Shopping for a Mortgage?
Below is a general guideline and helpful tips when applying for a real estate mortgage in Illinois.
By Colleen L. Sahlas, Attorney
KNOW BEFORE YOU GO. Before you apply for a loan you should obtain a copy of your credit report and correct any wrong or missing information:
- Visit the Illinois Attorney General’s website to find out how to get a FREE copy of your credit report.
- Beware of Imposter Websites. Only one website is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com.
- Visit the Federal Trade Commission’s website for more information and for answers to Frequently Asked Questions.
BEWARE OF PREDATORY LENDERS. Learn to read the warning signs:
- Visit the Illinois Attorney General’s website.
- Read the article, “Deceptive Mortgage Ads: What They Say and What They Leave Out.” For further information, visit the Federal Trade Commission’s website.
- Get FAQs answered at the Illinois Department of Financial and Professional Regulation’s website.
- Read about Mortgage Scams and Predatory Lending at the Mortgage Professor’s website.
- To report Mortgage fraud, call the Consumer Fraud Hotline at 1-800-386-5438 or contact the Illinois Attorney General’s Office.
- Avoid Home Equity Scams by reading the article at the Federal Trade Commission’s website.
CAN YOU AFFORD IT? Find out how much house you can afford:
- Visit the Illinois Attorney General’s website to download or print PDF forms:
KNOW WHO YOU’RE DEALING WITH.
- What’s the difference between a Mortgage Broker and a Loan Officer? Typically, a loan officer is employed by the loan department of a particular bank. Those banks are usually in the business of lending money. A mortgage broker is employed by a brokerage firm that is usually not in the business of lending money but rather is hired by the customer to shop around for a lender on the customer’s behalf. To learn more, visit the Mortgage Professor’s website (at glossary terms):
- Is your Mortgage Broker an “Upfront Mortgage Broker?” Find out by reading the various articles about “Upfront Mortgage Brokers” at the Mortgage Professor’s Website.
- Is your Mortgage Broker licensed with the State of Illinois? To find out, visit the Illinois Department of Financial and Professional Regulation’s website.
EDUCATE YOURSELF about mortgage terms and types of loans.
- View the Glossary of Mortgage Terms at the Mortgage Professor’s website.
- Read about home loans on the Federal Trade Commission’s website.
SHOP AROUND for a mortgage broker or lender. Meet with several lenders and mortgage brokers before you commit to a specific one.
- What Makes a Good mortgage broker? Visit the Mortgage Professor’s website for an answer.
- Once you apply, you may receive unsolicited competing offers. Find out how to discern whether these unsolicited competing offers are to your benefit or how to opt out by visiting the Federal Trade Commission’s website.
ASK YOUR LENDER FOR A PRE-APPROVAL LETTER.
- Don’t confuse a pre-qualification letter with a pre-approval letter. Unlike a pre-qualification letter, a pre-approval letter means that the loan officer or mortgage broker reviewed your credit report. When presented with your offer to buy a home, a pre-approval letter can assure the Seller that you are a good candidate for loan approval of a specific amount and can stand above a competing buyer’s offer which lacks a pre-approval letter.
- To learn more, visit the Mortgage Professor’s website.
ASK YOUR LENDER FOR A “LOAN ESTIMATE.”
- A loan estimate provides estimated charges which you are likely to incur upon the settlement of your loan (at your real estate purchase closing). Federal law requires lenders provide it to you within 72 hours after you submit your loan application.
- A sample can be viewed at the website of the Consumer Financial Protection Bureau.
A PRE-APPROVAL LETTER IS NOT A FINAL LOAN APPROVAL.
- Even with a pre-approval letter, your loan application process has just begun.
- Your lender usually needs:
- a copy of your real estate purchase contract;
- to lock your interest rate;
- to appraise the property;
- information such as your bank statements, your assets, your securities, any real estate properties you may own, your income, your income taxes, verification of employment, etc.;
- an inspection of the property (not always);
- final approval from the lending institution’s underwriter(s).
MISTAKES TO AVOID
Read about the legal services that the Illinois real estate attorneys at The Law Offices of Hoy & Sahlas, LLC can provide to you if you are buying real estate in Illinois. Hire us by calling (630) 575-0400 or by filling out our form online.
* Disclaimer: This is intended to be a general guideline and is not a comprehensive explanation. Do not rely solely on this information. To obtain the most comprehensive, accurate information, seek counsel from a professional or expert in the area, the Illinois Attorney General’s Office, and several licensed mortgage brokers or loan officers. If you have questions about the application of the law in a particular case, consult a lawyer. The law is constantly changing. Information on this site or any site to which we link does not constitute legal advice.