HOME LOAN

• Income proof: It is better to include at least two copies of pay stubs alongside other related documents pertaining to employment. In case if you are getting fixed income then it would be better to include a beneficiary letter that states total income earned.

• Tax returns: Provide at least previous two years tax returns. Suppose if you are self employed, the mortgage company would demand business and personal tax returns for a time period of two years. If you own a business you need to get business statement prepared by a chartered accountant.

• Records related to Bank account: Gather account number, address of your branch and get saving bank account statement for a period of 2 - 12 months. In some cases the mortgage company needs only last 2 months branch statements, but most of the lenders would need 12 months bank statement.

• Housing payments proof: Housing payment proof involves copy of lease agreement and 12 months cheques that represent timely rental payments.

• Major Asset's list: This list should include individual stocks like automobiles, real estate property, antiques, stock and insurance policy.

• Debts List: Prepare a list of debts that you are aware of like furniture loans, car loans, credit cards and student loans.

Mortgage Loan 101 - How Much Mortgage Loan Debt is Right For You? - For generations investing in real estate, whether a home or commercial property has been a fairly safe investment. Most properties have held and even enjoyed small increases in value from one year to the next. An investment in real estate sometimes offered big financial returns, sometime small but usually always "safe" returns compared to other investments. After the financial crisis of 2008, the world of real estate and mortgage lending has changed for the near future. Some property values have decreased up to double digits. Increased unemployment has spurred record numbers of foreclosures. There are still many people looking to buy new homes though. Whether downsizing, upgrading, relocating for jobs or just hoping to take advantage of lower interest rates, there are many people wondering, "What kind of mortgage loan debt would I qualify for?" Some potential homebuyers have their sights set on a home before they've been through a loan qualification process and this can sometimes lead to less than ideal financial decisions. It's fun to ride around and look, research and dream but it is important to take a look at what kind of mortgage you can pre-qualify for and even then to determine is that's really a number that you can live with comfortably. How Lenders Determine Mortgage Loan Affordability: Well there is the standard that has been used by most lenders for years which is called the 28/36 rule. This is still a very helpful tool as long as applicants keep in mind that under this new real estate and banking culture, things have changed a bit. Lenders may tweak these numbers a few points for added security. They may also ask to see a portfolio for collateral and many are requiring more money down. Of course all of this usually stands on an applicant having an average or above credit rating. What is the 28/36 rule? Mortgage payments as well as property taxes and insurance shouldn't total more than 28% of your gross pay. Yes, that's gross pay, as opposed to net pay. That's the first number. Monthly outflow including mortgage payments, property taxes, insurance and installment debt such as credit cards, student loans, personal loans or car loans the cannot equal more that 36% of your gross pay. That's the second number. Here's an example for a household with an income of $84,000. If a household making $84,000 a year also had $500.00 worth of monthly installment payments, they could qualify for a mortgage of around $1,960.00 bases on the 28/36 rule. Is the maximum mortgage loan best for you? Most applicants are ecstatic to find that they qualify for the loan amount desired but before you sign on the dotted line, ask yourself a few important questions. If I take on this mortgage loan will I still have money left over for... -- Paying off other debts? -- Saving for retirement? -- Saving for college tuition? -- Travel or vacations? Remember, a higher mortgage payment also means: -- Higher taxes -- Higher monthly maintenance -- High homeowner's insurance It's important to understand how a mortgage debt loan number is estimated but even if you qualify, you may not want to take advantage of the maximum amount of debt that you qualify for. Leaving some room for emergencies as well as pleasures can help you enjoy any home more. By Jonathan Kraft

• Governmental mortgage loans are any loans that are backed by the FHA (Federal Housing Administration), the U.S Dept of Veterans Affairs, or the RHS (the Rural Housing Service). Any other mortgage programs are known as conventional loans. Conventional loans usually fall under the category of conforming or non-conforming.

• Conforming loans are defined by parameters set down by the Fannie Mae and Freddie Mac companies. These underwriting standards ensure that lenders often follow the same guidelines and so generally offer about the same rates to their consumers. The Fannie Mae is a private shareholder company that is not a lender, but rather the nation’s biggest source of financing home loans. They are insured by the FHA and are one of the largest financial corporations worldwide. Freddie Mac is also a private company, though much smaller. Both of these private financial corporations buy single and multiple family loans from mortgage lenders that meet the preset down payment, income and credit requirements.

• Non-conforming loans, also known as "sub-prime" loans, follow no such guidelines. They are high-interest mortgages for those with blemished credit reports and lower credit grades. If this is the case, then comparison shopping should be kicked up a notch, because lenders fees and rates will vary greatly for often the same mortgage programs. Sub-prime customers can save money by providing as much documentation as possible. It may be tempting to omit information, but this will only cost you money in the long run. Potential loans fall into three categories: full doc, simple doc, and no doc. Full doc is being able to accout for all of your income, including W-2's, tax returns, pay stubs, etc. Simple doc is using bank statements to verify income, and no doc is little or no documentation. A no doc rate will often have an interest rate that is a full point over simple doc.

• Not all low rates are considered equal

• Your Credit

• What?!! I don't qualify for that rate?

• Down payment

• Debt to income

• Equity