Getting Your Mortgage
Getting Your Mortgage
Before filling out an application, it is important to know exactly what you are getting into. Ask your mortgage lender as many questions as possible. The questions here are a good place to start.
· How much property tax and insurance does the reserve account require?
· Is private mortgage insurance (PMI) required? If so, what is the fee and at what point can PMI be dropped altogether?
· What is the anniversary, margin and index for payment adjustments and options?
· When can an adjustable rate mortgage be converted to a fixed rate of mortgage? What charges and extra appraisals are involved?
· At what point do you pay the property taxes to ensure the year’s income tax deduction?
· Is this loan going into your portfolio or will it be sold on the secondary market?
· When are the payments due? When are late fees levied and what is their amount?
What is a mortgage?
When a bank or other financial institution provides a loan for the purchase of real estate, a mortgage interest is created. The bank's loan is secured by an interest in the property. State laws interpret mortgages differently, resulting in different consequences if the borrower fails to make a payment. Mortgages can be fixed rate (interest rates and monthly payments stay the same throughout the life of the loan) or adjustable (interest rates may vary with economic changes and monthly payments change accordingly). Some government programs offer special mortgage rates or programs for veterans or other individuals. Some homeowners will take on a second mortgage or a home equity loan secured by their property for home improvement or other financial needs. All of these mortgage interests can be foreclosed if the homeowner does not meet his or her financial obligations under the loan.
What is the difference between a pre-qualification and a pre-approval?
A pre-qualification is a letter from a lender stating that, based on your income and a rough idea of your expenses, you may qualify for a certain loan amount. This is subject to a full credit check and supplying the necessary paperwork. A pre-qualification is not a guarantee that you will be able to obtain financing, it is solely an estimation of what you could afford.
A pre-approval means you have already submitted a loan application and most of the necessary paperwork to obtain a mortgage. Your credit has been checked, and your mortgage is already approved. All you'll need to do then is find your new home.
Being pre-approved gives you a distinct advantage when making an offer on a property. A seller is more likely to accept an offer when they know you will not have a problem getting a loan. It also makes the process much easier on you. Once you find a home, you'll want to concentrate on planning your move, not worrying about whether your loan will be approved.
What your mortgage payment includes
In many cases, mortgage payments include what are commonly known as P.I.T.I. (Principal/Interest/Taxes/Insurance). Most of the payment is divided between the principal of the loan (the amount borrowed) and interest; and a portion of the payment goes into a special escrow account that the lender maintains to pay for hazard insurance and property taxes. If you have substantial equity on your new purchase, your lender may only require principal and interest to be paid, and you will not be asked to escrow taxes and insurance.
Getting Mortgage Pre-approval
There’s nothing more frustrating than falling in love with a home and then discovering you can’t afford to buy it.
Consulting with a mortgage lender is the first step you should undertake in the home buying process. Almost all first-time buyers need a mortgage to finance their home purchase, so get prepared before you look.
When you’re armed with the knowledge of what you can afford, it focuses your search and allows you to make a move when you find the right home.
What Is a Mortgage Pre-Approval?
Lenders offer borrowers either a pre-qualification letter or a pre-approval letter, but I generally recommend you get a pre-approval letter before you start home shopping.
A pre-qualification letter states the amount a lender thinks you’ll be able to borrow based on your income and credit profile without any actual documentation.
However, mortgage lending standards have tightened since the housing crisis, and all mortgage loans now require full documentation and verification of income and assets—so most sellers will only accept an offer from a buyer with a full pre-approval letter based on verified information.
Your home hunt will benefit with a pre-approval for two main reasons:
- First, you’ll have completed the credit check and paperwork requirements for a mortgage, so you’ll know your ability to finalize a home purchase. If the lender finds a problem with your credit or an error on your credit report, you’ll have time to fix it before making an offer.
- Second, since your documentation will already be in place, a mortgage pre-approval will likely speed up the process once you make an offer.
How to Find a Mortgage Lender
To help you find the right home, query any of the lenders on my “mortgage officer” list found in these pages.
I can recommend a lender or two for you to interview. As a first-time buyer, you should call a few lenders to find someone experienced with first-time buyer needs who can possibly help you identify special loan programs.
What to Expect From Your Mortgage Lender
The best lenders take a collaborative approach with borrowers and explain all your loan options. When your lender checks your credit report, they should give you feedback on how to improve your credit profile.
They should also offer recommendations on how to handle your money between the time you apply for a loan and settlement day.
Your mortgage lender should provide advice about when to lock in your loan rate and discuss the pros and cons of various loan programs.
What Your Mortgage Lender Expects From You
Your lender needs you to be honest about your finances and responsive to all requests for additional information, no matter how unimportant it may seem to you. The more cooperative you are with a lender, the easier the loan process will be.
You should be prepared with tax returns, W2s, bank statements, employer names and addresses, and your current landlord’s information (see separate list here).
Your lender will generate a mortgage approval based on your debt-to-income ratio and credit score, but you should also consider your budget and your own comfort level with the payment amount.
There’s no need to borrow the maximum amount you qualify for, particularly if you know you plan to spend money on items that don’t show up on your credit report. Your careful planning and preservation of your emergency fund are important for responsible, long-term homeownership.
A preapproval letter matters
Having a pre-approval letter from a lender early on in the home search journey will make you stand out as being a more serious buyer……. It tells a seller you are ready to buy at any time, and it also gives you the confidence to know what you can afford while searching for the right home.
LIST OF LOCAL MORTGAGE OFFICERS FOLLOWS:
Mortgage Officers (Rev 2015)
Please note that this is not to be meant a complete list. Let me know of any additions (or deletions) that would be appropriate. Grouped eclectically (not order of experience):
Amherst - Beverly Orloski, , 56 Amity Street, Amherst, MA 01002
665-2139 (Home), 256-4544 (Business), 256-5400 (Fax), firstname.lastname@example.org
http://www.bankatpeoples.com Sizeable area bank with Amherst branch. Beverly is experienced and personable with an excellent reputation for working with customers
Northampton - Jocelyn Houle-Kinlock, 300 King Street, Northampton, MA 01060
(direct) 493-8636, (cell) 250-5432, (email: JKinlock@BankatPeoples.com
Mortgage officer at PeopleBank branch on King Street in Northampton
Northampton/Amherst - Todd Barron and Lindsay Barron, 211 North Street, Northampton, MA 01060 586-5626), 586-5067 (Fax), 586-5660
Family owner local mortgage broker with superior service
FLORENCE SAVINGS BANK
Amherst - Shelley Daughdrill, 385 College Street, Amherst, MA 01002
587-1871 (Business), 256-8554 (Fax), Shelley.Baughdrill@florencebank.com
Shelley is a mortgage officer at Amherst branch of FSB. Apply online for preapproval
Hadley - Toby Daniels, 355 Russell(Rte 9) Street, Hadley, MA 01035
587-1802 (Business), 582-9449 (Fax). (email) Toby.Daniels@Florencebank.com
FSB is largest mortgage lender in Hampshire County. Toby is their mortgage office at Hadley office. With FSB you can apply online for preapproval
Belchertown - Elissa Langevin, Stop & Shop Plaza, 20 George Hannum Street, Belchertown, MA 01007, 587-1880 (Business), 323-5662 (Fax) email@example.com
also Jessica Wales 587-1881 (Business), 323-5662 (Fax) firstname.lastname@example.org
GREENFIELD/NORTHAMPTON COOPERATIVE BANK
Amherst - Maureen Bowler, 253 Triangle Street, Amherst, MA 01002
549-6622 (Business), 549-8750 (Fax), MEB@NorthamptonCoop.com
http://www.northamptoncoop.com Owned by depositors, mainstay bank in Amherst/Northampton area now merged with Greenfield Cooperative Bank
Greenfield - Missy Tetreault, Stacy Pinardi, Melissa Hager, 63 Federal Street, Greenfield, MA (Missy) 772-5000, MTetreault@GreenfieldCoopBank.com
(Stacy) 772-5000 or (cell) 522-9604, SPinardi@greenfieldcoopbank.com
(Melissa) 772-5000, MHager@greenfieldcoopbank.com
Northampton - Christine Gagnon, 67 King Street, Northampton, CG@greenfieldcoopbank.com
Florence - Dawn Hibbert, 6 Main, Florence, 322-7115 DHibbert@GreenfieldCoopBank.com
GREENFIELD SAVINGS BANK
Amherst and Northampton - Cassandra Morrey 6 University Drive, Amherst, MA 01002,
413-549-3660 or 413-774-3191 email@example.com
GSB is major lender in Hampshire and Franklin Counties. Cassie is the Amherst and Northampton mortgage officer. Kelly Stetson-Adams is also a mortgage officer 775-8165
Greenfield - Caryl Connor, 400 Main Street, Greenfield, MA 01302, 774-3191 ext. 126 (Business), (Fax) 774-4277 (Caryl) firstname.lastname@example.org,
Caryl is mortgage officers at GSB main branch in Greenfield, Cassie now at Amherst
UMASS/FIVE COLLEGE CREDIT UNION
Hadley - Gary Talbot, 200 Westgate Dr, Hadley, MA 01035 256-5541, (Fax) 517-0552
Gary is the primary mortgage officer for UMass Federal Credit Union based at Hadley office
Amherst - Tony Roda, Rebecca Stanley, Coral Rief-Duffy, Nathan Davis, Debra McConnell
243 Triangle Street, Amherst, MA 01002 549-5112 (Fax) 549-2812
EASTHAMPTON SAVINGS BANK
Hadley - John Vassallo, 100 East Street, Hadley, MA 01002
584-3407 (Business), 584-5231 (Fax)
ESB is major lender in Hampshire County. John is their mortgage officer at Hadley branch
Northampton - Karen Craig, Mary Pyper 527-4111
297 King Street
Northampton, Massachusetts 01060
Easthampton – Randall Gage, Beth LaPointe, Stephanie Smith, Jessica West, Shirley Quinlan
241 Northampton Street
Easthampton, Massachusetts 01027
Belchertown - Pamela Bronner, Tracey Fournier 527-4111
40 State Street
Belchertown, Massachusetts 01007
Roving ESB mortgage officers include Jeff Hutchins 320-1217 and Paula Auclair 210-6662
PEOPLE’S UNITED BANK
Northampton – Michelle Caron 582-7870 email@example.com
43 King Street, Northampton, MA 01060
25 East Pleasant Street, Amherst, MA 01002
PLEASE INFORM ME OF CHANGES
What you need to bring to your lender:
Gather the documents you'll need to apply for your mortgage. Most lenders will ask for the following:
· W-2's for the last two years: If you are self employed, commissioned, or own other real estate, you should have 2 years 1040's with all schedules.
· A recent paystub for all jobs.
· Bank statements for the past 3 months for all accounts and any retirement or investment accounts.
· Statements or payment books for any installment loans including mortgages.
· Name and address of your landlord for the past 2 years (to verify timely rent payments) or 12 months canceled rent checks.
· Proof of funds for your earnest money deposit.
· Self employed borrowers may need to prepare a year to date profit and loss statement.
· Addresses, Loan, tax, insurance info and leases for any other real estate owned.
More Frequently Asked Questions on Mortgages
When should I submit a loan application to the bank?
I always recommend getting pre-approved for a loan before you even begin looking at homes. As soon as you get an accepted offer you want to submit a full application to your lender with details on the specific house you are buying so that you can get final approval, including the bank appraisal, no later than the date specified in your contract with the seller.
How can I check my credit rating before I apply for a mortgage?
Your credit rating is based on a combined score generated from three credit bureaus who look at your credit history, amount of credit available, and recent inquiries to determine what's called your FICO score. For a small fee, you can get your score or review your credit report by going online to www.myfico.com or contacting the credit bureaus directly at:
Equifax: (800) 685-1111; Experian: (888) 397-3742; TransUnion: (800) 916-8800
Why should I consider paying points?
Buyers often choose to pay a one-time charge called mortgage "points" in exchange for a lower interest rate. Usually paid at closing, each "point" costs 1% of the mortgage amount, or $2,000 on a $200,000 loan. The lower rate reduces the monthly mortgage payment, and points paid in conjunction with the purchase of a home are generally tax-deductible in the year they're paid (see tax advisor). Monthly savings will often exceed what was paid in points in just a few years' time.
What happens if my loan is not approved by the deadline in the contract?
If a commitment for loan cannot be obtained by the specified date, then the parties can either sign an extension to give the lender more time to approve the loan or withdraw from the purchase and the buyer's deposit is refunded.
What happens after I get my mortgage commitment?
Once you have received a loan commitment, the lender will draw up the necessary mortgage paperwork and send it to your attorney. As required by the lender, your attorney will carry out a title search in preparation for the closing to be sure that there are no outstanding liens on the property. Once this is done, a time for closing is scheduled.
What happens if my loan is denied?
If your loan is denied, you or your attorney must notify the seller or seller’s attorney in writing (fax usually) before the deadline in your contract in order to keep from forfeiting your deposit. In some cases, the seller may be willing to sign an extension for the time for commitment if you feel you will be able to get a loan approved through another lender. A second appraisal may be sought, the buyer may be willing to put more money down, the seller may adjust the price or offer other concessions, or the two sides may negotiate to split the difference between them.
How can I be sure I'm getting what I pay for?
Before giving a loan commitment, the lender will hire a certified appraiser to appraise the property. This way the lender can be assured that the property's value is at least the amount you are paying for the property.