Banks are the traditional source of mortgage funding. They offer face-to-face service, recognized name-brands and fees that are generally competitive with other lenders. What they may lack is a broad variety of loan programs, which may mean that they may not offer the lowest interest rates or the lowest fees.
Mortgage brokers generally offer a large variety of loans, which includes loans for people with bad credit. Variety also often results in the lowest interest rate and the most convenient one-stop-shopping for comparison purposes. Because you can physically meet with a broker, the face-to-face service is another plus. In the minus column, mortgage brokers are often more expensive than other funding sources.
Online mortgage providers offer a large variety of loans, convenient round-the-clock shopping and instant comparisons between multiple loans. They often lack personal service — in some cases even reaching a human being by telephone can be nearly impossible to do in a timely manner.
As the variety of lenders suggests, there is no single source of mortgage financing that works best for everyone. Searching for the best deal among all of the potential providers or working with the provider that best meets your personal needs from either a comfort perspective or loan type are both viable ways to address the issue.
You’ll need to select a lender and complete an application. Depending on the lender, you may be able to apply in person, by phone or online. All lenders require you to provide information about yourself and anyone else, such as a spouse or partner, who will be listed as a co-borrower on the mortgage.
Once you find a home that meets your preferences, needs and budget, and the seller accepts your offer, it’s time to apply for your loan.
What you’ll need
You and your co-borrower, if you have one, will need to provide your lender with documentation to verify your employment history, creditworthiness and overall financial situation. The following documents will be required:
W-2s (for the last 2 years)Recent pay stubs (two most recent consecutive)
Bank statements for all financial accounts, including investments (for the last 2 months, all pages)
Signed personal and business tax returns (all pages and relevant schedules)
If self-employed, a copy of most recent quarterly or year-to-date profit/loss statement
A copy of the signed Purchase and Sales Agreement
Your lender may require more documents, depending on your circumstances and the type of mortgage for which you’re applying. You can expect your lender to ask you details about your employment and financial history. With your permission, your lender will also run your credit report as part of the process.
Be sure to take your time and carefully fill out the application as completely and accurately as possible. Not disclosing credit problems up-front or holding back requested documents will only delay the process and potentially prevent approval of the mortgage, so it’s to your benefit to fully disclose everything about your finances.
In addition to verifying why you’re asking for a mortgage loan, a lender will also verify you are who you say you are. This means providing a personal identification documents such as the following:
Often two forms of government identification, such as a passport and driver’s license
Social Security number
Copy of divorce decree if you are divorced
Legal status, legal problems or other financial obligations that would not appear on the credit report
Keep in mind, whenever you send anything to a lender, it is important to present it in an easy-to-understand way. Be as brief as you can in your explanations.
Also, your paperwork must present a complete picture, one that cannot be open to misunderstandings by an overworked underwriter on the other side.
If you approach the mortgage loan application process the right way, you will be more apt to provide the lender what they need, making it a smooth process.