When applying for a mortgage...
...WHAT’S IN A NAME?

If it has been more than a few years since you’ve bought a home, you will need to learn your mortgage ABCs all over again.

For example, if you are self-employed, a "limited doc" mortgage may fit just right. Requiring "limited documentation", this mortgage can be quickly approved.

You could also run into a "negative am" loan, one with payments so low, the principal balance actually increases with each payment made. When you decide to sell, that kind of loan can create a very challenging sale process.

Then there is a "one-year ARM", or "adjustable rate mortgage", with a fluctuating interest rate. It can be perfect for the middle management type who will sell after two years.

Today, a single mortgage lender may have as many as twenty-five or thirty different loan plans, each with different rates, discount points and eligibility requirements. Choosing the right plan can be critical to completing your home purchase.

One solution to the mortgage question is the "prequalification interview". Ask the real estate agent who shows you homes to set up an appointment with one or more lenders. The loan officer will determine your financial ability to make a purchase and secure a loan, and a "conditional commitment" may then be issued for a specific mortgage amount.

Before buying, take time to learn about mortgages from a real estate agent.