Step-By-Step Guide In
Obtaining A Home Loan
Now that you've decided to
purchase a new home, it's important to know what to expect throughout the loan
process. With the right knowledge, the
road to home ownership is just ahead.
Choose A Home
Some lenders may offer a
pre-approval, but others require that you have a specific home chosen before
they will discuss loan options.
Therefore, the first step to obtaining a home loan is to first select a
home. Some sellers may require you to
provide an earnest money deposit, which secures the home while you obtain
financing and have the necessary inspections completed in order to finalize the
purchase.
Check Your Credit
Before you even think
about applying for a mortgage, it's important to know where you stand from the
lender's point of view. Checking your
credit report is a good idea for many reasons, but it's an essential step in
your journey toward buying a home.
Every 12 months, you can
request a free copy of your credit file from each of the three major credit
reporting agencies - Equifax, TransUnion and Experian. Look for inaccuracies, outdated information
or anything that requires your attention.
If you spot anything, file a dispute right away to get the information
corrected. A free credit report does not
include your FICO score, which is available from the credit bureaus for a small
fee. Most lenders use this number in
determining your interest rates and creditworthiness, so it may be a good idea to
check it out for yourself first.
Gather Your Documentation
When you apply for a loan,
you will be asked to provide certain documentation and/or information relating
to your current financial status, employment, assets (including both real and
personal property) and liabilities.
Before meeting with your lender, make sure to have your current
paystubs, bank statements, tax returns for the two years preceding your
application and information relating to any debts that you currently owe. If you are self-employed, you will also be
asked to provide a year-to-date profit/loss statement, which is also known as
an income statement.
Meet With Your Lender
Now that you have your
documentation together, it's time to meet with your lender. At this point, you will complete a mortgage
application and submit it for approval.
Depending on the lender, it may take anywhere from several hours to
several days before learning whether or not you are approved. In most cases, however, a lender can provide
you with an answer within 24 hours.
Last Minute Details
If your loan is approved,
it's time to move forward to the next step in the mortgage process. Your lender will order an appraisal and
inspection to be completed on the property.
This is just as much for your own protection as it is for the lender because
it may reveal hidden problems within the home.
The inspection and appraisal can take up to 30 days, at which point the
results will be forwarded to the lender.
If all goes well, you will close on the loan and get ready to move into
your new home.
