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Mortgages in Western New York

Lender Checklist: What You Need for a Mortgage

• W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.
   
• Copies of at least one pay stub for each person signing the loan.
   
• Account numbers of all your credit cards and the amounts for any outstanding balances.
   
• Copies of two to four months of bank or credit union statements for both checking and savings accounts.
   
• Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
   
• Addresses where you've lived for the last five to seven years, with names of landlords if appropriate.
   
• Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
   
• Copies of your most recent 401(k) or other retirement account statement.
   
• Documentation to verify additional income, such as child support or a pension.
   
• Copies of personal tax forms for the last two to three years.

5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
    
2. How much you owe.  If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it's a good thing if you have a good proportion of balances to total credit limits.
    
3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.
    
4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
    
5. The types of credit you use. Generally, it's desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

10 Questions to Ask Your Lender

1. What are the most popular mortgages you offer? Why are they so popular?
    
2. Which type of mortgage plan do you think would be best for me? Why?
    
3. Are your rates, terms, fees, and closing costs negotiable?
    
4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you've acquired a certain amount of equity by paying down the loan.)
    
5. Who will service the loan — your bank or another company?
    
6. What escrow requirements do you have?
    
7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?
    
8. How long will the loan approval process take?
    
9. How long will it take to close the loan?
    
10. Are there any charges or penalties for prepaying the loan?

Loan Types to Consider

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

• Mortgage terms. Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.
   
• Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan's interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years.
   
• Balloon mortgages. These mortgages offer very low interest rates for a short period of time — often three to seven years. Payments usually cover only the interest so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
   
• Government-backed loans. These loans are sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.
   
• Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. Ask your lender for help in determining how much your monthly payment will be for various loan amounts.

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