How to Apply for a Home Loan & Get Low Rates in the Fastest Time

What do mortgage lenders want to see on a loan application? Just as important, is there anything they don’t want to see? These tips will help a prospective borrower find the best rates and fastest closing times in the home loan process.

Provide All Requested Information on a Mortgage Application

The home loan application process, once only a red-tape hassle, has turned into an intimidating mountain of paperwork.. Though it’s tempting to simply fill in as few of the blanks as possible, paying careful attention to certain details can actually save time and money.

Why? There are two reasons.

First, some loan applicants assume if there’s more information needed by the lender, it can be added, or written in later, by the lender directly. However, most lenders no longer allow any alteration of the application by anyone other than the applicant. If the mortgage request has to be refiled, odds are good that it will be put back at the end of the processing line.

Second, some lenders may approve a loan despite some missing information; they may just penalize the borrower by charging them slightly higher interest rates. Moreover, they may never tell the lender this.

 

Documents Need for Home Loan Applications

If the loan application specifically requests documentation, provide it exactly as requested. However, even if not called for, borrowers should assume the lender will need two years’ worth of tax returns, two years’ worth of proof of income, and two years’ worth of bank and brokerage (or other asset) statements.

If the lender determines it’s not necessary, then the borrower simply over-prepares. If the lender does need it though, they’ll generally want the documents within a day or two. Otherwise, the application could be pushed back to the bottom of the processing pile.

Along those same lines, it should go without saying that even the undocumented information on a loan application should be factual. Falsifying any portion of the supplied data – like income or work history – effectively nullifies a borrower’s rights, and even jeopardizes the lender’s willingness to continue carrying a loan.

Work With a Reputable Lender or Mortgage Broker

Many lenders are able to make loans, and some initially offer strangely attractive rates and costs. More often than not, these so-called ‘discount’ lenders end up costing more in the long run…. either through mistakes, omissions, or delays. These mistakes may even damage the borrower’s credit. As such, these lenders are best avoided.

Banks generally offer a very streamlined and transparent loan approval process, though some banks don’t offer competitive rates – particularly if they are going to make the loan themselves (which they usually do).

Their alternative to banks offering loans directly from their assets is to use a loan broker, and then pass that loan along… with a slight markup in the total cost- to the borrower. The process works effectively, but in most cases the middleman/bank can be by-passed simply by going directly to a loan broker for a mortgage loan.

Dealing directly with a loan broker usually makes the process faster, and cheaper, since the broker may present several offers from different lenders. Moreover, a broker generally has a stronger vested interest in getting the loan approved, as they are only paid for approved mortgages.

Home Loan Applications for the Self-Employed

The home loan process for the self-employed is not as different or difficult as one might think. The only additional requirement – in most cases – is that the self-employed individual needs to have been in business for two years or more. This indicates stability of income. It will most definitely be a ‘full documentation’ loan application though.

If Your Mortgage Loan Application is Rejected

The denial of a mortgage loan does not have to be a permanent problem. When loans are denied, a reason for the decision should accompany the notification. If not, contact the lender to inquire, as they are required by law to explain the denial decision. In almost all cases, the reason is specific, and fixable… though it may take time to resolve.

Debt Advice Agency CCCS Warns of Increase in Personal Debt

Debt Advice Agency

CCCS and other debt advice agencies, including the Citizens Advice Bureau, have already seen a rise in the number of clients seeking debt help as companies, in response to difficult current economic conditions, implement overtime bans and cut workers’ hours.

One of the most important pieces of advice offered by the Consumer Credit Counselling Service and the Citizens Advice Bureau is that those struggling to pay their debt shout not turn to fee-charging companies for help.

 

A recent review carried out by the Office of Fair Trading (OFT) into debt advice firms has concluded that, “consumers in difficulty often seek debt advice in desperation.” The report continues by pointing out that as well as fee-charging debt management companies there are also a number of government and charitable organisations, which provide a range of free debt advice to the consumer.

The OFT continue by saying that, “regardless of what type of debt advice a consumer turns to it is important they receive the advice and solution most suitable for their personal circumstances.” The OFT also makes it very clear that the, “potential for large amounts of profit to be generated by the commercial sector creates a risk of abuse.”

Debt Remedy from CCCS

Because of the huge rise in face-to-face debt advice CCCS has introduced an online Debt Remedy, which allows the consumer, while protecting their anonymity during this stage of the process, to receive free and independent debt advice from trained debt counsellors.

Problem Debt

Debt Remedy, a customised solution for each case of problem debt, is based on the financial information given by the debtor, so it’s very important to be honest about all money owed. It is of course up to the individual whether or not to accept the advice and carry forward their personalised Debt Remedy solution.

A number of possible solutions are available for those who find themselves in debt. For example a debt advisor will almost certainly discuss the following strategies with their clients:

  • Negotiate a freeze on interest with creditors
  • Debt Management Plan
  • Debt Relief Order
  • Individual Voluntary Arrangement (IVA)
  • Protected Trust Deed (Scotland)
  • Personal Bankruptcy.

Sources of Debt Help

The UK government website Directgov (Direct.gov.uk) offers advice on a range of consumer-related subjects including debt management and have recommended the organisations listed below as places where free and independent debt advice is available.

  • Consumer Credit Counselling Service (CCCS)
  • National Debtline
  • Citizens Advice Bureau.

The information in this article is obtained from the reputable sources listed below and is offered in good faith. However like all financial decisions it’s important to seek appropriate advice.