Buying a home and be a daunting process especially for first time home buyers, Even seasoned home buyers and refinancers find the entire process overwhelming. Deciding on a mortgage lender or finding the best current mortgage rates today isn’t easy. Does the lender make privately or federally insured or guaranteed loans?

Some lenders offer mortgage loans backed by a federal agency such as the Federal Housing Administration (FHA loans) or the Department of Veterans Affairs (VA loans).The names of credit bureaus can be found in the phone book.It’s common for a decision to be made within 30 days after the lender receives all the necessary information. The point is to lock in your mortgage rates today because you never know when rates will move higher.

But, basically, the way to find the loan with the most attractive terms is to shop around.If there were special circumstances surrounding old credit problems, ask for a chance to explain.You also have the right to receive a copy of the appraisal if you have paid for it.But they may be more restrictive in other ways; for example, they may be available only for certain kinds of homes, or for properties whose value is below a specified price.

Is the size of the mortgage you need too high, given the property’s appraised value?If similar houses in the neighborhood have sold at prices comparable to yours, maybe the appraiser undervalued the property.Where you shop and what you look for are important.The mortgages these institutions offer will have varying features.

If your application is turned down, federal law requires the lender to tell you, in writing, the specific reasons for the denial.Other factors important to your mortgage decision are the length of the loan and the down payment required by the lender.Ask how your debt ratios compare to the lender’s standards.The lender will need documentation pertaining to your personal finances–your earnings, your monthly expenses, and your debts–to help gauge your willingness and ability to repay the mortgage.

Ask the lender if such programs are available.The time may vary depending on the complexity of your mortgage, current market conditions, and whether you have to provide additional information.For example, what types of loans are available from a given institution?In that case, the lender may suggest a larger down payment to make up the difference between the price of the house and its appraised value.

To estimate the value of the property, the lender will ask a real estate appraiser to give an opinion about its value.Factors that may affect the loan decision include: Is your proposed down payment sufficient?If the appraisal is below the asking price of the home, the down payment you planned to make and the amount the lender is willing to lend you may not be enough to cover the purchase price.These are commonly used ratios.When you talk to a lender, find out what ratios will be used to evaluate your application.Applications for FHA or VA loans may take longer.

When you file your application, ask the lender how long the approval process will take.If not, perhaps the lender offers other types of mortgages with lower down-payment requirements.In the case of “28 and 36,” the 28 refers to the percentage of your gross income (before taxes) that may be spent on housing expenses, including principal and interest on the mortgage, real estate taxes, and insurance.

When you’re shopping around, you will find that some home mortgage lenders have special programs to assist veterans and low-income or first-time homebuyers.Be prepared to provide certain documentation about your income (W2s for prior years and year-to-date pay stubs), current debts (account number, outstanding balance, and creditor’s address for each), and the purchase contract for the home you want to buy.A wide variety of institutions make home mortgage loans, including savings and loan associations, commercial banks, mutual savings banks, and mortgage companies.

Lenders also will examine your file at the credit bureau to learn if you pay your bills on time.In addition, mortgage loans may have interest rates that will stay fixed for the life of the loan (fixed-rate mortgages), that may change (adjustable-rate mortgages, or ARMs), or that represent a combination of fixed and variable rates (convertible mortgages).A lender may reject your application if the report shows that you have a poor credit history.Worksheet 1 helps determine how much money you might have available for a monthly payment–just list all items of income and payments required on debts that won’t be paid off within ten months.

You might start by looking for a mortgage at the bank where you have your checking or savings account.Is the lender doubtful–because of your level of debt or credit history–about your ability to make the monthly payment?Lenders usually will lend the borrower up to a certain percentage of the appraised value of the property, such as 80 or 90 percent, and will expect a down payment making up the difference.

Don’t hesitate to ask the lender how one loan differs from another, how the different features of the loan will affect the mortgage, or whether your chances to qualify would improve if you made a higher down payment.You can prepare for questions about your financial condition by using the worksheets in this brochure.When looking at your projected mortgage payment and existing debt, some lenders might use ratios such as “28 and 36″ to determine whether you qualify for the loan.

The initial rate of an ARM is generally lower than the rate available on a fixed-rate mortgage; but remember, the rate may change during the lifetime of the loan.Next comes finding a mortgage and payment terms that fit your budget.Insured mortgages may be more attractive than conventional mortgages in some ways–such as lower down payment requirements.Then use Worksheet 2 to calculate whether you are within the lender’s guidelines.Loans that are not government-insured are called conventional mortgages.The longer the term and the larger the down payment, the smaller your monthly payments will be.But don’t limit yourself.

One way to find the creditor with the most attractively priced loan is to look in your local newspaper; check to see if it publishes a shoppers guide to mortgage credit.

To figure the mortgage payment, the lender will begin by asking how much you want to borrow.Thus, you may want to make sure your credit file is accurate before you apply for your mortgage.These shoppers guides are available in many localities and can be used to identify the lenders with low rates.The mortgage application process requires considerable paperwork.

The 36 refers to the income that may be spent for payments on all your debts (including the mortgage): the monthly payments on your outstanding debts, when added to the monthly housing expenses, may not exceed 36 percent of your gross income.You should have in mind some of the things to look for in a mortgage loan.

First there is the application form, which asks for detailed information about you, your employment record, the house you want to purchase, etc.Suggest that the lender re-examine the appraisal.Make sure you understand the reasons given–you may be able to find answers or alternatives that will satisfy the institution’s lending standards.

The appraiser’s opinion can be an important factor in determining whether you qualify for the size of mortgage you want.The interest rate is important too, and in some cases the amount of the down-payment will influence the interest rate that you pay (the larger the down payment, the lower the interest rate).Even if that doesn’t happen, understanding fully why the loan was denied may improve your chances with the next lender you visit.

You have a right to know what information is contained in your credit report and to have someone from the credit bureau help you understand what the report says.Actually, only the first phase has been completed.The maximum loan amount will be determined by the value of the property and your personal financial condition.There’s also a place for the estimated mortgage payment quoted by the lender.Once you have found the home of your choice, you may think that your shopping days are over