5 Important Aspects of Mortgages
The constantly changing mortgage landscape requires solid understanding of what’s involved in today’s mortgage decisions. In this podcast learn what’s required in qualifying for a mortgage, how the appraisal process has changed and the new federal regulations governing mortgages. The podcast also gives advice on credit scores and how to shop for a mortgage.
1. Qualifying for a mortgage requires full documentation.
Documentation is more extensive than it used to be. Federal tax returns for the past two years that are verified by the Internal Revenue Service must accompany every application.
2. The new Home Valuation Code of Conduct requires a random, unbiased appraisal by a third party.
In the past some appraisals were done solely on a look at the property–in industry terms known as a field review or “drive by” appraisal. Today the most influential factor is the sale price for similar types of homes in the same area.
3. New federal regulations around timing and accuracy are designed to protect consumers.
Although compliance with the regulations is the responsibility of the provider, not the borrower, consumers should be aware of their rights. The Truth in Lending regulation requires the provider to honor the stated rate quotes, and another regulation requires disclosure of fees the provider will receive.
4. Your credit score is a critical factor in getting a mortgage.
The average credit score in the U.S. is 680. While a mortgage usually requires a score of at least 640, those who get a score of 740 or better have the opportunity to get the best rates. Be sure you know your credit score and monitor it regularly to avoid surprises or fraud.
5. Don’t make a decision on your provider solely on cost.
In the past mortgages were viewed as commodities selected for the best rate. While rate is still important, borrowers should be sure their proposed advisor is trustworthy and affiliated with an institution that delivers what is promised on a timely basis.
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