Many of today’s loan mortgage problems facing the consumer have been caused by having a clear understanding of the type of mortgage program they were placed into by their lender. As a consumer we must be responsible for are decisions. However, most of us unfamiliar with the entire process when acquiring a mortgage loan. Since purchasing a residence is a major step and will become the cornerstone of the consumer’s assets. Therefore, it is extremely important that the consumer be aware of all the ins and outs of this process.
One of the key elements of the consumer’s responsible is to be prepared with all financial information, have a budget and ask questions of your lender. A good lender will take the time to exam your financial information and explain all the various programs open to them. Their needs to be good communication between the parties and the consumer must never feel uneasy to ask for an explanation. Remember do not be pushed into something you do not understand.
So how should a consumer prepared for a meeting with a lender? The consumer should bring the following:
- Complete copy of last 2 years personal tax returns on all borrowers with W-2’s
- A copy of the borrowers most recent pay stub
- Complete copy of last 2 months bank\brokerage statements
- If a business owner, provide last 2 years of business tax returns
- Have a list of other outstanding debt with balances and monthly payment amount
By having this information the experienced lender can do a preliminary review of your finances. In addition, the lender can assist the consumer is preparing the consumer loan application. It is important that the consumer be truthful on this form. Do not let anyone put information on this form that is not true. This has been one of the biggest issues within the housing market and is the main reason for some many mortgage failures. Because this application is what the lender uses to determine the type of loan program that will fit the consumers budget and will assist in giving an idea of the consumer’s debt to loan ratio. The debt to loan ratio is what the consumer will owe and how much cash they will have available monthly. The ideal ratio is below 47%.
Whether you are planning to purchase a new residence or want to refinance your current residence the same information above applies. Before you purchase your new residence, it is always best to discuss your financial present with an experienced lender.
