Lowgage

A mortgage is a long-term loan through a bank, other financial institution, or even through the seller of the property. The house and/or property serve as collateral for the loan.
Step 1: Find the right mortgage for you.
The most common types are 30-year and 15-year fixed mortgages where the interest rate is fixed for the term of the loan. Other types are Adjustable Rate Mortgages (ARMS), hybrid ARMS, jumbos, assumables and seller financing where the interest rate can vary over time.
Step 2: Determine how much you can afford.
Consider: equity in your current home (if you own), amount you can put down, monthly payments you can manage, real estate taxes, closing costs and insurance (definitely homeowners insurance and probably Private Mortgage Insurance – PMI – if you put less than 20% down). Monthly payments on debts(credit card bills, alimony, child support and student loans, etc.) should not be more than 36% of your pretax income.
Step 3: Check you credit.
A potential mortgage broker will check your credit report immediately. It is the best to clear up any credit problems before you apply for a mortgage. Get your credit report from Equifax (800-685-1111), Experian (888-397-3742) and Trans Union (800-888-4213).
Step 4: Pre-qualification and pre-approval.
If you have not found a home yet, consider getting pre-qualified (a lender will review your financial history before you find a home) or pre-approved ( a lender will check your credit and provide you with a letter stating that you have been pre-approved for a certain amount). These pre-qualifications will improve your purchasing power.
Step 5: Gather the necessary paperwork.
See list below to get an idea of what you will need.
Step 6: Find a lender.
Finding the right lender is an important step to ensure a positive loan experience. Go to www.lowgage.com and fill out the short form for free quotes and their licensed mortgage brokers or lenders will contact you to discuss current loan mortgage rates and availability specific to your circumstances. Remember that the lowest rate is not necessarily the best loan for you. Compare several mortgage loan offers along with the annual percentage interest rate, check on points (pre-paid mortgage interest which will increase your upfront costs) and other fees associated with a given loan.
Step 7: Assess your potential home.
You have found your dream home by this time. Evaluate the home thoroughly to confirm it is what you really want. An appraisal is part of the mortgage process to ensure that you are paying the appropriate price for your home.
Step 8: Prepare for closing.
Make sure the closing is scheduled before your loan commitment and the rate lock-in expires. Also give ample time to complete any loan documentations, home inspections and repairs.
Step 9: Closing day!
Congratulations, you are about to own a new home! At the closing, you will have to sign legal documents and pay closing costs (these customarily include surveying, taxes, insurance, attorney fees, agent fees, points, loan origination fees, PMI and balance of down payment).
Step 10: Servicing the mortgage.
At closing, your mortgage lender is obligated to tell you who will be servicing and administering your mortgage loan. Normally, the mortgage banker will service the loan for the life of the mortgage on behalf of the investor. However, the servicing may be handled by a third party.
Necessary Paperwork
W-2 forms from the previous two years
Federal tax returns from the previous two years
Recent paycheck stubs
Documents showing other sources of income, which includes second jobs, overtime, commissions, bonuses, interest, dividend income, social security payments, VA and retirement benefits, alimony, and child support
A complete list of your creditors such as credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances
Investment records including mutual fund statements, real estate, automobile titles, stock certificates and records of any other investments or assets
Canceled checks for your rent or mortgage payment
Down the road
Removing PMI(Private Mortgage Insurance)
You should be able to remove PMI once the equity in your home reaches
20% of the property value either because the loan balance has been decreased
below 80% or because your home has appreciated in value.
Prepayment
The motivation for prepaying a mortgage is simple-you save money on interest. You can create a prepayment schedule yourself or the mortgage servicer can set up a formal biweekly pre-payment plan. Be sure to consider the tax implications of prepayment. Prepaying reduces mortgage interest, which is tax deductible. However, this may not be beneficial in your tax bracket.