mortgage

12 mortgage moves to buy a home in 2012

Tip 8Consider a shorter-term loan

Because interest rates are at or near rock bottom, short-term loans have become more affordable for many borrowers.

Those who currently have a 30-year mortgage with an interest rate of 6 percent or higher may be able to refinance into a 20-year or 15-year loan while keeping their monthly mortgage payments close to what they pay now. Consider this option even when the short-term loan means slightly higher monthly payments. This is your chance to pay off your mortgage more quickly.

Tip 9Receive a gift? Be ready to explain it

Did your parents or in-laws give you a few thousand dollars as a gift to help out with the down payment? If so, congratulations -- but make sure you can document and explain where you got the money.

FHA loans allow borrowers to receive their down payment as a gift from a relative. For conventional loans, borrowers may receive gifts, but at least a 5 percent down payment must come from their own funds.

Borrowers receiving a gift are required to present a gift letter signed by the donor, and they will need a paper trail of the money transfer. Be ready to present statements to show where the money came from when it was deposited into your account.

Unless the money is being used for the down payment, avoid receiving large cash deposits in your bank account until your mortgage closes. Any large deposits other than your paycheck will have to be explained to comply with federal regulations.

Tip 10Be persistent

If one lender rejects your mortgage application, that doesn't mean all lenders will. Most lenders follow Fannie Mae and Freddie Mac guidelines. In addition, they have their own internal underwriting guidelines, and some are stricter than others.

Ask exactly why your mortgage was denied. Depending on the reason, you may be able to take some quick steps to improve your credit, or you might just need to try a different lender.

Tip 11Appraisal isn't enough? Try again

If the home appraisal your lender received isn't enough to back the mortgage loan and you think the appraiser is mistaken, try another lender.

You can't order a second appraisal or pick which appraiser the lender hires, but you can dispute the first appraisal or apply with a different lender.

In a perfect world, the appraised value of a home shouldn't vary drastically from one appraiser to another. But you may find that they do. If you believe the first appraiser is wrong, try a different lender and hope that lender's appraiser does a better job.

Tip 10Seek help

If you are behind on your mortgage or are struggling to keep up with your mortgage payments, seek counseling.

The U.S. Department of Housing and Urban Development has counseling agencies throughout the country. Homeowners can receive free foreclosure-prevention counseling from HUD-approved counselors. To find a housing counseling agency near you call (800) 569-4287 or visit the HUD website.

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