Shopping for a Loan
Shopping for a loan (see Figure 1.4) is an important step in the process. Saving 0.25 percent on the interest rate of a $200,000 loan saves $12,000 over the 30-year term of the loan. Saving one discount
FIGURE 1.4 Step 2: Shopping for a Loan
point on a $200,000 loan saves $2,000. Lenders' prices vary widely, so comparison shopping is valuable to you. Chapter 5, “Shopping for a Mortgage,” explains how.
Part of shopping is deciding what type of loan you want. Chapter 4, “Choosing the Right Type of Mortgage,” describes the different types of mortgages most commonly available and their advantages and disadvantages.
A professional qualified loan officer also can describe the benefits of different loan products. Be aware, however, that most loan officers are commissioned salespeople, and they try to sell the loans that they have to offer and are most familiar with. Find out for yourself what kind of loan you need so you can shop more effectively.
Applying for a Loan
After you select a loan type and complete your shopping for a lender, you must submit an application (see Figure 1.5) and sign nu-
FIGURE 1.5 Step 3: Applying for a Loan
merous forms that allow your lender to contact your employers and banks. Your loan officer helps you prepare your loan application (see Appendix B) using a computer to gather the necessary information and print the completed application for your signature.
Just as there are national guidelines for qualifying, there also are national standards for application forms and required information. Most lenders request some or all of the following information. However, lenders usually only collect information that is necessary for you to qualify.
• Social Security numbers for each applicant
• Current address and prior addresses for the past two years
• Name and address of current mortgage lender (if any)