Getting the Most Out of Your Mortgage Company

2007-03-08 10:33:40

( Financial )



Brief Overview of the Mortgage Application Process

Applying for a mortgage loan involves a set of procedures from both you and your mortgage company.

You need to fill out a loan application form and submit pertinent documents like copies of your income tax returns and personal documents. You or your mortgage company need to obtain a copy of your credit report showing a history of your credit card and loan payment performance.

The property needs to be appraised as to its market value, which is important in determining your qualification.

Then using all the data regarding your personal data, income records and credit reports, the loan company will recommend the best mortgage package for you. Your mortgage lender will also give you a fair estimate of all the costs you need to shoulder before the loan is released.

Typically, your mortgage company expects you to pay the fees for the loan application, appraisal, credit reports, title search and certification, title insurance, survey fee, documentary stamps, and legal fees. You will also need to settle any unpaid property taxes. Some of the fees, such as loan application and appraisals, are paid to your mortgage company even before the loan is approved. And at the closing of the loan, you also pay the origination points, which is about 1-2% of the loan amount.

How to Get a Better Deal

Now that you are aware of the many costs you have to incur, ask your mortgage company to provide you a statement showing all the actual charges.

It may also be a good idea to apply with more than one lender, so that you will have a basis of comparing all the costs. The application fee that the loan company charges you is only a small price to pay in exchange for knowing your available options between different lenders.

Appraisal fees vary widely, so look for companies that are reliable, yet charge cheaper. Your lender normally assists you with this task by contacting the appraisal company directly, but make sure that the fee being charged is reasonable.

You can obtain your own credit report directly from any of the three major credit bureaus, because you might need to pay extra if you ask the lender to do it for you.

Title search, title insurance, survey fees, documentary stamps, transfer charges and recording charges are standard and vary only by state and area. Check with the home seller if he has an existing title insurance policy, as you could possibly obtain it from the same issuer at a lower rate.

Between you and the seller, you can agree as to who should pay the origination points, as it is common practice to require the seller to pay a part or all of the points.

Make sure that all property taxes payable to the state and local governments have been settled before the title transfer.

The right strategies can help you save not only on costs, but also valuable time as well.


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