If you have previously purchased a house, you know what lies ahead, however, if you're a first time home buyer . . . you have questions. You probably have friends or relatives who anguished over the mortgage process. The reason is probably due to inadequate preparation on their part or the failure of the mortgage loan officer to properly prepare them. So here's some tips to make the mortgage application and your home buying uneventful. If you're purchasing a home in Pennsylvania, please visit the various mortgage calculators on the calculator page. This page contains a variety of calculators; including a closing cost calculator for an FHA, VA and conventional mortgage. You can compare mortgage scenarios (i.e. FHA, VA conventional) on the Mortgage Comparison page. Additional information can be found on the PA Home Buyer Page and Frequently Asked Question page. Information on the Pennsylvania closing costs can be found on the PA Closing Costs Explanation page. The Seller Assist page will explain how the seller can pay a percentage of your closing costs. Good Luck! 1. Get your free credit report!
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. Don't get suckered into the credit report services that want your money. Go to the Federal Trade Commission for information requesting your credit reports from Equifax, Experian and TransUnion. At this point, you're probably thinking, "I pay my bills on time, why should I bother". Talk to any mortgage loan officer with years of experience and he or she will tell you that it's common for collection accounts and erroneous information to appear on a consumer's credit report. Erroneous information can devalue your credit score. A low credit score can jeopardize your ability to obtain a mortgage. Working through an inaccurate credit report . . after you applied for a mortgage is to say the least - is stressful. 2. Get your papers in order!
At mortgage application you will provide the lender with your pay stubs for the previous 1 - 2 months, your checking, savings, 401K account(s) statements - all pages, even the last page for check reconciliation, divorce decrees, child support, and settlement agreements. Underwriters want to sell it all. Do you have a compete copy of your income tax returns and W-2's for the previous two years? If you lost your W-2"s, obtain copies. If you don't have copies of your income tax returns, call the IRS at 1-800-829-1040 and request a transcript of your income tax return for the previous 2 years. Most likely, you will only need a transcript, not a full copy. Are you a union tradesman? If so, make sure you have ALL of your pay stubs and documentation for the previous two years and year to date earnings. You guys are tough to underwrite. The lender will need the full address and phone numbers for all employers. Do you still have your first grade class picture? Dig it out, the underwriter might want that too. They want it all. It's the bank's money, if you want a loan, you have to abide by their rules, whether the rules make sense or not. 3. Get PRE-APPROVED - not PRE-QUALIFIED There is a difference. In short, only an underwriter or Fannie Mae or Freddie Mac's automated underwriting system can PRE-APPROVE you. Anything less is pre-qualification. Pre-qualification is when the loan officer gives you his or her opinion that you are likely to obtain a mortgage - not that you will. Is that what you want, an opinion? Or do you want someone in authority who approves your paperwork to render an opinion? That's PRE-APPROVAL. Get pre-approved by a mortgage broker and your bank. Why? Think about it as a second opinion. Are both lenders arriving at the same pre-sale price? Are they both asking for the same information? Did both lenders obtain your credit report for all three credit reporting agencies? 4. Get a good faith estimate (with an APR disclosure) and compare If the lender is unwilling to provide you with a good faith estimate before or after the purchase - move on. Carefully review each good faith estimate. Does the Pennsylvania title insurance premium match? Did the lender disclose a deed transfer tax? Are the tax escrows similar? Just because some Pennsylvania fees are not listed, doesn't mean that you won't pay them - you will. And always remember . . . if it's too good to be true, it probably is!
Here's a link to HUD/FHA's home buying page - HUD/FHA Buying a Home |
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