Home Equity Loans
People usually apply for a second mortgage or home equity loan when they need money for debt consolidation, to pay large expenses or for home remodeling and home improvement, maintain emergency cash reserved. Second mortgages are generally categorized as fixed interest rate home equity installment loans (HELOANS) and adjustable mortgage rate home equity lines of credit (HELOCs).
Which you choose depends on your needs, but the application and approval process is similar for both.
These tips will help your loan process be as hitch-free as possible:
- Work with your mortgage broker to compare options like refinancing and other loan options to determine if a second mortgage is the best choice.
- Your lender may want to know the purpose of the loan. Your answer may help determine whether you are approved.
- Know your FICO score and check your credit report for errors. Lenders will review your FICO score to determine your loan rates.
- Discuss different loan programs with your mortgage broker and find the best loan for your situation. Getting a good interest rate is not a bad idea either.
- When applying for a loan, you will get a mortgage checklist containing the list of paperwork you need to close the loan, including:
- Copy of the deed to the property.
- Recent tax appraisal.
- Last two years’ W-2’s, tax returns and current pay stub, or two years’ tax returns if self-employed. Be sure to include all schedules.
- Proof of income from alimony, child support, disability payments, lawsuit settlement, inheritance, or other income sources.
- Copies of your last 3-6 bank statements.
- List of all open credit accounts
- Your current mortgage statement.
- Homeowners insurance information
- Electronic transfer of documentation from the checklist will expedite the loan process
- Fill out your loan application thoroughly, or it may delay approval and loan closing.
- Has your mortgage application been rejected by a lender? Ask why it was rejected to find out what you need to do to secure mortgage loan approval in the future. Sometimes paying down some credit cards can increase your credit score just enough to qualify.