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 scores of different sources out there (banks, credit unions, mortgage brokers, Internet services, etc.) and you should evaluate a few to truly get hold of the one is the best for you. Different Upper Peninsula lenders offer different rates, so it pays to shop around. You can use a mortgage broker as well. Sometimes they can offer better rates than you can locate yourself, and will help you work through your options. Mortgage brokers are compensated by the lending institution that is offering the loan.

Items you will need 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 sensible to request a copy of your own credit report in order for you to review prior to lenders do. It's estimated that about 80% of credit reports have errors, so this allows you to correct them prior to you apply for a loan, as well as take first steps to improve your credit score.

What points are

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

Discount points are tax deductible, but origination fees are not. When choosing between loans with points or no points, consider how much money you've available for closing, and the amount of time you intend to own the home. If you do not have a lot 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 lengthy time, a lower interest rate will be better for you ultimately. You can ask the seller to pay the points as part of the purchase agreement; if they agree to pay 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 all the details about your financial history, payment records, total debt, and any bankruptcies.

The information on this report is used to generate your credit score or FICO score, a numerical rating of your creditworthiness. Credit scores range from 300 to 900, with most people falling somewhere between 600 and 700. The higher your credit score, the more plausible 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.

Settle any outstanding accounts, verifying all listed account numbers to make certain they are yours. Check your loan balances and late payments.

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

Pre-qualification and Pre-approval

Pre-qualification is an estimation of how much mortgage you can afford. The whole process might take only minutes or a few hours at most, and is typically 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 is more time consuming. The Upper Peninsula lender will contact your employer, your bank and others to authenticate your income, assets, debts and credit history, and then send you a letter which states that your mortgage is approved for a certain amount within a certain timeframe. This process generally costs a small administrative processing fee which is often refunded at closing.

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