For many buyers, applying for the mortgage loan is one of the more
stressful aspects of buying a home. The loan application need not be a
stressful time. By following a few easy steps, you'll sail through the
loan application process.
- Make a list of any questions you have about the loan program.
Be
sure you understand the advantages and disadvantages of the various
mortgage programs for which you may qualify, including the advantages
and disadvantages of Fixed Rate Mortgages versus Adjustable Rate
Mortgages.
- Decide if you want to lock-in or float the loan's interest rate.
Locking-in
the rate means that the lender commits to the mortgage interest rate
for the loan - typically at the time the loan application is submitted.
By floating the rate, you can lock-in the interest rate anytime between
the loan application day and closing. Buyers opt to "float the loan"
when they believe interest rates will drop after their loan application
date and prior to closing. The risk is that rather than dropping,
interest rates may rise, increasing the mortgage payment.
- Decide if you want to pay additional points to lower your interest rate.
Typically
you can elect to pay additional points (each point is 1 percent of the
mortgage loan payable in cash at closing) to lower the interest rate of
your mortgage loan.
- Gather your paperwork.
Click here to view a list of typical loan documentation.
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