Step 1: Income

Get copies of your two or three most recent payroll stubs, your two latest federal tax returns, and your most recent W-2 forms. As you get new payroll stubs during the application process, keep them in the file.

If you’re self-employed you will likely be required to provide year-to-date income and expense estimate. Indicate which figures are “actual,” which are “estimated” and be conservative in your reporting.

Every household has a few financial oddities. For instance, if you started work in May your W-2 will not reflect a full year’s pay. If you have a partnership interest or other complex holding, you’ll need documentation. Be prepared to explain special situations and provide documentation as required.

Step 2: Debts

Make a list of your debts — who is owed what, the total amount of each debt, the required monthly payments, account numbers and contact information. An easy approach is to make copies of your latest payment stubs for auto, credit card, mortgage and other debt — such stubs have account numbers which the lender can use to verify information.

If you have student loans, show the total of what you owe, to whom, account numbers, and what you pay each month.

Step 3: Assets

Copy your most recent IRA, Keogh, mutual fund and other account statements — they have dollar totals and account numbers. List all the real estate you own by address and estimated value. Be sure to emphasize “estimated” because without an actual sale the value of real estate is debatable. Be restrained — lenders like happy surprises, such as an independent appraisal which shows your home is worth more than your estimate.

If you own investment real estate, provide leases for all properties.

Step 4: Credit

Your lender will obtain credit reports from the three leading credit reporting agencies (CRAs), along with credit scores from each bureau.

Under the federal Fair Credit Reporting Act (FCRA) reports may also be available without charge if you have been refused credit, denied a job or insurance under certain conditions, believe your report is inaccurate, or are now unemployed (and expect to seek unemployment benefits) or on welfare.

Your lender will order credit reports directly, but for your own information such records can be useful — especially if you see items which are factually incorrect or out-of-date. It’s good to get credit information several months before applying for a mortgage so you have time to contest any errors.

If you have a late payment — or a missing payment — be prepared to explain what happened, if you can. Remember that lenders do not expect perfect credit.

Credit scores are essentially a way to “grade” credit reports. There are different credit score services and they will often produce a range of scores. As well, individual lenders and loan programs value credit scores differently. Under one program a score of 680 may be fabulous while under another 720 may be required to get the best rates.

To get copies of your credit report online and WITHOUT charge or the requirement to buy some other product or service, go to AnnualCreditReport.com

Step 5: Gifts

If there’s a financial gift involved in your transaction it’s a good idea to explain where the cash is now located and to have a letter from the giver stating that the money is really and truly a gift and that no repayment or interest is required or expected.

Step 6: Help Yourself

During the application process, do not buy a car, obtain a new credit card, or rack up vast amounts of new debt. Make all payments in a full and timely manner. Expect lenders to re-check credit reports just before closing. Provide the name and account number of your insurance provider. If your loan requires an appraisal, clean up the house as you would before the arrival of an important visitor.

Make copies of everything you give to your lender — and mark down the date provided and how delivered — by hand, mail or electronically. Keep your lender’s good faith estimate of closing costs and any rate-lock commitment in your file. If you’re refinancing, dig out your last set of settlement papers — the title policy may help you get a “re-issue” rate on new coverage and the HUD-1 form can be important for tax purposes.

Will these six steps save you time, money and irritation?

You bet. Every time I’ve financed or refinanced a property my loan application has flown through the system.

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Published originally by Realty Times on October 14, 2003 and posted with permission.

Six Steps to Simple Refinancing is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Negotiation is a complex matter and all transactions are unique. Both sides — buyer and seller — want to feel that the outcome favors them, or at least represents a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take, and neither party gets everything they want.

So how do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are five basic keys which will determine who wins at the negotiating table.

1. What Does The Market Say?

At various times we’re in a “buyers” market, a “sellers” market, or a market where housing supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique — it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you’re a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

2. Who Has Leverage?

If you’re on the front page of the local paper because your business went bust — and the buyer knows it — you have little clout in the bargaining process. Alternatively, if you’re among six buyers clamoring for that one special property, forget about dictating an agreement — the owner can sit back and pick the offer which represents the highest price and best terms.

3. What Are The Details?

A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $475,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $8,000 of the buyer’s closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount — the $475,000 purchase price less the value of the roof repairs, closing credit, and other items. If you’re a buyer, this is the deal you want. If you’re a seller, you would prefer to be the second owner and give up nothing.

4. What About Financing?

Real estate transactions involve a trade — houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:

• Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available — a loan application can be declined because of appraisal problems, title issues, survey findings, and other reasons.

  But, buyers who are “pre-qualified” or “pre-approved” (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.

  The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it’s possible that the transaction could fail because the buyer can’t get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.

• The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.
• Alternatively, high rates or even rising rates may drive buyers from the marketplace — and that’s not good for anyone.
• It used to be that downpayments were a major financing hurdle — but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 95 to 97 percent financing, mortgages with little down, are now being made by conventional and FHA lenders. Reduced downpayment requirements are good for both buyers and sellers.

5. Who Has Expertise?

Imagine you’re in a fight. The other guy has black belts in 12 martial arts — and you don’t. Who’s going to win?

Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table? Both sides should have professional representation.

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Published originally by Realty Times on April 10, 2001 and posted with permission.

Five Keys To Successful Negotiation is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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