Get Pre-Approved Mortgage Mortgage Refinancing|Mortgage Calculator

You are been so busy searching for a house for several months now. You have search a lot of houses, but you havent seen the right one for you and your family.

You want to stop renting and dream to have your very own house. But you havent seen your dream house yet; your patience is starting to run out.

Until, one day, you and your agent, finally found a house that seems so attractive. It has two bedrooms, two bathrooms, with well-equipped kitchen, a huge backyard and it has a price that you believe you can afford. You felt that everything you ever wanted is in this house.

So your agent rapidly contacted the seller and makes an offer. Now, all it takes is for you to obtain the financing you needed from your bank.

You are so happy and excited that you soon found the right house for you and your family. You already contacting your landlord and told her that you will be moving out. Because of your excitement, you even bought some things needed in the new house such as curtains, decorations and the like.

But soon, you receive a call from your bank loan officer telling you that your loan application has been rejected. He told you that the current income level of yours is not enough to cover up the expenses such as expenses of the mortgage, homeowner’s insurance, and property taxes.

So you cant reach the financial needs of the dream house of yours. What is even worse is that you already spent a lot of money in this dream house, you have spent for the home inspection, hiring agent and also for the loan application fees which were non-refundable.

These entire scenarios can be prevented or will not even happen to you, you can also prevent yourself from stress, if you first and foremost get a pre-approved mortgage before looking for the best house for you and spending some cash for it.

Get pre-approved for a mortgage, this is what you should do first, it will be beneficial to you. The lender will pull your credit report and will require you to provide the paperwork needed such as tax returns and pay stubs. These will be use to verify your salary and the place of your employment. The lender can even provide you a precise computation of how much you can afford to borrow. So now, you know the price range you need in searching for a home.

Having a pre-approved for a mortgage is truly beneficial in your part. So as soon as you have the computation of how much you can afford to borrow, you can start searching for the home that is within the budget. As soon as you found the right house for you, and contact the seller, even if the seller gain multiple offers, if the seller knew that you have pre-approved for a mortgage, you will become more desirable by the seller. The seller tends to go to the buyer who has a pre-approved mortgage.

So if you are planning to purchase a house, it is better to get a pre-approved mortgage first, it will be advantageous on your part.

Many factors determine the rate, but basically interest rates are a function of risk:

The risk that the investor will not get paid back. (This is why D credit mortgages cost more than A credit mortgages.) This is why adjustable-rate mortgages are cheaper than fixed-rate mortgages. (The further you lock in a rate, the more expensive it is.)

The risk that the servicer will get paid back too quickly. (If a servicer paid a certain number of points for servicing rights to a loan and the loan is refinanced in a few months, then obviously the servicer is unable to recapture his investment. This is why above-market, or no-closing-cost, loans are more expensive.)

How Do Mortgage Companies Make Their Money?

Mortgage brokers make their money from origination fees, rebates or yield spread premiums, and miscellaneous fees (such as processing and application fees). Mortgage bankers and lenders make their money from the following principal sources:

1. Origination fee. The origination fee is typically 1% of the mortgage amount. For example, if the mortgage loan amount is $100,000, the loan origination fee (1%) is $1,000. The origination fee is a fee to compensate for the costs of originating the loan.

These costs include:
- Commissions paid to the loan originator
- Salaries for the operations staff (receptionist, processors, underwriters, funders, and managers)
- Office overhead (rent, utilities, phones, equipment, etc.)

2. Miscellaneous fees. Lenders may also charge third-party fees (fees that are paid directly to a third party and that include document preparation fees, underwriting fees, and tax service fees). These fees can make the mortgages more profitable to service in the long run and supplement the income from the origination fee.

3. The difference between the lowest available price and any higher price he borrower agrees lo pay is an overage. Many lenders allow their loan originators lo sell mortgages with overages. The average is part of the commission paid to the loan officer. Not all lenders allow overages.

4. Servicing income. As we discussed earlier, servicing income can be quite lucrative for the lender. Another benefit is the fact that servicing is a year-round source of income.

5. Sale of servicing rights. The earnings made in the sale of the servicing rights can be quite significant. On most mortgage loans, the servicing rights can be sold for anywhere from 1 to 2% of the mortgage amount. If a mortgage lender loses one point on the origination fee (one point in commission fee and overhead), the lender will still be at a profit if it receives 2 points for the servicing rights.

Key Note: The servicing released premium (SRP) is the amount a wholesaler is willing to pay for the servicing value of a loan.