Download a Uniform Residential Loan Application (Freddie Mac Form 65/Fannie Mae form 1003)
Download a Statement of Assets and Liabilities (Freddie Mac Form 65-A/Fannie Mae form 1003-A)
Download an Amortization Schedule (an Excel file)

Mortgage Basics

Getting a mortgage approved for your new or existing home might seem like finding your way through a financial maze. There are hundreds of available loan programs being offered from thousands of mortgage brokers, bankers, lenders, finance companies, credit unions, even stock brokerage firms.

Before you begin the process of choosing a mortgage company, a good first step is to determine a monthly mortgage payment that will fit into your current budget. A general rule is to keep your payment less than 30% of your gross salary. Don't forget to leave room for insurance, taxes, association dues and other costs that factor into your total mortgage payment.

When most people begin the online search for a mortgage company, they start looking for the lowest rate. The lowest rate is important and you should compare rates on comparable loans from mortgage companies in your area. Be sure that you also find a mortgage professional you can trust and work with effectively. It should not be surprising that more people are deciding to go online to apply for their mortgage loan everyday.

After selecting a mortgage product and company, the application process may prove to be the easy part, provided you have prepared for your initial meeting with a mortgage professional. Your mortgage professional will help you complete a 1003 (Uniform Mortgage Application Form) and examine a copy of your credit report.

You may have to wait for an approval after completing the application. Remember that companies are in the business of making loans, not denying them. There are two key factors in qualifying for a loan and your mortgage company may need time to verify the data and documents provided with the application. To speed up the mortgage process, stay in touch with your mortgage company and be prepared to answer any questions they may arise.

Interest Rates

To understand mortgage and interest rates, you should understand what you are looking for in your mortgage loan. Several factors affect your mortgage rate including the amount of your loan and down payment, your credit report quality and income levels, desired mortgage payment and closing costs, and your current financial situation.

Begin by checking out current interest rates and rate movements when shopping for a mortgage. Mortgage rates generally rise and fall along with wall-street securities and generally reflect the overall direction of interest rates. By keeping an eye on mortgage market trends and key economic indicators, a borrower has a better chance of obtaining interest rate savings.

As you begin, educate yourself on the different types of loan programs; it is important to keep in mind that mortgage packages consist of more than interest rates. Pay close attention to the terms of a loan including the type of the mortgage, Annual Percentage Rate (APR), low or high down payments, mortgage insurance requirements, payment schedule, lock-in period and many other features. Pick the loan with the rate and other terms that suit your situation best.

When choosing a mortgage company, focus on finding a knowledgeable professional who you trust to find the right program. Once you have found a company and selected a program, you will need to lock in your interest rate to gain a firm commitment on your mortgage. You can lock your rate anytime after your initial meeting with a mortgage professional where you will complete a mortgage application.

Down Payment Loans and Gifts

Loans and gifts can help with your down payment but you can not use this strategy for all loan programs.

The most popular program for this tactic is the Federal Housing Administration or FHA. FHA allows 100% gift funds for your down payment. The gift can be from any relative or can be collected through new innovative programs, like the Bridal Registry where couples receive money into an account that can be used for the down payment.

Another popular tactic, which can be used in a wider range of programs, is to borrow from your 401K program. If you have a 401K program with your employer, you can withdraw without a penalty for your down payment and pay it back over a specified period. There are some drawbacks, the payment will be used in qualifying and your 401K account will not continue to grow as fast. Even with these drawbacks, it is often a smart move if this is your only option.