Upper Peninsula, Michigan Mortgages

A mortgage is a long-term loan that is normally backed by the equity (value) of your home.  You pay interest on a mortgage, and the interest rate varies depending on your credit and the type of mortgage you receive.  Some Upper Peninsula mortgages have fixed rates, usually for a 15, 20 or 30 year term, others have a rate that adjusts after a shorter fixed-rate period.


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Mortgages Introduction

There are many different sources out there (banks, credit unions, mortgage brokers, Internet services, etc.) and you ought to evaluate a few to really locate the 1 is the best for you. Different Upper Peninsula lenders offer different rates, so it benefits you to shop around. You can also use a mortgage broker. They can often offer better rates than you can find yourself, and will help you work through your options. Mortgage brokers are compensated by the lending institution that is offering the loan.

Items needed to qualify

IRS W-2 forms

Income tax returns (for the past few years)

Any alimony or child support payments (paid or received)

Bank statements

Pay stubs

Credit report - It is smart to request a copy of your own credit report in order for you to review before lenders do. It is estimated that almost 80% of credit reports hold errors, so this gives you an option to correct them prior to you apply for a loan, plus taking initial steps to enhance your credit score.

An explanation of points

A point is 1 percent of the loan amount, and lenders can charge from 1 to quite a lot of points on a loan. Points are paid as part of closing costs. Discount points are prepaid interest; the more points paid at closing, the lower your interest rate will be. Origination points are essentially just a fee to cover the lenders cost of making a loan.

Discount points are tax deductible, but origination fees aren't. When choosing between loans with points or no points, think about how much money you've available for closing, and the length of time you plan to own the home. If you don't have a good deal of money for closing, a loan with no points will require less money up front. If you intend to live in the home for a great deal of time, a lower interest rate will be better for you in the end. You can ask the seller to pay the points as part of the purchase agreement; If they consent to paying the points, you still claim the tax deduction.

Credit Reports

Upper Peninsula lenders will request a copy of your credit report when your loan application is taken into account. This report gives every detail about your financial history, payment records, total debt, and any bankruptcies.

The information on this report is used to determine your credit score or FICO score, a numerical rating of your creditworthiness. Credit scores range from 300 to 900, with the majority of people falling somewhere between 600 and 700. The higher your credit score, the more likely they will offer you good rates and loan terms. Factors affecting your credit score include the number and frequencies of your delinquencies, the length of your credit history, and a review of your credit limits.

Any unused credit card accounts should be closed.

Resolve any outstanding accounts, Confirm all listed account numbers to ensure they are yours. Check your loan balances and late payments.

It may be required that you explain certain items to lenders.

Pre-qualification and Pre-approval

Pre-qualification is an estimate of how much mortgage you can afford. The entire process may take only minutes or a few hours at most, and is usually free. While a pre-qualification is non-binding to the lender (because the information you provide to them has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness. Pre-approval takes pre-qualification an additional step further. To get pre-approved takes more time. The Upper Peninsula lender will contact your employer, your bank and others to confirm your income, assets, debts and credit history, and then issue you a letter stating that your mortgage is approved for a particular amount within a certain timeframe. This process typically costs a small administrative processing fee that is often refunded at closing.

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