Mortgage Info

Don’t Underestimate Rates and APRs

The difference between a 6.5 percent interest rate and a 7 percent rate may not seem like much, but it very well could be the difference between buying the home you want versus buying the home you can afford.

When shopping for a home, or anything requiring financing, rates matter! A lower interest rate allows you to borrow more money than a higher rate with the same monthly payment. Interest rates can fluctuate as you shop for a loan, so ask your lender if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period of time, usually 30 to 90 days (you may have to pay for it).

Also, keep in mind a lender must disclose the annual percentage rate, more commonly referred to as the APR, of a loan. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is usually higher than the interest rate because it takes into account the cost of points, mortgage insurance and other service fees thrown into the loan.

So, don’t just compare rates — compare APRs as well.

Mortgage Info

Items Needed to Secure a Home Loan

To make your loan application go smoothly, the following documents are generally needed to complete the loan application process. Keep in mind different lenders may require different documentation, but the following items are almost always necessary:

* Most recent two pay stubs
* Last two year’s W-2’s
* Information on long-term debts
* Most recent two to three months bank statements
* Two year’s tax returns (if self employed)
* Home address(es) the past two years (and landlord contact information if applicable)
* Copy of sales contract and estimate of proceeds, or settlement sheet (if you have or will be selling a home)
* Proof of any other income
* Address and description of the property you wish to buy
* Copy of sales contract on home purchase (and disclosures)
* Copy of driver’s license for all borrowers

During the application process, the lender will order a credit report and a professional appraisal of the property you want to purchase. The application process typically takes two to six weeks.