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Applying For A Mortgage Loan


Applying for your loan Once you have found a home (and the seller has accepted your offer) or refinancing Information Panel solution that fits your personal preferences, your needs and your budget Information Panel, it’s time to apply for your loan.

If you have already selected your lender Information Panel, get in touch with them and they can take your application. You can apply for a mortgage Information Panel by filling out an application in person, and depending on your lender, may be able to start over the phone, or online. You’ll fill out an application, providing information on behalf of yourself and anyone else who is going to be listed as a co-borrower Information Panel on the mortgage (like a spouse or partner). If you’ve already been preapproved Information Panel, you may have filled out some of the application details by this point.

What you’ll need To apply for a home mortgage or to refinance, you’ll need to provide your lender with documentation to help verify your employment history, creditworthiness, and overall financial situation. If you are applying with someone else (called a co-borrower, such as your spouse), they will also need to provide the same documents. Be prepared to provide the following:


Be prepared to provide the following Point. 1 W-2s (for the last 2 years)

2 Recent pay stubs (two most recent consecutive) 3 Bank statements for all financial accounts, including investments (for the last 2 months, all pages)

4 Signed personal and business tax returns (all pages and relevant schedules) 5 If self-employed, a copy of most recent quarterly or year-to-date profit/loss statement 6 Most recent monthly statement for any mortgage, home equity loan or line of credit you hold on your home (refinance transactions only)

7 A copy of the signed Purchase and Sales Agreement (purchase transactions only) 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 Information Panel as part of the process. Because a mortgage is such an important financial commitment, 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


Locking in your interest rate Since interest rates Information Panel fluctuate frequently, things can change between the day you apply for your loan and the day you close Information Panel. If you want to protect yourself against rising interest rates and ensure that the loan terms Information Panel you used to build your budget are locked, you might consider locking in Information Panel your rate with your lender when you fill out your loan application.

What is interest rates:- Cost for the use of a loan, usually expressed as a percentage of the loan, paid over a specific period of time. The interest rate does not include fees charged for the loan. See also: annual percentage rate (APR).

What is Loan term:- The period of time during which a loan must be repaid. For example, a 30-year fixed loan has a term of 30 years. Also called term. See also: maturity date.

Locking in your interest rate:- A lock period refers to the amount of time prior to closing that you can secure an interest rate for your loan. Lock periods typically range from 30 days to more than 90 days. Generally, the longer the lock period, the more you pay in points or interest. Discount points:- Typically, it’s an amount usually paid at closing to the lender in conjunction with a mortgage loan in order to lower or buy down the interest rate. One discount point equals one percentage point of the loan amount. For example, two points on a $100,000 mortgage would cost $2,000. Negative points reflect the amount that will be credited to you and reduce the amount of closing costs you will pay. Also called mortgage points or points A rate lock, also known as a rate commitment, is your lender’s assurance that the interest rate and discount points Information Panel are guaranteed until the rate lock expiration date. The lender will provide the terms of the rate lock to you in writing, including the agreed-upon interest rate, the length of the lock, and any discount points you choose to pay Of course, if you believe that interest rates will decrease in the near future, waiting to lock your rate may make sense to you. In the end, it’s a personal choice when to lock your rate. The rate must be locked prior to the lender preparing your closing documents. Talk to your lender about the choice that best suits your needs and your preferences.


About applying for a Loan What's prequalification? Being prepared is one of the smartest things you can do to help the home buying process run smoothly. Getting prequalified Footnote 1 gives you an idea of what your loan program and the amount you could borrow might look like in advance. This can give you a big advantage at different stages of your house hunt, from helping you prepare your budget Information Panel and set your expectations, to strengthening your negotiating position with the seller when you’re making an offer on a home. Budget:- A detailed plan of income and expenses expected over a certain period of time. A budget can

provide guidelines for managing future investments and expenses

Homebuyer tip: Regardless of the loan amount you’re prequalified for, stick to your budget and the amount you can comfortably afford. Your lender may prequalify you for more than you think you can comfortably afford. If this happens, you can always scale back to a lower loan amount. You re not obligated to share your prequalification amount with real estate professionals, so simply ask them to only show you homes in the price range that fits your financial comfort zone.

Lender:- An individual or business entity making a loan.


What is prequalification? Prequalification is an estimate of what you might be able to borrow. It: • Provides an estimate of your borrowing power. • Is based on information you provide verbally about your income, assets, and sometimes a credit Information Panel check. • Can often be done online. • Is offered by most lenders at no cost. • Is not comprehensive and therefore is not guaranteed or considered any type of loan commitment. Credit:- An arrangement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date

Why get prequalified? Once you’ve built your budget and know how much of a monthly payment you can comfortably afford, getting prequalified allows you to estimate the loan amount and type that’s right for you. Then, when you’re searching for a home, you’ll know which homes are in your price range.

Monthly payment:- The amount paid each month toward the principal and interest amount of a loan. The monthly payment may or may not include taxes and insurance.


Program Parameters Loan Size: $50,000 -$450,000 Loan Types: First mortgage Acquisition and Rehab Loans Property Types: Single family and 2– 4 unit residential Geography: Chicago and surrounding counties Loan Term: 6 - 9 months Loan to Cost: Up to 80% Loan to After Repaired Value: Up to 60% Interest Rate: 12.5% - 15% Points: 3.5% - 6% Prepayment Penalty: None Fees: $1,000 processing, $100 per rehab draw inspection Appraisals: required and ordered through an approved appraiser Special Pricing: For Successful Repeat Customers


How loans are approved To get a clearer view of the home loan process, it’s helpful to know some of the factors that will be considered when your mortgage application is reviewed. Mortgage:- A legal document giving a lender a lien on real estate to secure repayment of a loan. Mortgage loans

generally run from 10 to 30 years, after which the loan is required to be paid off. Also called deed of trust and or security deed. When you apply for a mortgage, whether you're purchasing or refinancing, your mortgage loan officer will forward your application and the supporting documentation to an underwriter It’s the underwriter’s responsibility to review your loan scenario and the supporting documentation to ensure that it meets the loan program guidelines to determine whether or not you qualify for the loan.

The underwriter looks at your application to see if it meets these basic criteria: 1. Your ability to repay the loan. This requirement basically asks, Is your income enough to cover the new mortgage payment and all your other monthly expenses? To figure this out, lenders use your debt-to-income ratio (DTI). To calculate yours, add up 2 things: your projected monthly home payment and your other recurring debt (monthly payments toward loans and credit cards, for example). Do not include expenses like your electric bill or phone bill. Divide that total number by your monthly pre-tax income to find your ratio. Most lenders want your debt-to-income ratio to be 36% or less, but the ratio that works best for you is the one that you can comfortably afford. If you’re self-employed, tell your lender so they can help guide you through any specific questions about your employment or income.


2. Your likelihood to repay the loan. Your payment history and credit score are indicators to lenders of your likelihood to make payments in the future.

Credit score:- A number that rates the quality of an individual’s credit. Credit reporting agencies calculate this number, often with the assistance of computer systems, as part of the process of assigning rates and terms to the loans they make. The number helps predict the relative likelihood that a person will repay a credit obligation, such as a mortgage loan. In general, the higher your credit score, the more likely you are to be approved for and to pay a lower interest rate on a loan.

3. The home value. The underwriter carefully looks at the home value (based on a professional appraisal ordered by your lender) of the property you are purchasing or refinancing to verify that it meets or exceeds the purchase price or outstanding mortgage balance. This will also help them ensure the (LTV) ratio fits within the loan program guidelines.

Loan-to-value ratio (LTV):- The ratio between the unpaid principal amount of your loan, or your credit limit in the case of a line of credit, and the appraised value of your collateral. Expressed as a percentage.

4. For a purchase, the source of funds for your down payment. The underwriter will verify your down payment funds. If you have a down payment of less than 20%, you will typically be required to carry private mortgage insurance (PMI) at an extra cost. The underwriter will review your documentation to estimate whether you have enough money to cover closing costs You may also be required to have set aside 2 monthly mortgage payments as reserves Lenders typically require reserves to cover your mortgage payment in case of emergencies or unforeseen events. If you are refinancing and don’t exceed the lender's maximum loan-to-value limit, you may be able to finance some or all of the closing costs instead of paying them out of pocket.


Down payment :- The amount of cash you pay toward the purchase of your home to make up the difference between the purchase price and your mortgage loan. Down payments often range between 5% and 20% of the sales price depending on many factors, including your loan, your lender, your credit history, and so forth.

Closing costs:- Closing costs, also known as settlement costs, are the costs incurred when obtaining your loan. For new purchases, these costs also include ownership transfer of any collateral property from the seller to you. Costs may include and are not limited to: attorney's fees, preparation and title search fees, discount points, appraisal fees, title insurance, and credit report charges. They are typically about 3% of your loan amount, and they are often paid at or just before your loan closes. Funds often needed to close a loan, such as homeowners insurance, property taxes, and escrow impound account funds, aren't included in closing costs and are considered separate. You should be prepared to pay these costs before your loan closes.

Reserves:- The amount of savings, separate from the down payment, that a homebuyer sets aside in case of unforeseen events or emergencies. During the loan approval process, many lenders require reserves—typically the equivalent of two monthly mortgage payments—to be verified. As you move forward, keep in mind that your income, debt, credit history, down payment and savings (if applicable), the home’s value and your loan program’s guidelines will all play a role in whether your loan application is approved.


Contact Us Address Renovo Financial, LLC 1016 W. Jackson Blvd., Suite 316 Chicago , IL60607 USA

Phone : 312.243.3288 Fax : 773-442-0600

E-mail : drosen@renovofinancial.com www.renovofinancial.com


Applying for a mortgage loan