These forms can speed your mortgage approval

REAL ESTATE MAILBAG

April 24, 1994

Q: My real estate agent told me that it takes 45 days to get a mortgage approved. Is there any way to speed up the process?

R. Schmidt, Parkville

A: The answer is yes. The bulk of time in approving a mortgage is taken up with mailing and receiving written verification from your employer and asset accounts. Lenders now accept for income verification two years' W-2 forms, current pay stubs covering one month of income, and verbal verification from your employer that you are still employed.

Rather than a written verification from your banks on the amount of cash you have for closing, the lender will accept three months' bank statements. The lender will need all pages of the bank statements and explanation for any large deposits made in the last three months. Talk to your lender and get a complete list of needed documents.

Lenders say the key to a speedy approval is coming to the lender well-prepared -- with all the needed documents. Approval can be as quick as 10 days and should be no more than 30 days.

Q: I recently purchased a home with a fixed interest rate of 7.50 percent, but my Truth-in-Lending statement says I am paying 7.875 percent APR. Why the difference?

Brian Levin, Columbia

A: The 7.50 percent is your note rate -- the amount of interest you are paying on the outstanding mortgage balance.

The interest rate on the Truth-in-Lending statement is an annual percentage rate and includes any fees you are paying, in addition to the note rate. These fees may include loan origination points, discount points, funding fees, prepaid interest, mortgage insurance, buy-down funds, underwriting fee, commitment fees and document review fees.

By federal regulation -- known as Regulation Z -- these fees must be included in the calculation of the annual percentage rate. Regulation Z requires that the cost of all loans be reduced to a single APR figure so you can shop for the best loan.

But borrower beware: Just because two loans have the same APR doesn't mean they're the same. One of them may be better for you because of the number of points required or other terms.

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