When it’s time to buy a house, it can be a very exciting experience or a nerve-wracking mess of an experience. The best way to make it as easy as possible is to find out what you need to know before filling out the home mortgage application. There are important factors to consider. For example, what type of mortgage fits your needs? ARM? FRM? Who is required to be on the application? Must my wife/significant other be included in the application? What factors into the interest rate? Are there fees to consider? This article will give you the armor to battle with mortgage brokers and lenders before you fill out any home mortgage loan applications.

A home mortgage application has a number of different parts. The first, and most significant part is the type of loan; i.e. an ARM (adjustable rate mortgage), a FRM (fixed rate mortgage) or a mixture of the two. Adjustable rate mortgages are great, if you don’t expect the prime rate to go up in very much during the variable rate term of the mortgage. Most ARMs are 2 years and then the rest of the loan is fixed rate. While it may seem like a good idea at the time, having an ARM is more appropriate for consumers that wish to flip the house (sell it quickly after fixing it up or living in it to improve its value). FRM are usually higher interest rates, but if you have a long term commitment to the home, might be the best type of home mortgage to choose. Be sure to understand the implications of both an ARM and FRM before even filling out the home mortgage loan application. Each application can affect your credit score, which in turn affects the interest rate for which you may qualify.

The FICO credit score is the number one most important factor lenders look at on your home mortgage application process. The score is a combination of your credit history; including the type of credit you’ve accumulated, how long you have it and how many outstanding credit requests you’ve had in the last 3 months. Negative factors can affect your score. The highest score possible is a 950; however, the best interest rates are available to those with scores from 650 and up. Credit score isn’t all a lender looks at, however. Your interest rate is also calculated on your debt to income ratio, how long you’ve lived in your current residence and how long you’ve had your current job.

If you have good credit, you can expect fees on the actual mortgage, although many companies who want your business waive those fees! However, if you come across a lender who wishes to charge for an application fee, I suggest you look at more reputable brokers/lenders. Lenders want good credit risks, and if you have good credit, that should encourage a lender to drop unnecessary fees and costs from the application and loan process.

Only the person filling out the application has their credit ran, and name on the mortgage. However, that means only that person’s income and credit risk are factors in the decision on how much a lender will lend and what interest rate the mortgage will eventually be at.

Know your rights as a borrower before filling out any home mortgage applications!

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