With scads of mortgage lenders, mortgage brokers, banks and credit unions available to homeowners, it is sometimes necessary to change tack in the middle of the process to secure a mortgage loan. In general, using a lender whom you trust and respect is rule No. 1 during home loan financing. If you are using a lender that you believe is offering inaccurate rates, payments and terms, or if you feel as though you and your spouse will be treated better elsewhere, it may be time to explore other lending options.
Assess the terms, rates, payments and fees being offered by the lender with which you have started the process. It is important to first understand specifically what you do not like or understand about the offer. Having this information at hand will make researching other lenders easier.
Obtain copies of your credit reports from the three major credit-reporting agencies: Equifax, Experian and TransUnion. Pay for copies of your FICO scores as well. These three-digit numbers between 350 and 850 offer a quick synopsis of your creditworthiness. These scores and reports will be invaluable as you begin researching other lenders.
Research banks, credit unions and other financial institutions once you have a firm handle on your financial goals, mortgage preferences and your overall creditworthiness. Pay close attention to fees offered (origination fees and discount fees) as these represent the cost of doing business with any particular lender. Narrow your search to two or three lenders or institutions.
Choose a lender and provide the loan officer with two recent pay stubs, two years of Forms W-2, income tax returns for the past two years, a copy of your homeowners insurance policy, a copy of a recent tax bill and a copy of the mortgage loan you were offered by the previous lender. This will help your new lender work up a mortgage application based on your preferences and scores.
Review the loan offer once the application is processed through underwriting. Ask your lender to thoroughly review all areas of the loan, particularly those that encouraged you to leave your last lender, and verify that all terms still meet your needs and your family's financial priorities.
Close the loan only after you review all final mortgage terms with your lender. Take a trusted financial adviser with you to closing to ensure that all documents match the final terms you discussed with your lender.
Items you will need
- Two recent pay stubs
- Two years of Forms W-2
- Two most recent income tax returns
- Copy of homeowners insurance policy
- Copy of recent property tax bill
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