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 a number of different sources out there (banks, credit unions, mortgage brokers, Internet services, etc.) and you should compare a few to truly get hold of the 1 is the best for you. Different Upper Peninsula lenders offer different rates, so it benefits you to look around. A mortgage broker can also be used. At times, they can offer better rates than you can discover yourself, and will help you sort through your options. Mortgage brokers are paid by the lending institution 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 prudent to request a copy of your own credit report in order for you to review prior to lenders do. It's estimated that up to 80% of credit reports contain errors, so this gives you a chance to rectify them prior to you apply for a loan, in addition to taking basic steps to increase 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 generally 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, contemplate how much money you've available for closing, and how long you intend to own the home. If you don't have a great 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 long time, a lower interest rate will eventually be better for you. You can request 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 ask for a copy of your credit report when your loan application is taken into consideration. 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 a large amount of people falling somewhere between 600 and 700. The higher your credit score, the more probable they will offer you good rates and loan terms. Factors affecting your credit score consist of 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, validating all listed account numbers to ensure they belong to you. 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 approximation of how much mortgage you can afford. The whole process might take only minutes or a few hours at most, and is more often than not 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 1 step further. To get pre-approved takes more time. The Upper Peninsula lender will contact your employer, your bank and others to verify your income, assets, debts and credit history, and then issue you a letter stating that your mortgage is approved for a specified amount within a certain timeframe. This process generally costs a small administrative processing fee which is often refunded at closing.

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