Finance Articles

Buying a home might be the most exciting, puzzling and straining financial transaction that you ever undertake. Even if you have done it a couple of times you can still find the process complicated and intimidating, particularly when it comes to getting a mortgage loan. Reams of loan documents, peculiar terminology and uncertainty serve to deflate the joy of buying a new home. As soon as the sales contract is signed, gaining the financing for the contract becomes paramount for all but a very few home buyers. If you master the steps required to qualify for a loan, however, much of the stress can be avoided. The following explanation of the loan application interview process is intended to help you through the intricacies of obtaining a mortgage.

The Loan Application Interview

Once you have tabbed a lender, the following step will likely be a consultation with a loan officer or other lender representative, whose job is to begin the collection of information the lender requires to approve the loan. They will annotate the types of mortgage loans available to you, the interest rates and fees for each type and the qualification requirements. It is at this time that you will complete the loan application paperwork

By this time you should have a good idea of the general interest rates and fees being charged in the area. The total cost of a mortgage loan consists of the interest rate on the loan, origination fees, discount points, and miscellaneous other charges. The interest rate affects the amount of the monthly payment, while points affect the amount of cash you must have at closing. Most lenders will offer a range of interest rate/point combinations to meet the borrower needs. In general, the higher the interest rate, the lower the points. For example, if the current market provides for an 8.5 percent interest rate with 2 points, a nine percent rate may be offered at no points. If you are a corporate transferee, however, your company's relocation policy may pay all or part of origination costs and the lower rate will have more appeal. The loan officer is prepared to explain all of the mortgage information and your options to you when buying a home.