Mortgage Application Tips – Part III

This post will be the last in our series of “Mortgage Application Tips”. The blog posts have been written to show borrowers how to enhance their chances for mortgage loan approval when financing their home. We’ve covered credit scores, income, and assets now let’s go-over the other items that will help insure your mortgage approval.

You will need insurance on your home as the mortgage lender wants both you and them to be covered in the case of a catastrophe. When you call your insurance agent you will need to have it covered for a minimum of the loan amount or replacement value. You will also need to provide then the mortgage clause from the mortgage lender showing them as a named insured on your insurance policy. Depending on the location of your property you may need flood insurance and/or wind-storm insurance. Remember most mortgage lenders will not allow for more than a one-percent deductible on your insurance policy.

The purchase money agreement if you are buying a home needs to be filled-out completely and correctly by your real-estate agent or real-estate attorney. Make sure the legal description on the sales contract matches the correct legal description on the title policy.

The one item when obtaining a mortgage today that receives probably the most scrutiny is the appraisal. If you are buying a home it’s imperative that there will be a minimum of three additional comparable sales within a close proximity to the property and have recently sold.

A close proximity in an urban setting is usually within one mile of the subject property. Recent sales are usually within three to six months and absolutely no more than a year old. When buying a home you should ask the listing agent to provide three comparable sales that will support the sales price of the property. If they cannot do that chances are you are going to have a hard time getting mortgage-loan approval. The homes need to be of similar size, age, and condition. For example, you cannot compare a brand-new home to a property that is thirty-years old.

Finally make sure that every thing on your application is correct before you sign it. Don’t just sign it without proof reading it for mistakes. Make sure you can document everything on the application from income, assets, time on a job to time at a specific residence.

When it comes down to it not only is honesty the best policy – you are signing a legal document and if you cannot document what you have put on the application not only will it be denied you may open yourself up to being accused of mortgage fraud.

There is only one way to apply for a mortgage – the honest way.

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