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 homeownership is just ahead.

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  Look for inaccuracies, outdated information or anything that requires your attention.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.

Choose A Lender

Choose a lender and get preapproved.

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.

Choose Your Realtor

It is very important to choose a Realtor to represent you in the buying process.  There is no cost to a buyer to be represented and the Realtor will work for your best interest.  They will discuss with you what you are looking for in a home, your price range, and will be able to search the Multiple Listing Service(MLS) to come up with listings that will match the criteria you are looking for.  The Realtor is key in the negotiating process with the seller and/or seller’s agent, and again, will be working for you and your best interest.

Last Minute Details

If your loan is approved, and you and your Realtor have found the home of your dreams it’s time to move forward to the next step in the buying process.  The Realtor will draw up the purchase agreement, present your offer, assist you in negotiating, and help you come to an agreement on price.  Once the offer is accepted 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!

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