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How to Get a Mortgage

You need to show lenders that you and your home are good investments.

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Gather statements & Get Informed

Up-front legwork for a smooth application

Get informed:

  • Learn about mortgage types, lenders, and mortgage terms.
  • Get an idea of the size of the loan you need.

Gather documents:

Use the checklist below to gather documents lenders will need with your application.

To showWhat you need
IncomePay-stubs, tax returns
SavingsBank and retirement plan statements
AssetsApproximate value of big-ticket items like cars, real estate, etc.
CreditworthinessCredit report
LoansAny outstanding debt such as student loans, auto loans, and credit card balances.

Tips On Picking A Mortgage

From our friends in New Zealand.

Banks Will Lend If Lending to You Is Safe

How to Improve Your Prospects

  • Fix your credit: Your credit score tells banks whether you’ve paid back loans in the past.  If your score is less than 600, try to improve your credit before applying.  See How to Improve Your Credit.
  • Save for a sizable down payment:  Lenders will be more willing to give you a loans f you have a sizeable down payment (20% or more), because they are less likely to lose money if your loan is foreclosed.  If you can’t afford to save 20%, make sure you have enough for at least a 10% down payment.
  • Get your debt under control: Banks won’t give you a loan if you already have a lot of debt and your payments, including the new mortgage, real estate taxes, and insurance, take more than 45% of your income.  If you have a large credit-card balance or high monthly car-payments, consider paying these off.
  • Build a good employment history:  If you’ve worked less than a year at your current employer, waiting 6-12 months could strengthen your loan application. If you have large gaps in your employment history, make sure you can explain these to a lender.

Find a Lender

It's Worth Your Time to Find the Right Lender

  • Check rates:  Half a percentage point (0.5%) on a $100,000 mortgage can cost you $400/year in interest.  Check your local paper, or search online to find mortgage rates in your area.  And focus on the “APR” – the annual percentage rate – that includes closing costs and points.
  • Check with your bank:  A local bank can offer personal service and information on government or other programs that could help you.
  • Consider a broker:  Mortgage brokers can compare offers and find a loan with a low interest rate.  On-line brokers can provide several quotes minutes after you submit an application.
  • Compare your options: Once you’ve found several lenders that offer reasonable mortgage rates, compare them using the table below.

More than rates…

Your BankBrokerA different bank
Rate (APR)
Fees
Trustworthiness
Responsiveness
Agent experience

Fixed or Adjustable?

It's Worth Your Time to Get the Right Loan

80% of Americans pick a 30-year fixed-rate mortgage.  But a 15-year mortgage builds equity faster and an adjustable rate mortgage (ARM) comes with a lower interest rate – at least until the initial fixed period ends.  To learn more, use our Mortgage Analyzer.

Get It Done

Nothing Happens Unless You Make it Happen

  • Most lenders accept applications on-line, in-person, or over the phone.
  • You will receive a formal loan application packet within a few days of your application.
  • Carefully complete the application with the requested supporting documentation. Keep copies for your records.
  • After you apply, you’ll get an estimate of the interest rate, terms, and fees due at closing.
  • Time matters. Make sure your lender’s commitment – and any interest rate lock – expires after critical dates, such as the closing date.  A rate-lock is a lender’s promise to hold a certain interest rate and terms for a specified period of time.

If you’re ready to apply, print out this How-To and put  reminders in your calendar to help you move from How-To to Done!

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