One of the biggest hassles of applying for a mortgage or a refinance is gathering all the paperwork. Lenders want detailed information on your finances so they can size you up and determine whether you qualify for a home loan. Before making what’s likely to be the biggest purchase of your life, here’s what you should collect before you apply for a mortgage. Proof of income A lender wants to know that you’ll be able to repay the loan. At minimum you’ll need to provide: The previous year’s W-2 form. Your most recent pay stub. Your tax returns from the past year. Depending on your income history and the size of the loan, you may have to show additional paperwork. “Occasionally, one item trigger
Homeowners with low mortgage rates have an easier time paying off their mortgage early. But is that a good idea? It’s not a “yes” or “no” question. You might be better off putting extra money in a Roth IRA or 401(k) than paying off your mortgage ahead of schedule. And if you’re applying for need-based education aid for your kids, a paid-off mortgage or a lot of home equity can count against you at colleges where equity is considered money in the bank. If, after considering the potential downsides, you still want to pay off your mortgage early, here are four ways to make it happen. Refinance with a shorter-term mortgage. Pay a little more each month. Make an extra mortgage payment every year.
If you bought a house and made a down payment of less than 20 percent, the lender required you to buy mortgage insurance. The same goes if you refinanced with less than 20 percent equity. Private mortgage insurance is expensive, but you can’t remove it until you have met some conditions. How to get rid of PMI? To remove PMI, or private mortgage insurance, you must have at least 20 percent equity in the home. You may ask the lender to cancel PMI when you have paid down the mortgage balance to 80 percent of the home’s original appraised value. When the balance drops to 78 percent, the mortgage servicer is required to eliminate PMI. Although you can cancel private mortgage insurance, you cannot
Money issues often stand in the way of homeownership. A survey by rental service Apartment List found that 80 percent of millennial renters want to buy a home, but most say they can’t afford to. What you may not realize is that many first-time home buyer programs and grants offer financial help, and you may be eligible for various types of assistance. Here are nine first-time home buyer programs and grants designed to help you land a great mortgage and get a place of your own. 1. FHA loan In an FHA loan, the Federal Housing Administration insures the mortgage. The FHA is an agency within the U.S. Department of Housing and Urban Development (HUD). The FHA’s backing offers lenders a layer of p