What Are The Steps to Secure a Mortgage?

What Are The Steps to Secure a Mortgage?

» Q & A with Dottie Herman | By Dottie Herman | December 18, 2014 8:00 AM ET

Q & A with Dottie Herman
Question: What are the steps to applying for a mortgage? What are the first things I need to do?

ANSWER: Mortgage applications usually consist of the last 2 years of income (W-2s and income tax returns), most recent paystubs, last 2 months of bank and asset statements, and your credit score and report.  Gather those documents and reach out to a mortgage lender and ask to be pre-approved based on these documents.
Question: Can I finance a rental property? I found a rental I love and it is a bit outside what I can afford at the moment. Is there a way I can make it work?

ANSWER: Financing is available for rental properties.  The type of property will determine the types of financing available. One to four family unit homes usually require a minimum of 20 percent (of the purchase price) down, but more typically need 25 percent or more to qualify. Some lenders require landlord experience as well. It is best to run the particular scenario past your mortgage lender to see if you can qualify.
Question: I know credit is very important in determining if someone can get a loan. Is it the only factor? I have decent credit but was wondering if that's a deal breaker?

ANSWER: It is very important, but if you can show at least one year of paying all of your bills on time, and your credit score of 620 and above, the lender may be able to look at other factors such as income and down payment to determine if you can be approved.
Question: My husband had some credit trouble in the past and doesn't have a very good score. I have an excellent credit score. Will we be able to get a mortgage on our home together? Or will it just have to be in my name if we need a loan?

ANSWER: That depends on how bad his credit score is. The interest rate you pay on your mortgage is generally based on the lower credit score. It might make sense to see how much of a mortgage you qualify for without your husband.
Question: Can I get a loan to remodel my house? It needs many upgrades.

ANSWER: Yes you usually can. That is referred to as a renovation loan. The bank will assess the value of your house based on the future value after all of the work has been completed by an approved contractor.

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