"Well pull your credit." is the bland phrase you might hear from a lender. What does that mean? Three companies — Experian, TransUnion and Equifax — maintain records of peoples debts and payments. They issue a credit score for you, based on this data. From a lenders perspective, the credit score provides a consistent measure to assess the possibility of a borrower defaulting on a loan. Your credit score can directly affect qualifying for a loan, rate and other terms. The better your score, the better your borrowing situation. A good credit score saves you money, which can help you maintain a good credit score. Its worth checking your credit score regularly, but particularly before a big transaction like a mortgage. If there are issues, start addressing them early. This video may help you understand the score; look for other videos here on credit scores and credit history for more.

Companies involved in the mortgage loan process are required to follow detailed regulations. Many of these are detailed in the Real Estate Settlement Procedures Act — the Federal law commonly called "RESPA." The RESPA rules spell out the information that a lender has to provide to potential customers, step-by-step. They mandate detailed, full information about all costs, servicing details, account and escrow practices. They also mandate that lenders disclose any business relationships that they have with other parties involved in the transaction. In plain English, that means that you should be informed of existing relationships. If the mortgage process requires you to get your car washed, and the lender gets a commission from the car wash across the street, they have to tell you. Same for other not-so-silly business arrangements. The Dept of Housing and Urban Development - HUD - provides information on the RESPA regulations. Here are some of the current links: RESPA page that says nothing particularly useful. Settlement Costs Booklet The Settlement Costs booklet is quite useful and detailed — a recommended resource if youre starting the mortgage journey. HUD also sponsors housing counselors. Some consumers can qualify for counseling without any charges; where charges are involved for counseling, HUD requires that any counseling fees be "commensurate with the level of services provided." The HUD housing counseling agencies directory is here: https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

When you apply for a mortgage and provide the 6 required pieces of information, a lender must provide a Loan Estimate within 3 business days if the loan is approved. This video explains the basics. The Loan Estimate is a standard form, with required information. Yours will include: Loan terms, including interest and loan schedule Projected payments Costs at closing, including: Total Interest Percentage APR (Annual Percentage Rate) Estimates of costs from lender-recommended providers ("Cant Shop"). Final costs must be in defined limits of these estimates. Estimates of costs that you can shop; these will vary based on your decisions. Be clear that the Loan Estimate is anestimate - not a final, binding contract for loan costs and terms. It will give you a ballpark understanding about this loan, and some limits on the possible changes in final costs. For more assistance (and additional videos) on the specific parts and pages of a Loan Estimate, search "Loan Estimate" on this site.

Intimidated by mortgage loan terms and the list of fees? This short explainer video will help you get a handle on all of it. While a mortgage involves borrowing money for a home, there can be quite a few items and fees in the stack of papers. "Loan origination" -- the process of documenting and evaluating your loan application -- is not free. The "loan application fee" is one of the key components to understand. This fee generally covers: The lenders costs to verify, evaluate and underwrite the loan. This fee also pays for appraisal of the property — a professional valuation for the lender (not for the buyer.) Fees to "pull" your credit history. Other surcharges; ask the lender for a detailed list. Loan application fees are generally non-refundable.

Heres a short article and helpful explainer video, giving you some tips on choosing a lender for your mortgage loan. While applying for a mortgage can be intimidating, remember that lenders want your business! You are the customer, making one of the biggest purchases of your life. Companies you consider should be responsive, professional and helpful as you start sizing up your options. There are many advantages to working with a lender that has a local presence. They will have connections with the other businesses and government organizations involved in the purchase, and will know "how to do this" in your particular state and locality. A local presence also helps the lenders personnel be up-to-date on home values and conditions in the area, which could potentially be a factor in your search. Companies without a local presence should not automatically be rejected. Your communication preferences and record-keeping habits might make a national lender with a robust digital loan-processing system a fit. You should be comfortable with calls and video, rather than face-to-face conversation, if that looks like a fit. Advice from friends and family may be helpful, but keep this in mind. People do not buy homes as often as they buy groceries, or even cars. Verify the advice you receive with your own homework, online research, and feel for the situation.

This video outlines what to expect after youve applied for a mortgage loan. There are 6 required pieces of information for a mortgage loan application, covered in another video here on Video-Genius. Some lenders may request additional information at the time of application, or later. Once you have supplied the 6 required pieces, lenders have to provide a Loan Estimate in 3 business days. Lenders will verify the information you provide, through actions like credit checks, credit history and employment verification. Most lendersmust follow these steps, to assess your ability to repay. (Dont be offended by verification — it is required.) Once information has been verified, and processes like underwriting completed, the lender will make a decision about loan approval. If the loan IS approved, they will deliver a Closing Disclosure detailing all of the costs and terms. If you have a Closing Disclosure already, there are videos here that cover all of the pages and details to help you make sense of it. The Closing Disclosure itself must be delivered to you, 3 business days prior to consummation of the loan. The lender will usually set a date for that loan consummation process; this may also be your closing meeting. For clarity — closing essentially means "transferring ownership", and consummation basically means "committing to the loan." Once you have completed both of these, take a breath and pat yourself on the back! Successfully buying a home is a big milestone. Hopefully you remembered to get the keys so you can start transforming "the property" into your home.

Heres a video listing the DO and DONT steps to follow in the process of getting a mortgage loan. To ensure you wont fall victim to loan fraud, make sure you follow all of these steps in the process of applying for a loan. DO: Be honest about residency; if youre not going to live in the house, say so. Be clear and honest about any questions related to your credit history. Report your finances — debt, income and everything else — accurately. Do NOT: List fake co-borrowers Change tax return figures Overstate assets or valuations Fudge employment records Provide incorrect files to answer questions Exaggerate income or investments Buy property for someone else. Of course, do not sign ANY blank documents, and be sure you have read and understood anything that you do sign. And DO keep your own records of everything.

The terms "pre-qualify" and "pre-approve" sound similar, but they fit at opposite ends of the journey to a loan application. Pre-qualification should be done early. Its an informal estimate, without any commitment from a lender, to assess how much you might be able to borrow. Pre-approval is "just about ready to apply", typically when you have everything except a purchase contract. It involves completing a loan application, which lets the lender begin verifying your information. Successful pre-approval gives you a "pre-approval letter" that confirms the lenders offer to lend a specific amount. This letter may be helpful in shopping and negotiating the actual purchase.

How do you apply for a mortgage? First, assemble this information: Tax returns and bank statements for the past 2 years. W-2 forms for the past 2 years Pay stubs for the past 3 months Documentation of any long-term debts Proof of any non-payroll income When youre far enough in shopping for a home to make an offer, add these things: Address and description of the property A sales contract on the home Identify lenders and submit a loan application. If your credit is frozen, be prepared to unfreeze it for the credit history and credit-rating reports the lender will order. The lender will order an appraisal and (in some cases) possibly an inspection. Expect additional questions and clarifications as they go through the process of evaluating your ability to repay the loan. The process usually takes more than a week, and delays of up to 6 weeks arent uncommon. Be patient, and keep copies of everything.

Adjustable Rate Mortgages commit buyers to making loan payments that may change over time as market interest rates change. If interest rates go up, payments go up and the borrower has to meet those payment obligations. ARM rates may be lower than fixed rates now. Look at your personal situation to assess if you can handle the risk of future increases. Is your income likely to increase over the years to come? Will you be staying put, or do you anticipate selling the home and moving? While an ARM may put a larger loan amount in reach now, make sure you can keep up with that commitment if rates increase in the future.