Financing Your Home

Home buyers can choose from a variety of financial institutions to secure a mortgage, often without visiting the lender's office. Mortgage brokers can find you the best mortgage among many lenders. Or your real estate agent can log on to a computer listing of lenders and learn about the mortgages they offer. Mortgage applications can even be filed by computer.

Types of lenders:

Banks and thrifts, or savings and loans

These are the traditional, but no longer the major, mortgage lenders. Often they are the most flexible regarding whom they will grant a loan, and the amount, because many hold on to the mortgages rather than sell them to investors.

Mortgage bankers

Providing mortgages is their only business, so they offer many types. Their standards vary, however, because they sell their loans to investors, whose expectations about return also vary.

Mortgage brokers

They do business with virtually any lender, collecting fees on each deal. This means they can find the most appropriate mortgage for you and then handle all the paperwork.

'B' and 'C' lenders: People who do not have the A-quality credit history demanded by banks, thrifts and traditional mortgage bankers are called "B" or "C" borrowers. Many new mortgage bankers, and mortgage brokers who represent them, now offer mortgages to "B" and "C" borrowers at rates ranging from 1 to 3 percent higher than the standard A-quality loan rate.

Computerized loan origination networks (CLON)

These online services, accessible in the offices of many mortgage brokers and real estate agents, list all mortgage programs, rates and fees offered by a variety of lenders. CLON also may enable online mortgage application. A caveat: The list of lenders represented may not be extensive.

Credit unions

These savings institutions make loans to their members, who have purchased a share in the credit union. Members are usually people who work in the same industry or for the same company, or live in the area. Credit unions traditionally have made only small personal loans, but many now offer home mortgages.

Finance companies

These were once the only source of mortgages for borrowers with credit ratings of B and below.

National Cooperative Bank

People who purchase units in a housing cooperative are actually purchasing stock in the corporation that owns the building, so they often have difficulty securing financing. The Washington, D.C.-based National Cooperative Bank, which has affiliates in other cities, exists solely to provide financing for cooperatives.

Use the payment calculator below to determine mortgage amounts in US dollars; convert back to other currencies for easy reference.

The Loan Process
by Robert K. Heady, Tribune Media Services

Getting a mortgage can be a pleasure or a nightmare. It starts with that first phone call to a lender and ends at closing on your new home. Here are the four stages of the mortgage process, and what you should do to make the experience as painless as possible.

Phase 1: Choosing a lender. You can select among banks, mortgage bankers and mortgage brokers. The last doesn't supply the funds for your loan, but has a list of money sources. Base your selection primarily on cost and references. The lender should have competitive rates and fees and be recommended by someone whose judgment you trust. Many states require lenders to be licensed, but that's no guarantee they will be highly professional. Ask for references.

Phase 2: Making an application. This is more complicated than you might think. The lender probably will ask you pay up front for an appraisal and credit report, and will require many documents, such as proof of income and bank account statements. In return you'll get a ton of paper back. much of it disclosures required by law. Forms must be completed and signed. You'll have to wade through them. especially the good-faith estimate of expenses related to the mortgage. Read everything carefully, ask questions and challenge any charges you think don't make sense.

Phase 3: Getting the loan approved. Murphy's law applies here, You may encounter glitches. such as errors in your credit report. Lenders might lose important papers, forget to order inspections or just get bogged down with too many customers. It's up to you to keep the process going. Check with your loan officer at least once a week to see that you are on schedule for closing. Keep your own checklist of what the lender should complete and by what date.

Phase 4: Conducting the closing. This can be painless or painful, just like the other steps. The signing of the final paperwork can take place in a lawyer's office or at a title company, depending on where you live. You. the seller, real estate agents, the lender, and other interested parties will attend. Again papers must be signed. Read them carefully. The lender could make a mistake on the paperwork, even about the loan check amount.

Diligence and a little luck will make your mortgage application go smoothly. Be persistent when you encounter glitches. and you should come out with a home and the right mortgage.