The Real Estate Community of Eric Daker

Eric Daker - Profile

2009-07-07T12:35:00.000-07:00

I am married with 4 children. I have been in the Mortgage Industry for 18 years. Through out my time in the Mortgage Industry I have worked in various facet's of the industry. I have word as a loan officer, processor, underwriter, and now as Production Manager for a National Lender. This experience has made me a well rounded individual in my field. Having knowledge of all aspects of Mortgage Lending has enabled me to become a leader in my field.

Phone: 888.584.4248
Cell phone: 951.202.1728

Dailey Mortgage Market Commentary

2009-07-07T12:32:00.000-07:00

Mortgage Market Commentary At 10:00 the bond and mortgage markets are unchanged from yesterday's closes. The DJIA -40. There are no economic reports today; the main driver for the bond market will rest with the $35b 3 yr note auction at 1:00. We expect the auction to be well bid, investors are moving to the lower end of the curve as was evident yesterday. The 10 yr note yesterday saw its yield down 2 basis points while the 2 yr note yield fell 9 basis points from last Thursday's close. Tomorrow the long end will have a bigger test with $19B of 10 yr notes to be auctioned. The week is absent of economic data; the markets will focus on the beginning of the earnings season that kicks off today. Equity markets, to remain firm will need good earnings as companies report results of Q2 activity and possible gains. The ICSC-Goldman retail sales were up 0.1% frm the previous week but the increase is much smaller than the previous week to week gains which were up 1.6%. Yr/yr sales were up 0.5%, again lower than yr/yr last week at 0.6%. Not a big change so not much concern evident. This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales. The Johnson Redbook retail sales a little better than previous release at -4.2% yr/yr, up from -4.3% yr/yr the week before. A weekly measure of sales at chain stores, discounters, and department stores. It is a less consistent indicator of retail sales than the weekly ICSC index. The two reports this morning suggest consumers are still keeping their hands in their pockets and increasing savings; purchasing only necessities. Remember Laura Tyson, Clinton's main economic adviser? In a speech last night in Singapore she called for another Obama stimulus package; saying the 1st one of $787B isn't enough as the economy is worse than the administration thought. The ABA is saying today that home equity loan delinquencies jumped substantially in Q1, to 3.52% of all accounts in the quarter from 3.03% in the fourth and late payments on home-equity lines of credit climbed to a record 1.89%. An index of eight types of loans rose for a fourth straight quarter, to 3.23% from 3.22 percent in October through December. ABA said the biggest reason for the increases is job losses. Rate Quote7:00 AM - FNMA-30 4.5% coupon 100.14 (UP 3 BPs from prior close) Have a great day!

Buying or selling real estate? Let me help you.

2009-07-07T12:24:00.000-07:00

Buying or selling real estate? Let me help you.

Purchasing or investing in real estate is an exciting time in life, whether it is your first time or you are a seasoned veteran.

Let me help you find the perfect real estate partner for you, regardless of where you call home.

With many years in the business I have deep relationships that can make your next transaction easy and simple.

First time home buyer?

Moving up?

Investing?

Commercial properties?

I can recommend the perfect partner for you who will work with you your way. As always, I am happy to provide the right financing that you will need to complete your transaction.

Fast. Simple. Experienced. I am here to help!

Eric Daker

T: 888.584.4248
C: 951.202.1728

Buying Bank Owned Properties (REO)

2009-07-07T12:22:00.000-07:00

Buying Bank Owned Properties (REO)

So you’d like to buy a bank owned property?

You’ve watched the late-night infomercials and you’re ready to do the bank “a favor” and take a problem off their hands. Plus, you expect to make "a killing" in the process. Sounds great and it might just happen, but first you should take a look at some facts and get prepared.

REO vs. Foreclosure

An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You see, most foreclosure auctions do not even result in bids. After all, if there was enough equity in the property to satisfy the loan, the owner would have probably sold the property and paid off the bank. That is why the property ends up at a foreclosure or trustee sale.

Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs association with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid.

If you are the successful bidder, you receive the property in "as is" condition, which may include someone still living in the property. There may also be other liens against the property. Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale.

Then the property "reverts" to the bank. It becomes an REO, or "real estate owned" property.

REO Properties For Sale

The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will negotiate with the IRS for removal of tax liens and pay off any homeowner’s association dues.

As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property. A bank owned property might not be a great bargain.

Do your homework before making an offer. Make sure that the price you pay (if you’re successful) is comparable to other homes in the neighborhood. Consider the costs of renovation, including time to complete them.

Don’t get caught up in a ‘bidding war’ and pay over market value.

How Banks Sell REO's

Each bank/lender works a little differently, but they all have similar goals. They want to get the best price possible and have no interest in "dumping" real estate cheaply. Generally, banks have an entire department set up to manage their REO inventory.

Once you make an offer to purchase, banks generally present a "counter-offer." It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible.

You should plan to counter the counter-offer. Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days."

Property Condition

Banks always want to sell a property in "as is" condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.

Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct. Even though you agreed to “as is," always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market, but don’t take it for granted.

Banks do not want to see a lot of proprietary disclosures; they are exempt from the California Seller’s Transfer Disclosure Statement (TDS-14). If there are real estate agents involved, either representing you or the bank, those agents are required to provide you their disclosure statements.

Most banks will not provide financing on their REOs but it doesn’t hurt to ask. Especially if the property has extensive damage and you are purchasing it "as is."

Making an Offer

Before making an offer, have your agent contact the the listing agent and ask the following:

Are there any inspection reports?
What work has the bank agreed to?
Is there a special "as is" form?
How long does it take the bank to accept an offer?
How does your agent deliver the offer?

Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation.

Keep in mind: nothing happens evenings and weekends (banks are closed). Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography.

Make your offer easy to accept. Hopefully these tips will manage your expectations. Remember that REO's sell at pretty close to full market value and are not the deals presented on late night television.

Need pre-approval? Submit your information on line!

Partners>CoBranding>Preapprovals

2009-07-07T12:20:00.001-07:00

Partners

If you are a real estate professional, I have opportunities for you!

Pre-Approvals

We are happy to pre-approve your borrowers at any time.

As a nationwide mortgage banker backed by a publicly traded insurance company, we have the resources to quickly convert your prospects to buyers within a very short period of time.

Residential? Sure.
Commercial? Sure.
Conforming, FHA, VA or Jumbos? Sure.

Give us a try and find out what experience, strength and integrity means in today’s uncertain market.

Co-Branded Marketing Materials

Need fliers for open houses? All we need is your listing description and digital photos along with your photo and contact information and we can produce high quality fliers for your next showing.

Open House Time

For selected partners. We provide you with mortgage professionals to help you show your properties. Out of town? Too many properties? We are happy to help you out.

Cross Marketing

There are many professions that allow the cross selling of products that have value for your clients and mine. Need a good pool man? What about an experienced contractor to upgrade the property? We have deep seated relationships in our local community that can help you look…well extraordinary.

If there is something that you do not see listed here, please feel free to contact me. Our services and ideas are proven to produce greater sales with less effort.

Careers

Looking for a career in the lending industry? Please feel free to contact me.

Reverse Mortgages

2009-07-07T12:18:00.001-07:00

Reverse Mortgages

Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in HUD's reverse mortgage program. The program allows homeowners to borrow against the equity in their homes.

Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.

Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the borrower lives in the home. Lenders recover their principal, plus interest, when the home is sold. The remaining value of the home goes to the homeowner or to his or her survivors. If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage.

The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.

For example, based on a loan at today's interest rates of approximately 9 percent, a 65-year-old could borrow up to 26 percent of the home's value, a 75-year-old could borrow up to 39 percent of the home's value, and an 85-year-old could borrow up to 56 percent of the home's value.

There are no asset or income limitations on borrowers receiving HUD's reverse mortgages.

There are also no limits on the value of homes qualifying for a HUD reverse mortgage. However, the amount that may be borrowed is capped by the maximum FHA mortgage limit for the area, which varies from $81,548 to $160,950, depending on local housing costs. As a result, owners of higher-priced homes can't borrow any more than owners of homes valued at the FHA limit.

HUD's reverse mortgage program collects funds from insurance premiums charged to borrowers. Senior citizens are charged 2 percent of the home's value as an up-front payment plus one-half percent on the loan balance each year. These amounts are usually paid by the lender and charged to the borrower's principal balance.

FHA's reverse mortgage insurance makes HUD's program less expensive to borrowers than the smaller reverse mortgage programs run by private lenders without FHA insurance.

Mortgage Calculator

2009-07-07T12:17:00.001-07:00

Mortgage Calculators

How much mortgage can you afford?

Mortgage Loan Calculator Rent Vs. Buy
Maximum Mortgage Reverse Mortgage Loans

FHA Streamline FAQ's

2009-07-07T12:15:00.000-07:00

FAQ - FHA Streamline Refinances

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

1. General Message
2. What is a Mortgage Rate Reduction?
3. What is an FHA Streamline Refinance?
4. What do I need to do?
5. How long does it take?
6. Why Security National Mortgage Company?
7. Do you offer other types of mortgages?

1. General Message

Welcome to the information page for Tom Douroux, Security National Mortgage Company and our FHA Streamline Mortgages.

This information is designed to inform and educate you about FHA Streamline refinances including how quick and easy it really is, as well as the primary purpose – to lower your monthly payment.

We enable current FHA homeowners an easy more automated process that requires less documentation than the standard conventional loans demand.

If you already have an FHA mortgage, we recommend that you consider that rates are at historic lows.

Now is the time to take advantage of these savings by refinancing with Jeff Nelson and Security National Mortgage Company.

2. What is a Mortgage Rate Reduction?

We focus on a special streamline program called a "Streamline Rate Reduction".

This program allows borrowers to get lower interest rates, WITHOUT incurring any fees to get the lower rate.

This is how it works...

We are paid a fee by our HUD sponsored investors to initiate the Rate Reduction process with FHA
borrowers. Why?

We want to earn the interest on your loan.

We then take the fee that we receive and pay any costs involved in helping you lower your interest rate.

We DO NOT add any fees to the back of the loan! This would greatly reduce your benefit from this program.

Whatever funds are left over after we pay the transaction costs is what we earn for saving you money. It is a win-win transaction. You get a lower payment (at no cost) with little effort and the comfort of knowing that you never have to worry about your interest rate again… and we gain a new client.

3. What is a Streamline Refinance?

The mortgage term “streamline” refers only to the amount of underwriting & documentation required by the FHA and Security National Mortgage Company.

There are 3 basic requirements to qualify for an FHA streamline refinance:

1) Your home loan to be refinanced must already be FHA insured.

2) Your home loan to be refinanced should be in a current status, and not delinquent.

3) Your new mortgage is to result in a lowering of your monthly P&I payments.

Cash out is not allowed on mortgages refinanced using the FHA streamline refinance process. If you are looking for cash out, we may be able to accommodate your request with a traditional FHA or Conventional refinance.

4. What do I need to do?

First is the easy decision of saving money on your monthly payment. This is all about your monthly savings!

Second, is to collect the following documentation:
1) A copy of the original note with your current lender,
2) A copy of your most recent mortgage statement; and
3) Proof of your social security number, such as a copy of your social security card, a W-2 or the first page of last years federal tax return.

Just as a side note, you are not required to supply income or asset information – ABSOLUTELY NONE!

Third, call Tom Douroux and Security National Mortgage Company, to begin your quick loan application. That’s it!

5. How long does it take?

Once you have contacted Security National Mortgage Company, we begin by completing your application over the phone. We will require you to fax or mail us the documents detailed in the previous message.

With this information we can complete the qualification process and properly quote you your new lower interest rate and lower payments.

Processing is typically completed within several days to a week, and loan documents are prepared for your signature. You may sign your new loan documents in the comfort of your home or your place of business, or you are welcome to visit our title or escrow offices.

That’s it. Once the loan has funded and recorded, you will make your new lower monthly loan payment to us.

6. Why Security National Mortgage Company?

Security National Mortgage Company is a Mortgage Banker and is a subsidiary of a publicly traded insurance company.

We lend in 38 states and have 35 operations centers across the country.

As one of the nations leading lenders, we have a strict code of ethics and take price in delivering a quality experience for all our customers.

7. Do you offer other types of mortgages?

Absolutely

Security National Mortgage Company originates residential purchase, rate and term and cash
out refinances. Our menu of mortgage products include FHA, VA, Conforming and Super Jumbo loans to $ 3,000,000.

We also originate commercial purchase and refinance transactions to $ 100,000,000 as well as SBA
loans.

We gladly accept any and all referrals. You may reach a representative by pressing “0” now.

Thank you for taking the time to learn about Security National Mortgage Company,

We look forward to serving you and saving you money.

[Back to Mortgages]

Home Equity Closed-End Loans

2009-07-07T12:14:00.001-07:00

Home Equity Closed-End Loans

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

A home equity line of credit loan is a line of credit that is secured against real estate. The amount of the credit line is dependent upon the amount of equity in the subject property and the lender's guidelines. Each lender has its own specific guidelines and limitations. Lines of credit are typically designed for borrowers who intend to pay back the borrowed funds within a short period of time. Equity lines of credit are processed and underwritten similar to traditional mortgages; however, lender guidelines vary widely.

Home equity lines differ from traditional mortgages that provide funds up front, then require repayments of principal and interest each month. With a home equity line, a borrower may draw against any available credit on the line while continuing to make monthly payments during the "draw period." The draw period usually lasts 15 years. At the end of that time, the borrower has a set number of years to repay the remaining balance in full without further draws. The "repayment period" is typically 15 years.

Interest on home equity lines accrues similar to interest on credit cards and payments are based on payment factors.

[Back to Mortgages]

Mortgages

2009-07-07T12:01:00.001-07:00

Mortgages

Security National Mortgage Company offers several loan programs. Most loan programs contain different features that can be confusing for even experienced homeowners. The most common loan programs include:

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

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FHA

2009-07-07T12:00:00.001-07:00

Federal Housing Administration (FHA)

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

The Federal Housing Administration is a division of the U.S. Department of Housing and Urban Development, commonly referred to as HUD. FHA loans were created to provide affordable mortgages to the average homebuyer. The federal government insures FHA loans, or guarantees participating lending institutions against loss from default on qualifying loans.

Programs and Features:

Fixed Rate Loans, Temporary Buy-Downs and ARMS
Available for detached 1 to 4 unit dwellings, eligible condos and PUD's
Properties must meet HUD guidelines and be inspected by HUD-approved appraisers
Subject to loan limits set by HUD (see HUD web site for loan limits)
Mortgage insurance of .55% due annually and paid monthly
One time mortgage insurance fee of 2% to 2.25% charged on detached dwellings and PUD's, which may be financed
Non-occupant co-borrowers allowed
No reserve requirements at closing
100% of down payment and closing costs may be a “gift”
Fully assumable by a qualified borrower
Seller may contribute a maximum of 6% of the lower of the sales price or the appraised value

[Back to Mortgages]

Conforming loans

2009-07-07T11:57:00.001-07:00

Conforming Loans

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

Conforming Loans are those that meet Fannie Mae and or Freddie Mac underwriting requirements. In other words, income, credit, and property requirements must meet nationally standardized guidelines. Conforming loans are subject to loan amount limits that are set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). These limits vary based on the region in which the subject property is located as well as the number of legal units contained in the subject property.

[Back to Mortgages]

Jumbo and Non Conforming Loans

2009-07-07T11:53:00.000-07:00

Jumbo and Non Conforming Loans

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

Jumbo loans are those that exceed the loan amounts allowed by FNMA and FHLMC.

Programs:

No Income/No Asset Verification Loans
ARMs
Fixed Rates
Credit History Less than perfect
Options Available

[Back to Mortgages]

Second Mortgages

2009-07-07T11:52:00.001-07:00

Second Mortgages

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

A close-ended loan is one where a set amount of money is borrowed and repaid within a specific period of time. There are a multitude of second mortgage products available and lender guidelines vary widely. Generally, loan amounts, interest rates and fees are tied closely to equity in the property and credit scores. Whether to do a first or second mortgage or whether to take a line of credit or closed-end loan depends largely on the purpose of the loan.

Second mortgages are ideal products for the following situations:

Debt Consolidation: This is the most common purpose for acquiring a second mortgage. Typically, a second mortgage is paid off in a shorter period of time than a first.
Home Improvements: The greater the equity in a property, the better the deal on a mortgage. Often, a borrower will take second mortgage to complete improvement projects. After the improvements are completed, the borrower refinances the first mortgage.
Cash Out: Many borrowers use the equity in their properties to obtain cash to pay for college expenses, vacations, or any other purpose that requires a fairly sizable amount of cash.
Eliminate the requirement for Mortgage Insurance.

[Back to Mortgages]

Veterans Administration (VA)

2009-07-07T11:49:00.001-07:00

Veterans Administration (VA)

FHA Loans VA Loans Conforming Jumbo Second Mortgages Equity Lines

Veterans Administration loans were created to help veterans finance the purchase of their homes with favorable loan terms. For the purpose of the VA program, “veteran” includes active duty service personnel and certain categories of spouses. Like FHA loans, the federal government insures VA loans, or guarantees VA approved lending institutions against loss from default on qualifying loans.

Programs and Features:

Fixed Rate Loans and Temporary Buy-downs
Available for detached 1-unit dwellings, eligible condos and PUD's
Properties must meet VA guidelines and be inspected by VA-approved appraisers
Subject to loan limit set by VA, currently $240,000
One time mortgage insurance fee of 2% is typically charged, which may be financed if the total loan amount does not exceed $240,000
No prepayment penalty
No reserve requirements at closing
No down payment required
Out-of-pocket expenses may be gifted, typically from relatives
Only eligible veterans and their spouses occupying the subject property may be co-borrowers or co-signers
Seller may contribute a maximum of 6% of the lower of the sales price or the appraised value

[Back to Mortgages]

2009-07-07T11:44:00.001-07:00

Residential and Commercial Real Estate Financing.
Thank you for visiting my site today. While you're here, please take the time to read a little bit about my services and explore the site. From this site you can learn about the mortgage process, get pre-approved for a home loan, or apply for your mortgage online using our secure mortgage network. Trusted. Experienced. Professional.

Welcome.
My name is Eric Daker. For many years now I have been helping families all over the country purchase and refinance their homes with FHA, Conventional and Jumbo financing. I work closely with my clients and other real estate professionals to ensure that your loan application is completed as expeditiously as possible with frequent informative updates. This process creates trust and understanding, building a long term advisory relationship. Call me today!

Security National Mortgage Company, a Subsidiary of Security National Financial Corporation [Nasdaq:SNFCA] originates real estate loans in 38 states through a network of 35 local branches. Licensing Information available at http://www.securitynational.com/.

What to expect when you apply for a home loan

2009-07-07T10:27:00.001-07:00

What to expect when you apply for a home loan: The Mortgage application should take approximately 15 - 20 minutes to complete. Once you have submitted your application, one of our mortgage specialists will contact you within one business day to discuss your needs and help you select the mortgage that suits both your budget and lifestyle. IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account. What this means for you: If you open a personal account, we will ask for your name, address, taxpayer identification number, date of birth, and other information that will allow us to identify you. Additionally, we will take certain steps to verify your identity, such as asking for your driver's license or other identifying documents or checking other sources. Similar identification requirements apply to non-personal accounts such as corporations and partnerships. Be assured that we recognize the importance of protecting your privacy and safeguarding the confidentiality of the information you provide to us. What Information You'll Need: To apply for an SNMC mortgage, please have the following information at hand: * Social Security Number or Tax Identification Number * Date of birth * Mother's maiden name * Address history for the past two years * Current e-mail address * Annual income and employment information * Current month's paystub(s) for the borrower and co-borrower (if applicable) * Last two year's W-2 forms * Monthly costs you pay for current housing, including rent, mortgage(s), taxes, insurance and association dues * Last two year's tax returns with all schedules and YTD Profit and Loss Statement if you are self-employed or paid on commission, or if more than 25% of your monthly income comes from bonuses or overtime * Last two month's full bank statements (not just summary pages) as well as any other asset accounts you wish us to consider * The Deed, if you are refinancing * The Sales Contract, if you are buying a property * Outstanding liens, monthly insurance and tax amount, market value and income generated on any other property you may own, such as rental property As part of the verification process, you may be asked to provide us with copies of the items listed above. Once the application has been submitted, you may be asked to provide the following additional documents, if applicable: * Canceled checks showing your mortgage payments over the last 12 months, OR your rent payments over the last 6 months * If a Veteran, your VA Certificate of Eligibility, or DD214 What You Should Know: * Fees associated with your application: Fees associated with closing (or settlement of) your loan will be provided on a Good Faith Estimate which will be sent to you upon receipt of your application * Once you have submitted your application, we will mail you disclosures and a paper application for signature within 3 business days. You will need to review, sign and return those documents to us to continue processing your application Questions: If you need assistance or have questions about the application, please contact us or call 1-888-584-4248. Security: Learn more about our site's security features, because securing your information is important to us. APPLYING FOR A MORTGAGE With all of the paperwork and questions that you need to answer, applying for a mortgage can be stressful. But knowing what's involved in the process can make things a lot easier. Here's some information to get you started. Before you apply Do some homework before you apply for a mortgage. Think about what type of home you want, what your budget will allow, and what type of mortgage you might seek. Get a copy of your credit report, and make sure it's accurate; dispute any erroneous information to get it corrected. Be prepared to answer any questions that a lender might have of you, and be open and straightforward about your circumstances. What you'll need when you apply When you apply for a mortgage, the lender will want a lot of information about you (and, at some point, about the house you'll buy) to determine your loan eligibility. Here's what you'll need to provide: * The name and address of your bank, your account numbers, and statements for the past three months * Investment statements for the past three months * Pay stubs, W-2 withholding forms, or other proof of employment and income * Balance sheets and tax returns, if you're self-employed * Information on consumer debt (account numbers and amounts due) * Divorce settlement papers, if applicable You'll sign authorizations that allow the lender to verify your income and bank accounts, and to obtain a copy of your credit report. If you've already made an offer on a house or condo, you'll need to give the lender a purchase contract and a receipt for any good-faith deposit that you might have given the seller. Prequalification and preapproval In many cases, you'll want to know how much mortgage you can get before you look at homes so you won't waste time drooling over places that you can't afford. Your potential lender can either prequalify you or preapprove you for a mortgage. Lenders use several standard ratios to determine how much mortgage you're eligible for. Generally, your monthly housing expenses (mortgage principal and interest, real estate taxes, and homeowners insurance) should not exceed 25 to 30 percent of your gross monthly income. In addition, your total long-term debt (monthly housing expenses plus other debt payments that won't be repaid within a year) should be no more than 33 to 38 percent of your gross monthly income. Prequalifying for a mortgage is simply a matter of a lender crunching these numbers to tell you how large a mortgage you'll qualify for based on those ratios. Remember, what you qualify for may not be what you can afford--only you can determine that after examining your own budget and lifestyle. Because the lender has not verified your income or examined your credit report, prequalification promises you nothing; it simply tells you how much mortgage you might get. Preapproval, however, means that the lender has checked out your income and credit. You'll get a letter of commitment stating that you'll be given a mortgage up to a certain amount. Preapproval lets you know exactly how large a mortgage you can get. In addition, it gives you more credibility as a buyer, since a seller can see in the lender's letter that you're going to get the mortgage if he or she accepts your purchase offer. Finalizing the application As your mortgage application is processed and finalized, your lender is required by law to give you several documents. Within three business days of applying for the loan, the lender must inform you of the mortgage's effective rate of interest, or annual percentage rate (APR). If relevant, the lender must also give you consumer information on adjustable rate mortgages. In addition, the lender is required to give you an itemized good-faith estimate of your closing costs and a government publication that explains those costs. Since the home that you're purchasing will serve as collateral for the loan, the lender will order a market value appraisal of the property. The lender will not lend you more than a certain percentage of the value of the property. If your down payment will be less than 20 percent of the value of the property, your loan will require private mortgage insurance, and the lender will obtain insurer approval. If the lender has not already done so as part of a preapproval process, it will verify your employment and bank accounts as well as obtain and evaluate your credit report. For financial advice tailored to your situation, please contact an expert such as a CPA or a personal financial advisor. It all begins when you find THE house and make a sound offer based on your budget and pre-qualification amount. Once the offer is accepted, the mortgage process begins. To help you understand every step, we'll cover information about the loan application and decision points throughout the entire process. Gather Your Information Typically when you apply for a mortgage, you'll be asked to complete a Uniform Residential Loan Application. This standard residential mortgage loan application is a four-page document that asks in-depth questions about you, your income, your assets and liabilities, and your credit as well as a description of the property. Although it can vary slightly depending on the type of loan, lenders usually require the following information and documentation: * A driver's license or picture ID * Your Social Security card(s) * Home and business telephone numbers * The name and address of your nearest relative (for VA mortgage) * The name, address and phone number of your current landlord or mortgage company and the amount of monthly payment (if you've been at present address for less than 2 years, you'll also need this for previous landlords and/or lenders) * Employment information including your employer's name, address, phone number, length of employment, position and salary (if you've been with the same employer for less than two years, you'll need this information from previous employers) * Current pay stubs (not more than 30 days old) and copies of your W-2 forms for the last 2 years; if self-employed or commissioned, you'll need signed tax returns for the last 2 years plus a year-to-date income statement and balance sheet * Written verification of other income you need to qualify for the loan (e.g. retirement or rental income); you are not required to reveal alimony, child support, or separate maintenance unless you want it to be considered * Detailed accounting of your assets o Cash on hand o Bank accounts o Name and address of your financial institution(s), account numbers, balances, name in which the account is listed and the three most recent statements for each deposit account o Investments (stocks, bonds, annuities, mutual funds, etc.) o Investment breakdown, values and copies of the last three statements o Automobile(s) make, model and value o Estimated household and personal property value o Real estate description, value, lender's name and address, account number, plus information on any outstanding claim to the property (for example, if it has been used as collateral on another loan, or is currently mortgaged, etc.) o Life insurance o Amount of coverage and cash value o Other assets such as boats, campers, etc. and their value * Detailed accounting of your liabilities o Current and recently paid off accounts such as auto loans, loans from banks, finance companies and charge cards; include name, address, account number, monthly payment and balance, or line of credit o Child support or alimony, if applicable, document the amount and duration of obligation o Present and previous mortgage loans, including name, address, loan number, type of loan (Conventional, FHA, VA, or FmHA), original loan amount, present balance, monthly payment and intent to sell or rent; if a previous mortgage, date loan was disposed o Child care expenses (FHA/VA only) o Bankruptcies, liens and judgements with written explanations and copies of discharges * A copy of your DD214 or Original Certificate of Eligibility (for VA mortgage) * Your ratified sales contract * A legal description of the property you wish to purchase * Name, address and phone of the title company you wish to use * Name, address and phone number of the attorney you wish to use for closing * A voided check or deposit slip if you desire to have your mortgage payment automatically withdrawn from your checking account Choose a Mortgage In addition to providing your financial history, you'll also need to tell the lender what type of mortgage loan you're interested in. In addition to conventional, fixed, or adjustable rate (ARM) mortgages; there are also FHA Insured and VA loans, Rural Housing and AHP loans, as well as many others. Learn about the types of mortgages available to you before you apply for your loan or even before you start house-hunting. Your mortgage will directly affect how much house you can afford and the amount of your monthly payments. Decide How Much to Borrow Again, this is a decision you most likely will have made before the loan application. Your requested mortgage amount will be based on the purchase price of your new home and the amount of money you will be putting toward a down payment. Before actually applying for a loan, many borrowers find out how much they can afford by getting pre-qualified by a mortgage lender. Calculate Your Down Payment Some loan programs offer 3% down payments if you meet certain income standards, and the Veterans Administration (VA) and the Rural Housing Service (RHS) offer no-down-payment loans. Usually home buyers are expected to make a down payment of at least 5-10% of the value of the home. However, if you put down less than 20% on a conventional loan, most lenders will require you to carry private mortgage insurance. Choose a Closing Date Your sales contract will specify a time frame in which you wish to close on your new home (usually 30, 45, or 60 days from the time you have a ratified sales contract). When you apply for your loan, be sure and tell your loan officer the approximate date you would like to close so that loan processing can coincide with your wishes. Learn more about what to expect on closing day. Lock-In an Interest Rate Interest rates fluctuate frequently, and they may even increase between the day you apply for your mortgage and when you actually close on your home. That's why many lenders offer a rate lock-in, which guarantees a rate for a set period of time. If you opt for a lock-in, make sure the expected closing date is well within the lock-in period. Ask the lender if the rate can be locked in at the time of application or only at loan approval, how long it remains in effect, whether there is an additional charge, and if you can also lock in points. Get All The Required Information Legally, your lender is required to furnish you with several types of documents and information in conjunction with your application for a mortgage loan, including: Truth-in-Lending (TIL) Statement The lender must provide you with this document within three business days of applying for a home loan. The TIL statement outlines the estimated costs of your loan, including the annual percentage rate (APR) and other terms, including points, any other finance charges, the amount financed, the payment amount and the total payments required. Because it's possible that the APR and closing costs calculated at the time of your loan application will change at the actual closing, your lender is required to give you the final version of your TIL statement at or prior to your closing meeting. Disclosure About ARMs Federal law requires your lender to give you disclosure information about an adjustable rate mortgage (ARM) either when you receive an application form or when you pay a non-refundable fee—whichever comes first. Your lender should provide you with a written summary of the important terms and costs of the loan, the past performance of the index to which the interest rate will be tied, and a copy of the booklet “Consumer Handbook on Adjustable-Rate Mortgages,” published by the Federal Reserve Board. Good-Faith Estimate Within three days after you have submitted your application, the lender is required by federal law to provide you with an itemized estimate of the costs to close (or settle) the loan. This report is referred to as a "good-faith estimate." It's a ballpark estimate of how much money you will need to pay at the closing along with the seller's costs. Costs can and will vary from the actual amounts indicated, so be sure to take this for what it is—an estimate. Guide to Settlement Costs The lender must also give you a copy of the government publication, “Settlement Costs: A HUD Guide.” This publication describes the settlement process, the nature of charges and your rights, and it also includes an item-by-item explanation of settlement services and costs. The lender has three business days after receiving your written application to give you this guide. Understand Your Legal Rights You may be asked to sign several authorization forms that will allow your lender to verify the information on your application. These include the authorization to investigate credit, verify your employment, look into your past rental or mortgage payment history, even review bank deposits. When compiling a credit profile of you, your lender must certify that the credit report will only be used for the purpose of qualifying you for a mortgage loan. As part of the credit evaluation process, your lender cannot seek any subjective information from your neighbors or co-workers concerning your character, reputation, or other personal aspects unless you receive notice. These limitations are set by the Fair Credit Reporting Act. Under the Equal Credit Opportunity Act, a lender cannot discriminate based on race, color, national origin, sex, marital status, age, religion, and the fact that all or part of your income comes from a public assistance program, and your exercise of any rights under the Consumer Credit Protection Act. Your lender also cannot ask questions about your future parenting plans, although the lender may ask about the current number of children you have and their ages. In addition, a lender is prohibited by law from asking questions concerning the applicant's spouse unless the spouse is contractually liable, the spouse's income will be relied on to repay the debt, the applicants live in a community property state or the applicant plans to use child support, alimony or separate maintenance payments from a spouse or former spouse to repay the debt.