT DECIDE YOUR CREDIT SCORE

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history

Did you pay your credit card obligations on time? If they were late, how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe.

If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history.

In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have.

New credit, either installment payments or new credit cards, are considered riskier, even if you pay them promptly.

5. The types of credit you use.

Generally, it’s desirable to have more than one type of credit – installment loans, credit cards, and a mortgage, for example.