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REALTOR® Emeritus |  | MORTGAGE BASICS | | ||
|  Keep the Transaction on Track Advanced Tip Advanced Tip Advanced Tip Broker Tip Getting to Close Advanced Tip Mortgage Basics Advanced Tip Advanced Tip Advanced Tip Inspections and Repairs Broker tip Closing Countdown Advanced Tip Going for the Close Advanced Tip Advanced Tip Advanced Tip Commission Disbursements Broker Tips Broker Tip Post-Closing Strategies Quiz: Contract to Close Bright Ideas: Contract to Close Code of Ethics: Contract to Close More Resources: Contract to Close | Avoiding Application Problems Pat Franson, vice president of Advantage National Bank in Elk Grove Village, Ill., provides some insight about some of the challenges associated with applying for mortgages. Q: What are some of the most hurdles buyers face when applying for mortgage loans on homes? Franson: Understanding the difference between prequalified and preapproved. A lender might say, “You make $50,000; we can pre-qualify you for X amount.” But when you start looking at the actual papers and income, they may not be able to get that loan amount. Being prequalified isn’t really worth anything. The best thing is to get buyers preapproved, where the documentation gets run by an underwriter. For first-time buyers, underestimating the amount of money needed to close is another problem. They don’t realize escrows need to be built up and interest must be prepaid. It’s a payment shock that has to be explained. Q: What are the most common mistakes people make in pulling together the documents they need to apply for a loan? Franson: If borrowers are guided by a loan officer and told what they need—W-2 forms, pay stubs, tax returns, bank statements, and so forth—there shouldn’t be any real problem. But to make the loan process go more smoothly, prospective borrowers should begin pulling this information together at the same time they start looking for a house; this will help avoid delays later. Q: What about locking in interest rates? Franson: Rates do change daily, and sometimes the rates in the newspaper are a week old. Sometimes there are people who will try to get borrowers in the door with a teaser rate; be sure buyers get a lock-in sheet that confirms the promised rate in writing. TIP: If you’re rejected for a loan, get advice from the lender and from credit counselors about how to bring up the credit score. “Even after a bankruptcy, people can re-establish good credit, bring up their scores, and totally turn things around. How long that takes varies on a case-by-case basis,” comments Franson. Inspections and Repairs > | |