Top 4 Loan Application Mistakes
By Joe Cooke, RISMedia Columnist
Loan Consultant Eddy Martinez identifies four common but avoidable mistakes that applicants make when they come in for a loan consultation:
(1) Providing incorrect job information: Even if you have had 3 jobs in the past four years it doesn't mean that your application will be denied.
(2) Overstating income: W2's and pay stubs when received by a loan officer will verify what you state on the initial application.
(3) Understating current mortgage expense: During the initial application specify whether you have an escrow / impound account.
(4) Overstating profit on a rental property: If your monthly mortgage expense on a property is $2,000.00 and you only collect $1,000.00 it is not a monthly net profit, its actually a monthly net loss of - $1,000.00.
In addition to avoiding these common mistakes, be aware that your lender is required by the federal Real Estate Settlement Procedures Act to provide you with a good faith estimate of the fees due at closing within three days of applying for a loan. These mortgage fees, also called settlement costs, cover every expense associated with your home loan, including pro-rates, inspections, title insurance, taxes and other charges.
Because closing costs typically amount to between 3 and 5 percent of the sale price, it is best to wait until you receive the good faith estimate before signing any loan. Many closing costs are standard and won't vary from lender to lender, such as appraisals, credit reports, title insurance, government stamps and recording fees. Others fees may be eliminated simply by opting out of a service, such as overnight delivery of documents. If a fee seems vague or questionable, ask.
Some mortgage companies include so-called junk fees that you can eliminate or reduce. In fact, you can obtain good faith estimates from several lenders, compare their costs, and then your favorite lender to meet or beat the competition's best offer.