Form 1003 - Uniform Residential Loan Application (a breakdown)

There are several things to consider when applying for a mortgage or home equity line of credit. Below I have listed several main sections that are on the Fannie Mae Form 1003. By knowing what documents to bring to your broker, your loan process will be simplified and the process will be smoother.
A home equity loan is like any other mortgage loan in that the application process is usually the same.

Verification of documentation is dependent on the type of loan (stated, no-doc, no-income, or full-doc, and conventional) whether you need to verify your work history your rental payment history or if you need to varify your assets and income. These verifications come int the form of a VOE-verification of employment, VOR-verification of rent, and VOI-verification of income.

1. Type of Mortgage and Terms of Loan
   
   Your broker will fill this section out depending on what your needs are.
   
   For example they might write some of the details concerning a home equity line of credit here..
   


2. Property Information and Purpose of Loan
   
   Your broker will fill this section out. If you will be doing new construction or refinancing into a mortgage or HELOC,
   you will have additional information about your house to fill out here. Your broker
   will go into more depth in the interviewing process.
   
   
3. Borrower Information
   
   This section is going to cover your name, your social security
   number, phone number, date of birth, the number of years of school that you have
   completed, and your address (present and mailing)
   
   You will need to provide two years of address information and if you rent then be sure to provide contact
   information for your landlord.
   
   
4. Employment Information
   
   You will need to provide at least 2 years of work history. Include for each employer
   the length of time that you have been work there and how long you have been working
   in that line of work. Include contact information to reach your employer, and
   the title for your position.
   
   Compensation for your current job will be
   covered in the section following this one, but include your monthly income for
   all of the other jobs.
   
   
5. Monthly Income and Combined Housing Expense Information
   
   Write down your monthly income. be honest becuase
   you will need to bring varification. Varification includes 2 years of tax form
   w-2as well any award letters or other documentation that you think may be requested.
   The more material you provide to your broker will, in the end, mean less phone
   calls and less time wasted later on.
   
   Also write down what you are paying
   each month in rent. or if you currently own a home then write down all the information
   that you know about your current mortgage or home equity loan.
   


6. Assets and Liabilities
   
   Your broker will want to know about your assests. so
   list out everything you have. You will need to list your bank accounts, their
   account numbers and how much money is in each account. If you have investments,
   list them. If you have a money built up in a retirement fund, list it. List the
   year, make and model for all cars that you own, and if you have anything particularly
   valuable list it. for everything else, estimate what your howehold goods are worth.
   
   This gives the bank a better understanding of what your situation is. The Broker involved
   uses the Assets section less than other sections, but don't skimp. every detail
   that your broker loans will help ensure that your loan gets approved the first time.
   
   Liabilities will be collected by pulling a credit report for you
   and your coborrower if you have one. If you can explain derogatory credit and
   are getting a governmental loan, it may be useful to explain negative credit.
   
   If you own property you will need to list it in the section.
   


7. Details of Transaction
   
   This section is for your broker to fill out
   


8. Declarations
   
   There are several yes no questions here. Be honest. they will help avoid problems later on in the loan origination process.
   


9. Ackowledgment and Agreement
   
   When you go in to sign disclosures you will need to sign here to acknowledge that the
   information you have provided is correct to the best of your knowledge
   


10. Information for Government Monitoring Purposes
    
    Are you Hispanic or Latino?
    
    What is your race..? White, Asian, Black or African American, American Indian or Alaska
    Native, or Native Hawaiian or Other Pacific Islander.
    
    The government monitors your broker to ensure that they are treating their clients equally.

Consolidate your credit card debt

With the popularity of plastic money in the present age, credit cards are gaining immense importance. With the growing increase in usage of such cards the credit rates are also reaching the horizon. Debts are thus becoming a common happening in our daily lives. People who are under the claws of credit card debts need to give a serious thought to debt consolidation and lighten their burden. In the US more than half of the population has an average of $8000 debts, only because of the usage of credit cards.

You must be eager to know:

• How does debt consolidation helps in case of credit card debts?
• How consolidating my credit card debts could be beneficial?

A credit card debt consolidation loan can be a resource to consolidate the outstanding balances on your cards into one single loan. They can also be transferred to one single card that has a lower interest rate than the ones you are currently paying. The path to savings should be very cautiously chalked out and one needs to make calculated moves all the time. When you are paying high interest rates on some of your current credit cards then it might be a wise idea to go for a balance transfer onto another credit card or cards that have relatively low interest rate. Know more about balance transfer in the "members only" contents. We offer free membership. Calculate the interest on your credit card debts and transfer it accordingly.

The ideal way to consolidate your credit card debts!

In order to make you understand better we have a small example of how consolidating your credit card debt could be beneficial.

Let's say you have $100 in outstanding credit card debt and the average annual percentage rate (APR) on that card or cards is 18 % ( which is the average). If the outstanding balance remains at $100 then over the course of a year you would pay approximately $18 in interest charges alone. If you consolidate your credit card debt into a single loan with a lower interest rate or if you do a balance transfer onto a credit card or cards with a low interest rate you would save a significant amount of money.

If the new loan or credit card have a 9% APR then you would save roughly $10 in interest charges over the course of that same year. If you save $10 for a debt of $100, then think about a debt of $10,000. This trick will save you $1,000 over the course of that same year. Just think of $1, 00,000 debts; you can save $10,000. And this amount of $10,000 can be used to repay some of your debts. Life becomes easy with simple calculations and cautious moves.

If you are under a mountain of debts our experts will help you to consolidate your debts and help you tread you into a debt free land. Consolidating your debt is perhaps the fastest, safest and best way today to get rid of your financial obligations and we are experts in this field. Fill our free membership form to view all the alternatives. With debt consolidation we are here to consolidate all your financial loans in a single monthly payment. Thus we help you take the first step nearer to freedom. You can take a look at the following articles:

http://www.debtconsolidationcare.com/card-counseling.html
http://www.debtconsolidationcare.com/creditcard-terminology.html
http://www.debtconsolidationcare.com/creditcardfaq.html
http://www.debtconsolidationcare.com/credit-counseling.html

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About The Author -

Author's Name : Janet Williams

bill@debtconsolidationcare.com

Janet Williams is a contributing writer to www.debtconsolidationcare.com and is currently working on a special section in the site called do it yourself where you can eliminate your debts and become debt free.

(July 2005)

Disclosures from lenders

The federal Truth in Lending Act requires lenders to disclose the important terms and costs of their home equity plans, including the APR, miscellaneous charges, the payment terms, and information about any variable-rate feature. And in general, neither the lender nor anyone else may charge a fee until after you have received this information. You usually get these disclosures when you receive an application form, and you will get additional disclosures before the plan is opened. If any term (other than a variable-rate feature) changes before the plan is opened, the lender must return all fees if you decide not to enter into the plan because of the change.

When you open a home equity line, the transaction puts your home at risk. If the home involved is your principal dwelling, the Truth in Lending Act gives you 3 days from the day the account was opened to cancel the credit line. This right allows you to change your mind for any reason. You simply inform the lender in writing within the 3-day period. The lender must then cancel its security interest in your home and return all fees--including any application and appraisal fees--paid to open the account.

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This article is from the Federal Reserve website

(Febuary 2005)

Are There Good Mortgages for Mobile Homes and Manufactured Housing?

Are There Good Mortgages for Mobile Homes and Manufactured Housing?

Why do so many mobile home and manufactured housing buyers settle for what ever mortgage the dealer throws in front of them? Do they really think they deserve to pay 9-12% interest just because they are not buying traditional housing? There is no reason to pay those rates just because you are financing under $100,000.00. Fannie Mae, HUD, and FHA all have programs with rates between 7.125 and 8.5% interest on mortgages below 60,000.00 and 6.125-7.5% on Mortgages below 100,000.00.

They do have common sense conditions as to the construction, anchoring and foundation. Many of these conditions are based on location and safety but again they are common sense and can be rolled into the mortgage as a construction to permanent loan (also known as a C/P). By going with one of these programs you automatically qualify for reduced insurance premiums because your house will conform to Fannie Mae, HUD, or FHA standards. You also have the piece of mind of knowing your home is as safe and weather resistant as possible.

Compare the above rates to what you pay now. And realize that there is no good reason to pay more. If you have a credit rating of over 485 you can qualify for one of the rates above. There are other factors like Loan to Value, Debt to Income Ratio, Primary Residence, that can affect the rate. However there is no reason to pay higher then the highest rate mentioned above.

Let me know if you found this article useful.

Kevin Hidden

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This article is from Kevin Hidden at www.mortgageseeker.biz.

Kevin can be reached at support@mortgageseeker.biz

(April 2005)

Why is a Home Equity Line of Credit good for you?

There are several reasons to a choose a home equity line of credit (also known as a
HELOC) for home financing. There is such a wide variety of reasons that I will
limit my discussion about HELOCs here to just a few.

Investor:

A Home Equity Line of Credit is the perfect tool to reduce risk within an investment
property. If an emergency repair needs to be made, the cash to pay for such a
repair can be made directly through the Heloc. A Heloc may also allow the funds
for future investments or improvements to the property.

Parents:

Helocs are useful becuase they can allow you to pay for medical bills. For example,
a home equity line of credit may assist the preparation for a newborn or for an
older child, it could make braces more affordable. Consolidating debt is also
another benefit listed below. The benefits are endless. Consider financing your
car through a heloc. car loans tend to be outragious.

Home Improvements:

New landscaping, carpets, and paint are the three fastest and low cost ways to
improve the value of your home. Adding more square footage is the number one way
to increase your homes value and what better way to do that than through a home
equity line of credit. Helocs are better than an improvement loan becuase you
are not required to have inspections throughout the improvement process.

College:

Fund your childs college experience with a home equity line of credit. You
will find that a heloc may make the difference in putting your child through college.
College graduates on average make several time that of individuals with only a
highschool diploma.

Medical:

Use a home equity loan to cut the cost of your insurance by having a larger deductible. Becuase of the Heloc, you will
be able to make the deductible if you have a serious medical emergancy. Becuase
you will be paying dramatically less each month on insurance, your savings will be huge!

Retirement:

A heloc is one way to tap the equity that has
been built up in a home. Another loan to use is a reverse mortgage.

Debt Consolidation:

This is probably the number one reason to get a home equity
line of credit. why have hold several different loans that have large interest
rates when you can consolidate them into one loan with a lower rate. Not only
will this reduce your overall interest rate, but becuase a heloc is ammortized
over a large period of time, you will be dramatically decreasing your monthly
payment and improving your cashflow!

Costs of establishing and maintaining a home equity line

Many of the costs of setting up a home equity line of credit are similar to those you pay when you buy a home. For example,

• A fee for a property appraisal to estimate the value of your home
• An application fee, which may not be refunded if you are turned down for credit
• Up-front charges, such as one or more points (one point equals 1 percent of the credit limit)
• Closing costs, including fees for attorneys, title search, and mortgage preparation and filing; property and title insurance; and taxes.

In addition, you may be subject to certain fees during the plan period, such as annual membership or maintenance fees and a transaction fee every time you draw on the credit line.

You could find yourself paying hundreds of dollars to establish the plan. If you were to draw only a small amount against your credit line, those initial charges would substantially increase the cost of the funds borrowed. On the other hand, because the lender's risk is lower than for other forms of credit, as your home serves as collateral, annual percentage rates for home equity lines are generally lower than rates for other types of credit. The interest you save could offset the costs of establishing and maintaining the line. Moreover, some lenders waive some or all of the closing costs.

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This article is from one of
The Federal Reserve Board's webpages

(Febuary 2005)

Home-Equity Loans - A description from the Consumer Action Website

Consider carefully before taking out a home equity loan. Although this type of loan might let you take tax deductions that you could not take with other types of loans, they reduce the equity you have built up in your house. If you are unable to make payments, you could lose your home.

Home equity loans can either be a revolving line of credit or a one-time, closed-end loan. Revolving credit lets you choose when and how often to borrow against the equity in your home. In a closed-end loan, you receive a lump sum for a particular purpose, such as remodeling or tuition. Apply for a home equity loan through a bank or credit union first. These loans are likely to cost less than those offered by finance companies.

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This article is from one of the Federal Citizens Information Center's webpages

(Febuary 2005)

How will you repay your home equity plan?

Before entering into a plan, consider how you will pay back the money you borrow. Some plans set minimum payments that cover a portion of the principal (the amount you borrow) plus accrued interest. But (unlike with the typical installment loan) the portion that goes toward principal may not be enough to repay the principal by the end of the term. Other plans may allow payment of interest alone during the life of the plan, which means that you pay nothing toward the principal. If you borrow $10,000, you will owe that amount when the plan ends.

Regardless of the minimum required payment, you may choose to pay more, and many lenders offer a choice of payment options. Many consumers choose to pay down the principal regularly as they do with other loans. For example, if you use your line to buy a boat, you may want to pay it off as you would a typical boat loan.

Whatever your payment arrangements during the life of the plan--whether you pay some, a little, or none of the principal amount of the loan--when the plan ends you may have to pay the entire balance owed, all at once. You must be prepared to make this "balloon payment" by refinancing it with the lender, by obtaining a loan from another lender, or by some other means. If you are unable to make the balloon payment, you could lose your home.

If your plan has a variable interest rate, your monthly payments may change. Assume, for example, that you borrow $10,000 under a plan that calls for interest-only payments. At a 10 percent interest rate, your monthly payments would be $83. If the rate rises over time to 15 percent, your monthly payments will increase to $125. Similarly, if you are making payments that cover interest plus some portion of the principal, your monthly payments may increase, unless your agreement calls for keeping payments the same throughout the plan period.

If you sell your home, you will probably be required to pay off your home equity line in full immediately. If you are likely to sell your home in the near future, consider whether it makes sense to pay the up-front costs of setting up a line of credit. Also keep in mind that renting your home may be prohibited under the terms of your agreement.

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This article is from one of The Federal Reserve Board's webpages

(Febuary 2005)

Lines of credit vs. traditional second mortgage loans

If you are thinking about a home equity line of credit, you might also want to consider a traditional second mortgage loan. A second mortgage provides you with a fixed amount of money repayable over a fixed period. In most cases the payment schedule calls for equal payments that will pay off the entire loan within the loan period. You might consider a second mortgage instead of a home equity line if, for example, you need a set amount for a specific purpose, such as an addition to your home.

In deciding which type of loan best suits your needs, consider the costs under the two alternatives. Look at both the APR and other charges. Do not, however, simply compare the APRs, because the APRs on the two types of loans are figured differently:

The APR for a traditional second mortgage loan takes into account the interest rate charged plus points and other finance charges.

The APR for a home equity line of credit is based on the periodic interest rate alone. It does not include points or other charges.

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This article is from one of The Federal Reserve Board's webpages

(Febuary 2005)

What should you look for when shopping for a plan?

If you decide to apply for a home equity line of credit, look for the plan that best meets your particular needs. Read the credit agreement carefully, and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs of establishing the plan. The APR for a home equity line is based on the interest rate alone and will not reflect the closing costs and other fees and charges, so you'll need to compare these costs, as well as the APRs, among lenders.

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This article is from one of The Federal Reserve Board's webpages

(Febuary 2005)

Is a Home Equity Credit Line Right for you?

If you need to borrow money, home equity lines may be one useful source of credit. Initially at least, they may provide you with large amounts of cash at relatively low interest rates. And they may provide you with certain tax advantages unavailable with other kinds of loans. (Check with your tax adviser for details.)

At the same time, home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly payments. In addition, because home equity loans give you relatively easy access to cash, you might find you borrow money more freely.

Remember too, there are other ways to borrow money from a lending institution. For example, you may want to explore second mortgage installment loans. Although these plans also place an additional mortgage on your home, second mortgage money usually is loaned in a lump sum, rather than in a series of advances made available by writing checks on an account. Also, second mortgages usually have fixed interest rates and fixed payment amounts.

You also may want to explore borrowing from credit lines that do not use your home as collateral. These are available with your credit cards or with unsecured credit lines that let you write checks as you need the money. In addition, you may want to ask about loans for specific items, such as cars or tuition.

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This article is from the Indiana Department of Financial Institutions' website

(Febuary 2005)

Protecting Yourself

You can protect yourself against losing your home to inappropriate lending practices. Here's how:

Home Equity Loan Don'ts:

• Agree to a home equity loan if you don't have enough income to make the monthly payments.


• Sign any document you haven't read or any document that has blank spaces to be filled in after you sign.


• Let anyone pressure you into signing any document.


• Agree to a loan that includes credit insurance or extra products you don't want.


• Let the promise of extra cash or lower monthly payments get in the way of your good judgment about whether the cost you will pay for the loan is really worth it.


• Deed your property to anyone. First consult an attorney, a knowledgeable family member, or someone else you trust.
  

Home Equity Loan Do's:

• Ask specifically if credit insurance is required as a condition of the loan. If it isn't, and a charge is included in your loan and you don't want the insurance, ask that the charge be removed from the loan documents. If you want the added security of credit insurance, shop around for the best rates.


• Keep careful records of what you've paid, including billing statements and canceled checks. Challenge any charge you think is inaccurate.


• Check contractors' references when it is time to have work done in your home. Get more than one estimate.


• Read all items carefully. If you need an explanation of any terms or conditions, talk to someone you can trust, such as a knowledgeable family member or an attorney. Consider all the costs of financing before you agree to a loan.

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This article is a segment from the FTC's webpage Home Equity Loans: Borrowers Beware

(Febuary 2005)

What is The Interest Rate on The Home Equity Loan?

Interest rates for loans differ, so it pays to check with several lenders for the lowest rate. Compare the annual percentage rate (APR), which indicates the cost of credit on a yearly basis. Be aware that the advertised APR for home equity credit lines is based on interest alone. For a true comparison of credit costs, compare other charges, such as points and closing costs, which will add to the cost of your home equity loan. This is especially important if you are comparing a home equity credit line with a traditional installment second mortgage loan where the APR includes the total credit costs for the loan.

In addition, ask about the type of interest rates available for the home equity plan. Most home equity credit lines have variable interest rates. These variable rates may offer lower monthly payments at first, but during the rest of the repayment period the payments may change and may be higher. Fixed interest rates, if available, may be slightly higher initially than variable rates, but fixed rates offer stable monthly payments over the life of the credit line.

If you are considering a variable rate, check and compare the terms. Check the periodic cap, which is the limit on interest rate changes at one time. Also, check the lifetime cap, which is the limit on interest rate changes throughout the loan term. Ask the lender which index is used and how much and how often it can change. An index (such as the prime rate) is used by lenders to determine how much to raise or lower interest rates. Also, check the margin, which is an amount added to the index that determines the interest you are charged. In addition, inquire whether you can convert your variable rate loan to a fixed rate at some future time.

Sometimes, lenders offer a temporarily discounted interest rate -- a rate that is unusually low and lasts only for an introductory period, such as six months. During this time, your monthly payments are lower too. After the introductory period ends, however, your rate (and payments) increase to the true market level (the index plus the margin). So, ask if the rate you are offered is "discounted," and if so, find out how the rate will be determined at the end of the discount period and how much larger your payments could be at that time.

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This article is from the Indiana Department of Financial Institutions' website

(Febuary 2005)

Prerequisites While "Qualifying For a Home Loan"

When preparing to lend a mortgage the first thing many lenders do is to make sure about your financial condition. It enables lenders to grant loans that would otherwise be considered too risky. Lenders look at a variety of factors, including your ability and willingness to repay the loan. This mainly is done by the complete verification of borrowers application, which involves various factors.

They are as following:

1. Your identity.


2. Your income- The amount of money you earn will determine the amount of money you can borrow to purchase your home. Normally, 33% of your income is the general rule to be spent on your mortgage, but this can vary depending upon the amount of down payment, your credit history, etc.


3. Your debts- The lender will look at the debt paid monthly by the applicant.


4. Your employment history- Lenders see a steady employment in any occupation held by the applicant.


5. Your credit history- Lenders receive a copy of your credit history in the loan application process in order to determine your willingness to pay as a borrower.


6. The value of the property you want to buy or refinance.


7. Your financial assets and liabilities.

Your willingness to repay is closely related to how you have fulfilled previous financial commitments. This is why lenders also place an emphasis on a pair of numbers called the "housing ratio" and the "total-obligation ratio."

Housing ratio- It is the percentage of your gross monthly income that you will need to spend on housing expenses after you buy the new home. It includes-

• Your mortgage payment
• Taxes
• Insurance and maintenance

Lenders generally want to see a ratio of 28% or lower.

The total-obligation ratio- It is the portion of your income that goes to covering both your housing expenses and any other obligations, such as credit cards, car loans and child support. Your lender will want to see a ratio of 36% or lower.

Other qualifying prerequisite is the down payment. Traditionally, lenders have required a down payment of at least 20% of the purchase price of the home. However, lenders now accept less amount if the borrower takes out private mortgage insurance. The larger the down payment, the less your home costs in the long run. Besides there are many other documents requires by mortgage lenders. They are:

1. Federal tax returns from the previous two years.
2. W-2 forms from the previous two years.
3. A recent paycheck stub that shows your name and Social Security number, the name and address of your employer and your year-to-date earnings.
4. Documents to show other sources of income, which could include a second job, overtime, commissions and bonuses, interest and dividend income, Social Security payments, VA and retirement benefits, alimony, child support.
5. A complete list of your creditors, such as credit cards, student loans, car loans, child support payments, along with the minimum monthly payment and the balances.
6. Investment records including mutual fund statements, real estate and automobile titles, stock certificates and any other investments or assets.
7. Canceled checks that show your rent payments, or mortgage payments if you already own a house and are shopping for a new one.

Thus when all these are approved, you get the green signal from the mortgage lender. Mortgage lender then provides you the mortgage financing for buying the home of your dreams.

If you have any other queries related to mortgage, feel free to visit this site http://www.mortgagefit.com.

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About The Author -

Lance Williams who wrote this article is working as a content developer for www.mortgagefit.com.

He specialises in mortgage and real estate concepts.
He is currently working on www.mortgagefit.com/real-estate.html

This Article was submited by the above author from www.mortgagefit.com/loan-application.html

(June 2005)

What Qualifies for a 1031 Exchange? Know the Facts

This article is from the IRS website, IRS.gov. The IRS has listed several tips that real estate investors can benefit from in understanding how to make the most out of their investment pursuits. Remember that Capital Gains can be very taxing and in avoiding it through this wonderful tool you will be able to maximize your investments.

A 1031 exchange was created by the government to encourage real estate investment. By avoiding capitol gains tax, an investor will not lose a significant portion of their equity and will have the freedom to make the change. This in turn allows the opportunity to someone else to get into a home that fits their needs and creates motion within the real estate market thus assisting the economy.

I have included below the IRS page. There is a link to the actual page at the bottom of this page.

Like-Kind Exchanges - Real Estate Tax Tips

Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized.

Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.

Note: The above information references an Internal Revenue Code (IRC) section. A link to the Internal Revenue Code is included for the convenience of those who would like to read the technical reference material. To access the applicable Internal Revenue Code sections visit U.S. code search page. Enter “26” in the “Title” box and then the appropriate IRC section in the “Section” box and click on the search button.

Like-Kind Property

Properties are of like-kind, if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. However, livestock of different sexes are not like-kind properties. Also, personal property used predominantly in the United States and personal property used predominantly outside the United States are not like-kind properties.

Real properties generally are of like-kind, regardless of whether the properties are improved or unimproved. However, real property in the United States and real property outside the United States are not like-kind properties.

Additional Resources

• Publication 544, Sales and Other Dispositions of Assets
• Form 8824, Like-Kind Exchanges (PDF)

The 1031 Exchange is an Intelligent Financial Vehicle

The IRS webpage listed above is an excellent way to grow your investments. No matter what your home financing structure is this is a great tool to move between homes. Whether you have a Home Equity Line of Credit, a Fixed Rate Mortgage, an Adjustable, or a combination of all of those, this is a great tool.

After a significant amount of equity has been created this can be an excellent tool to move into investment properties. Remember, there are time restrictions to how long you have until you must purchase a new property to qualify for the 1031 exchange. If you plan on using a 1031, discuss this further with your tax consultant(s) and mortgage broker so that you can combine it with other strategies to really excel in real estate investing.

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This article is from

Internal Revenue Service IRS.gov

(April 2005)