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Category: Finance, Mortgages.

Applying for a mortgage is a big step.

There are a few things you should educate yourself about before obtaining that loan. For most American consumers buying a house and applying for a mortgage is the biggest and most significant financial decision of their life. There are no magic rules for how you should apply for a mortgage. Here are a few considerations when applying for a mortgage: How fast will the application processing take. Like with any other product that you intend to purchase, and mortgage is at the end of the day a financial product that you are going to buy, there are a few things that you should be aware of and check to make sure the mortgage is right for you. Mortgage application involves credit checks and other due diligence steps that do take time. It is important to align the time when you estimate you will need the mortgage to the period of time the lender needs to approve your application.

You also are not going to apply to many mortgages since for example having multiple credit checks at the same time can hurt your credit score. For example if you already put a bid on a home and you have 30 days to close, you must make sure that the mortgage application can be processed and approved in less than 30 days. For example refinancing mortgages require documentation regarding your property tax and insurance policy. Know in advance which documents you will need. If you know in advance that you will need insurance documentation and you don t have it you can have the time to get it otherwise you might get stuck during the application process with missing documents and be either denied or delayed. After all if you know for example that your credit score is 650 and a specific lender has a strict policy of only approving loans for applicants with credit scores higher than 700 why apply at all? Something to know that makes lots of sense is simply what is the bank threshold for approving a loan?

You will just waste time and energy and at the end of the process be denied. How much do you need to loan and how much can you afford? Make sure that you confirm to the lender known requirements before applying. At the end of the day lenders want to make sure that you can pay back the mortgage. Budget your income and find out how much you can allocate for the monthly mortgage payment. Applying for more money that you need or can afford to pay back will just result in your mortgage application being denied.

Be honest with yourself because lenders are thorough and if you apply for payments you can not afford they will most likely figure it out and deny your application. Know the terms. After figuring out the monthly allocation calculate back the total loan amount that such a payment can support. There are professional terms that the lender is going to use. Search online or buy a mortgage book. It is good to know those in advance.

For example you should know what is the difference between a first mortgage and refinancing, fixed vs. ARM, what is a conforming mortgage, what are points and so on.

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Yet For The Borrower With Bad Credit, Is Refinancing Really The Wise Choice - Lela Zick's Finance and Mortgages blog:

Interest rates today are still much lower than years ago. Yet for the borrower with bad credit, is refinancing really the wise choice?