While losing a game of golf because you broke the rules usually doesn't impact your life greatly (unless you're a pro), in the case of a loan, it can be devastating. Read this post from Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi :
With Golf and Mortgages:
It's Important to Know the Rules
There are a LOT of rules in golf ...
That fact has drawn increasing attention as of late. But truth is, golf rules have always provided controversy and remained in the forefront of gold tournaments over the years. Just ask these pros:LPGA star Lexi Thompson, PGA players Craig Stadler and Paul Azinger, golf mega-star Tiger Woods, and more. Not knowing ... or being unaware of a rule ... cost them strokes during important golf rounds and ultimately a win (and money) on the tour.Strong parallels between the importance of the rules in golf and mortgage lending can be made. Be unaware or not know the rules of mortgage lending? It can possibly cost you ... in time, money, and opportunity to attain success.Just as in golf, the rules of mortgage lending are important. They are intended to ensure all play by the same rules. The "rules" demand that Lenders ... and the entities that insure loans ... approve borrowers that are "qualified" to borrow money and have the ability to repay the loan in full, no matter race, sex, familial status, location of property (redlining), and more.The Mortgage Pre-Approval is another good example of a "rule" existing in the modern mortgage process. While the act of being pre-approved was suggested by agents years ago, it has now become almost a necessity. While some agents may show a property to a potential Home Buyer that has not pursued Mortgage Pre-Approval, it's become increasingly rare.So how and why did this "rule" come about?The process of obtaining a Mortgage Pre-Approval likely started with Home Buyers needing to prove an "edge" over their buying competition in a highly competitive housing market ...When a Buyer proves they can successfully complete their home financing to buy, they are viewed more favorably by Sellers. It's easy to understand why most Sellers (and their agents) stick to this "rule" regarding Mortgage Pre-Approvals and entertain offers from pre-approved Buyers only.Do otherwise? They risk a possible loss of valuable time and money. And disappointment.The backbone of any Mortgage Pre-Approval is the potential Borrower's Credit Report. In order for me to order a tri-merge Credit Report, I, as your Lender, need the following basic info from each Borrower to be placed on the Mortgage:
- Full Name(s)
- Address(es): 2 years required*
- Social Security Number(s)
- Date(s) of Birth
- Permission to run the Credit Report(s)
* If you haven't resided at your current address for two (2) years: Info regarding your previous address(es) is required.
If currently renting, sometimes, the following is needed: The name, address, and telephone number(s) of Landlord or letter from Landlord stating the amount of Monthly Rent and the Statement "Paid as Agreed for past 12 Months".
What does the all-important Credit Report disclose to your Lender?It provides your Credit Scores from each of the 3 main credit bureaus: Equifax, TransUnion, and Experian. The middle Credit Score received is the score that Lenders utilize during your Pre-Approval.Here's an example of that "rule" ...Credit Bureau 1: 723 ScoreCredit Bureau 2: 735 ScoreCredit Bureau 3: 741 ScoreThe score the Lender uses is: 735Why are Credit Scores so important to Lenders?Most mortgage loan programs/loan types have minimum Credit Score requirements. Some loans are simply not available to Borrowers with lower Credit Scores ... or those that don't meet minimum loan requirements."Rules" regarding Credit Scores are clear. The lower your Credit Score, the lower your chance of securing a Loan Approval. Likewise, lower Credit Scores typically mean higher Interest Rates, increased financing costs, or both. The higher your Credit Scores, the lower the Interest Rate earned for financing.Once it's determined that you are credit eligible, you will be asked for more detailed information regarding:
- Employment - Employment History
- Current Employer
- Length of Employment
- HOW you are paid (Salary, Hourly, Commission Bonus, Overtime, Social Security, Pension, Investment - if retired or disabled)
Those items or documentation that will verify income will be required at this time too. Those include:
- Tax Returns (Last 2 years)
- PayStubs (Last 30 days, consecutive)
- Court Orders for Support or AlimonyYou then move on to the topic of Down Payment Funds. Be prepared to answer the following questions:
- What Down Payment Funds do you have available, if any?
- Are Gift Funds being provided to you? If so, by whom? And how much?
- Are your eligible for VA Home Buying Benefits?
Note: Should you wish to flex your VA Home Buying Benefits, you will be required to supply the following documentation in addition to all the basic info:
- Copy of your original Certificate of Eligibility
- Copy of DD-214Most Buyers are typically asked for the following:
- A copy of your Driver's License of State ID Card
- A signed copy of the Real Estate Contract on the home being purchased, plus any Riders
- Names & Contact Information for your Attorney
- Name and Contact Information for your Insurance Agent
Where/When applicable, you may be asked for the following:
- All pages of your Recorded Divorce Decree(s) or Separation Agreement(s)
- 12 Month Court Printout of Child Support received
- Bankruptcy Papers: Recorded Bankruptcy Discharge, plus the Schedule of Creditors
- Collection Documentation: Filed & Stamped Release of any Judgment, plus explanations of any outstanding Collections
- Your most recent Social Security Award Letter or Pension Award Letter
If you currently own Real Estate, you'll be required to provide the following info:
- Mortgage Account Information
- If applicable: Info on any Home Equity financing
- Home Insurance Policy Info
- Real Estate Tax Bill
- Address and Info on additional Real Estate owned (Investment, Vacation, Second Home, Timeshares)
For those that are Self-Employed and seeking Pre-Approval or Mortgage Application, the following documentation is typically required:
- The last 2 years of filed Year-to-Date Profit and Loss Statement
- 2 years of complete Tax ReturnsIf you hope to be Pre-Approved and apply for a Mortgage, you can pretty much count on all the above questions and requirements being in play. Those are the "rules" with financing currently.Yes, you're right ...There are lots of "rules" involved in the current mortgage process. But as a I pointed out above, a knowledge of the rules beforehand helps immensely.So, if you have questions (and you should have many), ask them. The sooner the better. Want to know more about the mortgage process? Reach out to me. Hope to be Pre-Approved or apply for a Mortgage in New Lenox? Will County? Elsewhere in the Chicagoland area? Contact me.Know the "rules" regarding mortgages ahead of time. Be aware of what info and documentation you'll be asked to produce during your Pre-Approval or Mortgage Application (and gather it pro-actively).It helps you elevate your financing "game". Helps you avoid the "traps" and "water hazards" some find during their mortgage process. And it will make you a winner ...* Hoping to be Pre-Approved ... or to buy or refinance a home in New Lenox or elsewhere in the greater Chicagoland agrea? Contact me! I'll put my 40+ years of mortgage experience and expertise hard to work on your behalf.I'm easily found at:Gene MundtMortgage Originator - NMLS #216987 - IL Lic. 031.0006220 - WI License 216987American Portfolio Mortgage Corp.nmls #175656Direct: 815.524.2280Cell or Text: 708.921.6331eFax: 815.524.2281
Mortgage Originator - NMLS #216987
IL Lic. #0006220 - WI License
Gene Mundt, Mortgage Originator, 40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking: #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including: The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin.
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