What Lenders and Borrowers Should Know About Applying for a Mortgage

<div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6gQdCzM4Dcr5cCcfZYGbu5zhR7cZFh90lH0SlsEZvVFbZ2jSRM2O59yR6DulOgnahG0RTLA3HgWVlT2GJylCTnl1qR3Sjdtu0cgKs3yq6AbQnjCqNDg5qsSKVWX5vPzM2OObcaud4DNA/s1600/What+Lenders+and+Borrowers+Should+Know+About+Applying+for+a+Mortgage.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6gQdCzM4Dcr5cCcfZYGbu5zhR7cZFh90lH0SlsEZvVFbZ2jSRM2O59yR6DulOgnahG0RTLA3HgWVlT2GJylCTnl1qR3Sjdtu0cgKs3yq6AbQnjCqNDg5qsSKVWX5vPzM2OObcaud4DNA/s1600/What+Lenders+and+Borrowers+Should+Know+About+Applying+for+a+Mortgage.jpg" width="320" /></a></div> <span style="font-family: Calibri;">Now that lenders have tightened their underwriting norms, borrowers have to submit a lot of paperwork to qualify for a mortgage. In fact, the lender now asks the borrower to document every source of income they claim on the loan application. Getting all that paperwork ready can take time. </span><br /> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">The new mortgage rules are designed to protect the interests of both the borrower and the lender. Before the housing bust just about anybody could get a mortgage, but now the situation has changed. Lenders have become choosy. Is this good news for borrowers?</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <b style="mso-bidi-font-weight: normal;"><span style="font-family: Calibri;">The age of qualified mortgages<o:p></o:p></span></b></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">New mortgage rules are designed to protect borrowers from unscrupulous lenders who often encouraged them to get a bigger loan than they could afford. They also provide eligible borrowers access to safe and affordable financing. The new rules ask lenders to thoroughly verify the credit worthiness of the borrower before making the loan.</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">Lenders can offer loans without verifying the credentials of the borrower; however, in that case they won't get protection against lawsuits filed by the borrower. The borrower can claim that the lender had made the loan without verifying their eligibility for the loan. </span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">According to the new laws, a lender has to verify eight things before they can offer a qualified mortgage to a borrower. They are:</span></div> <div class="MsoListParagraphCxSpFirst" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The borrower's current income/assets</span></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The borrower's credit history</span></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The borrower's current employment status</span></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The monthly mortgage payment of the borrower</span></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The borrower's monthly payments on any other mortgage loans </span></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The borrower's monthly payments for any other expenses, like property taxes.</span></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">Other debts the borrower might have.</span></div> <div class="MsoListParagraphCxSpLast" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">         </span></span></span><!--[endif]--><span style="font-family: Calibri;">The debt-to-income ratio of the borrower</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">When lenders carry out so many verifications, first time borrowers may have a tough time getting a mortgage. Self employed people, too, may find it difficult to qualify because they are unlikely to have a steady flow of income.</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <b style="mso-bidi-font-weight: normal;"><span style="font-family: Calibri;">Cash buyer vs. Mortgage<o:p></o:p></span></b></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">The stringent mortgage laws have given rise to another trend. Many sellers now prefer borrowers who pay cash. Cash buyers are mostly investors.</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">Sellers prefer cash deals because they don't have to wait for the borrower to go through a mortgage approval process that might take several weeks or even months. When they accept cash deals, they can close quickly. This is not exactly great news for a borrower. However, borrowers have to come to terms with the fact that the loan approval process will now take longer. </span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">The borrower should have copies of every document they give to the lender. So, if the lender asks them to send those documents again, they will have them ready.</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">The borrower must refrain from lying on the application form. Now that the lender is going to verify a whole lot of documents, they simply can't get away with lies.</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <b style="mso-bidi-font-weight: normal;"><span style="font-family: Calibri;">The future of the lending market<o:p></o:p></span></b></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">While the loan approval process may take longer, the new rules are expected to make the lending market healthier. It provides ample protection for lenders who stick to the guidelines and give loans only to eligible borrowers. The borrowers, too, stand to benefit. </span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;">During this year, the interest rates may go upwards and the demand for refinance is likely to subside. Home prices, too, are expected to rise this year.</span></div> <div class="MsoNormal" style="margin: 12pt 0in 0pt;"> <span style="font-family: Calibri;"><span class="fblongblurb">Get your share of the $1.5 trillion in Adjustable Rate Mortgages scheduled to reset this year! </span>Imagine having up to a 20% funding rate at a low, cost effective price per lead! With our ARM plus leads, you can. Get in touch with </span><a href="http://www.armsource.com/"><span style="color: blue; font-family: Calibri;">ARM Source</span></a><span style="font-family: Calibri;"> today!</span></div>

What Lenders and Borrowers Should Know About Applying for a Mortgage

Now that lenders have tightened their underwriting norms, borrowers have to submit a lot of paperwork to qualify for a mortgage. In fact, ...

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