Mortgage Process (Continue...)


Step 3 : Banking on Mortgage

1. Mortgage Rate :
You can get a mortgage from many different sources, like mortgage banking companies, commercial banks, community banks, credit unions and other financial institutions. Mortgage brokers may be a source of information about different mortgage products available from a variety of sources. Some starting places include:

* Your own bank or financial institution. Sometimes lenders can offer better mortgage terms to current customers.
* Real estate professionals.
* Family members, friends and coworkers.
* Internet research.
* Your local newspaper or the telephone book.
Mortgage Rates: When looking at different lenders, start researching current mortgage rates.

2. Mortgage Types :

Down Payments
Your down payment is a percentage of the value of the house you want to buy. The exact percentage depends on the requirements of the lender for the type of mortgage you choose. In order to qualify for most mortgages you will need a down payment between 3-20% of the price of the house. You may be required to have private mortgage insurance (PMI) if your down payment is less than 20%. Private mortgage insurance protects the lender if the mortgage goes into default.

Pre-approval
We recommend that you get pre-approved for a mortgage before seriously looking at homes. Pre-approval gives you a good idea of how much of a mortgage you will qualify for and the price range of homes you can afford.

Pre-approval helps you to :
* Know how much you can borrow.
* Confirm your ability to qualify for a mortgage based on your credit, financial and employment information.

Strengthen your position to make an offer. Sellers will be more willing to accept an offer if a buyer is pre-approved.
To become pre-approved, you need to meet with a mortgage lender or apply for pre-approval on the Internet. The mortgage lender will review your credit history, earnings information, employment history and assets. You will need to provide certain documentation to the lender and may fill out a mortgage application at this time.  After the review, the lender will give you a "pre-approval letter." This letter tells home sellers that you qualify for a certain mortgage amount.

Getting a Ratified Contract
So now you're pre-approved. You find your dream house and make an offer. If the offer is accepted, the next step is to get a ratified sales contract from the sellers. You will need the ratified sales contract when you return to the lender to complete the mortgage process.
A ratified sales contract is simply the offer you made to the seller that the seller accepted and you both signed off on.

This offer may include :
* Sale price of the house.
* Contingencies, such as getting mortgage financing of a certain type and rate, satisfactory inspection, and any repairs that need to be made.
* Closing and occupancy dates.

Earnest Money Deposit
As part of the ratified sales contract, you will submit an earnest money deposit to show that you are a serious buyer. This money will be placed in an escrow account and applied to your closing costs. Your mortgage lender will probably want to see a receipt for the earnest money along with your ratified sales contract so it's a good idea to bring both of these items with you when you apply for the mortgage. The earnest money is usually not returnable if you don't complete the terms of the contract.

Escrow Accounts
Funds placed in trust with a third party, by a borrower for a specific purpose and to be delivered to the borrower only upon the fulfillment of certain conditions.

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