Applying for a Mortgage

As exciting as the home buying process can be -- beautiful homes to view, neighborhoods to explore, and possibilities to consider ? it's the not-so glamorous work that turns those dreams into a reality. It may take a lot of time, phone calls, and Internet research, but matching up with the right lender can save you thousands compared to signing an ill-advised agreement. Whether you're approaching lenders yourself, or utilizing a mortgage broker, keep the following in mind.

Review your monthly expenses and estimate what you can comfortably afford to pay every four weeks, including mortgage, insurance, utilities, maintenance, and property taxes. Be certain that your income can cover these expenses for several years. Obtain a credit report, check it for accuracy, and address any mistakes. Understanding your income picture and credit status makes it easier to narrow down which programs make sense for you.

Get familiar with the various loan programs at each lender. For example, many first time homebuyers are eligible for programs that offer insurance and a small down payment (as low as 3%). For low-income families, there are packages that subsidize the down payment.

When you're ready to apply, you'll find that different lenders have different requirements, but in general you need the following documents at hand:

• W-2 forms for the last three (3) years
• Federal tax returns for the last three (3) years
• Social Security card and your driver's license or state ID
• Pay stubs covering the last thirty (30) days
• Bank statements from the last three (3) months for any checking and/or savings accounts, 401K, CD, or any other accounts
• Completed application, with application fee if required

Confirm with the lender what they require specifically.

When you're offered a loan package, compare its terms, points, and rates with packages at other banks. Lenders and brokers sometimes offer different rates and fees to different consumers for the same loan, even when those consumers have the exact same qualifications. Many will accept the first loan offered, not realizing you can go "shopping" with the preapproval letter and perhaps find a more favorable package elsewhere.