What documents do I need to prepare for my loan application?

Below is a list of documents that are required when you apply for a mortgage. However, every situation is unique and you may be required to provide additional documentation.  

  • Last 30 days of paystubs
  • Last 2 years W2/1099
  • Copy of ID
  • Last 2 years of tax returns (if you're self employed or receive rental income from investment properties)
  • Last 2 months bank statement (Checking, Savings, Investment, Retirement)
  • Social Security/Benefits Awards Letter (if you recieve SS, Disability, or Pension income)



When should I refinance?

It's generally a good time to refinance when mortgage rates are 1%+ lower than your current interest rate. The key is to make sure the break even analysis makes sense for your scenario. There would need to be enough benefit when looking at the closing costs of your loan in comparison to what your monthly savings will be.

If you're looking to shorten the length of your term, for example to a 15 year mortgage, it might also be worth considering. 

If you've thought about making home imporvements, consolidating high interest credit cards, paying for college, using funds to purchase an invesmtnet property; it might be worth looking at doing a cash-out refinance to pull equity out of your home.



What is an appraisal?

An Appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the homes condition and value meets the requirements of the loan. The Appraisal is performed by a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.



What is PMI (Private Mortgage Insurance)?

On a Conventional mortgage, when your down payment is less than 20% of the purchase price of the home mortgage lenders usually require you get Private Mortgage Insurance (PMI) to protect them in case you default on your mortgage. The PMI cost will vary depending on down payment, credit score, debt to income ratio, as well as other factors.



What can I do to improve my credit score?

Credit scoring models generally evaluate the following types of information in your credit report:

  • Have you paid your bills on time? Payment history is a very significant factor. It is likely that your score will be affected negatively if you have recently paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.
  • What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.  Keep your credit utilization under 30% of the limit.
  • How long is your credit history? Generally, models consider the length of your credit track record. An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.
  • How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. 

To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It's likely to take some time to improve your score significantly.



What are points?

A point is a percentage of the loan amount, or 1-point = 1% of the loan, so one point on a $400,000 loan is $4,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Discount points are fees used to lower the interest rate on a mortgage loan by paying some of this interest up-front. Lenders may refer to costs in terms of basic points in hundredths of a percent, 100 basis points = 1 point, or 1% of the loan amount.