Experience and Knowledge
Ask your prospective lenders how long they've been in mortgage lending and what kind of service you can expect from their company.

Look for a lender who asks you a lot of questions, such as:

Is this your first home?
How long do you plan to own this home?

Rates and More
Low rates are important but don't tell the whole story of what you pay.

Application fees Charged by the lender to initiate the loan process. It's usually not refundable even if the loan is not approved.

Origination fees Charged by the lender to cover the costs of issuing the loan. Fees may cover credit checks, appraisal and title expenses.

What you can expect during the loan process
With the help of The Jansen Team, you don't have to be intimidated by the loan application process. Here's what will happen:

During your first meeting with a mortgage lender, you'll be asked for several pieces of information. Click here for an itemized list of what to bring.

The lender will order the credit report.

The lender will send out letters to verify the information you've provided on your employment, bank balances, etc. Don't be concerned by these routine requests.

Meanwhile, you've been searching for a home in your price range. When you find one you want to purchase and are under contract for the property, the appraisal will be ordered and the interest rate will be locked to guarantee you get the rate agreed to in the contract.

When the appraisal is finished the entire file is sent to the lender's underwriting department for final approval (usually this takes 24 to 62 hours). When the loan is approved, all the necessary documents are prepared for the closing process.

Which mortgage Is right for you?
Choices of mortgage loans have expanded since your parents bought a home. Seem confusing? Not at all! These choices allow you to find the loan structure best for you!

Here's a quick look at some of the pros and cons of the most widely used mortgage loans:

30-Year Fixed Rate

• Conventional loan

• Principal and interest are amortized over 30 years
• Monthly payments remain the same for 30 years
  • Pros:
    • Stable payments, regardless of inflation
    • Tax benefits in the early years of the loan
  • Cons:
    • Equity builds slowly

1 5-Year Fixed Rate

• Like 30-year loan, only shorter
  • Pros:
    • You pay less interest than with 30-year loan
    • Your equity builds faster
  • Cons:
    • Less tax-deductible interest
    • Your monthly payments are higher

Adjustable Rate Mortgage (ARM)

• Rate changes over an agreed-upon time schedule
• Rate changes are tied to financial instrument, usually Treasury Bill
  • Pros:
    • Initial interest rate is lower, sometimes below market
    • Payments might decrease
  • Cons:
    • Risky if rates rise
    • Payments might increase, depending on financial markets

FHA/VA Mortgage Loans

• Government insures or guarantees mortgage loans
  • Pros:
    • Usually a slightly better rate than conventional loan
    • Little or no down payment may be required
  • Cons:
    • Lower limit on maximum amount you can borrow
    • Military service, current or past, required for VA loan

Three factors determine how much home you can afford:

Down Payment

• Between 3.5% and 5.0% of the cost of the home is usually required for most loans. although there are now loan programs that can assist you with these costs as well.
• If you can afford a down payment of 20 - 25% of the cost of the home, you may be able to eliminate mortgage insurance.

  Ability to Qualify for a Mortgage, according to what lenders look for:

• Your income, including your history of employment, the stability of your income, potential for future earnings, and any secondary sources of income, like bonuses, child support, commissions, etc.
• Your credit report, including total current debt and history of repayment.
• Your assets, which means cash on hand and other liquid assets, like bank accounts, stocks, CDs, etc.
• Your property, or the home you are planning to buy, which the lender will have appraised.
• Your total monthly debt payments-mortgage, consumer loans, etc. -- should be 33 - 38% of your gross monthly income, as a general rule of thumb.

Closing Costs

• Total typical closing costs are 2 - 5% of your mortgage loan
• Costs include fees for loan processing, appraisals, title searches, etc.
• Closing costs usually must be paid in cash, unless you are able to include them in your financing.

Predicting your monthly payment

Your monthly payment is grouped together into one payment. It's called your PITI:

• P for the principal on your loan
• I for the interest on the loan
• T for the property taxes
• I for the homeowner's insurance
  • Covers fire, theft and similar damages
  • Required by your mortgage lender
  • You may choose any insurance company or agent

Many different institutions make mortgage loans

You can get a mortgage loan from banks, savings and loans, credit unions, and, of course, mortgage companies.

Whatever type of mortgage lender you go to, he or she will need some information from you to help you learn how much house you can afford. So when you go to your first meeting, try to bring the following information with you.

• Employment addresses for two full years
• Gross Monthly Income
• W-2s if available
• Proof of pensions, retirement, disability or social security
• Proof of income from rentals, investments, etc.
• If Self-Employed:
  • Two years 1040 Tax Returns
  • Current year profit and loss statement
• Creditors
  • Each creditor's name & account numbers
  • Monthly payments and approximate balances
• Amount of child care expenses
• Banking
  • Names and addresses of savings institutions
  • Account numbers for all accounts, type of accounts balances
• Miscellaneous
  • List of assets in stocks, bonds, land
  • Life insurance cash value (documented if used as cash down payment)
  • If applicant is selling a home, a copy of sales contracts
  • Social Security numbers for all parties
• Veterans
  • Certificate of Eligibility & DD-214
• Copy of sales agreement
• Copy of listing on property

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