Though there are many tips you can get when applying for a loan, but here are a few that almost always apply.

The Ten Commandments When Applying for a Real Estate Loan:

  1. Thou shalt not change jobs, become self-employed or quit your job.
  2. Thou shalt not buy a car, truck or van (or you may be living in it)!
  3. Thou shalt not use charge cards excessively or let your accounts fall behind.
  4. Thou shalt not spend money you have set aside for closing.
  5. Thou shalt not omit debts or liabilities from your loan application.
  6. Thou shalt not buy furniture.
  7. Thou shalt not originate any inquiries into your credit.
  8. Thou shalt not make large deposits without first checking with your loan officer.
  9. Thou shalt not change bank accounts.
  10. Thou shalt not co-sign a loan for anyone.

Lending FAQs

Private mortgage insurance, also called PMI, is a type of mortgage insurance you might be required to pay for if you have a loan. Like other kinds of mortgage insurance, PMI protects the lender, not you, if you stop making payments on your loan.

Mortgage insurance protects the lender if you fall behind on your payments. Mortgage insurance is typically required if your down payment is less than 20 percent of the property value. Mortgage insurance also is typically required on FHA and USDA loans. However, if you have a conventional loan and your down payment is less than 20 percent, you will most likely have private mortgage insurance (PMI).

Earnest money is a deposit a buyer pays to show good faith on a signed contract agreement to buy a home. The deposit is held by a seller or third party like a real estate agent or title company. If the home sale is finalized or ?closed? the earnest money may be applied to closing costs or the down payment.

Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow.

An origination fee is what the lender charges the borrower for making the mortgage loan.? The origination fee may include processing the application, underwriting and funding the loan, and other administrative services.

 

An escrow account is set up by your mortgage lender to pay certain property-related expenses, like property taxes and homeowner?s insurance. A portion of your monthly payment goes into the account.

An adjustable rate mortgage (ARM) is a type of loan for which the interest rate can change, usually in relation to an index interest rate.

An annual percentage rate (APR) is a broader measure of the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees, and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate.

Amortization means paying off a loan with regular payments over time, so that the amount you owe decreases with each payment. Most home loans amortize.

A conventional loan is any mortgage loan that is not insured or guaranteed by the government (such as under Federal Housing Administration – FHA, Department of Veterans Affairs – VA, or Department of Agriculture – USDA loan programs).

A Closing Disclosure is a required five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage.

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