Real estate can cost a fortune in most areas of the country, and it is not reasonable for most people to pay the full price of a new home up-front in cash. After all, it would take the average person decades to save up that much money. A home mortgage makes it easy to purchase your dream home now, typically with a down payment and regular monthly payments until the loan is paid off. The first step in the home loan application process is to get pre-qualified. By walking through a few easy steps, you can get pre-qualified and move on to own your own home.
Review Your Credit Report
Mortgage loans are typically credit-driven. This means that your interest rate and loan amount as well as your overall loan approval are hinged on your credit scores and the information in your credit report. Your lender will review your credit report as soon as you apply for a home loan, but it is wise to review the information yourself before you apply. Some people are surprised to find that false information is being reported about them on their credit report, and you can easily spend time correcting the false information before you begin the loan process. This may help your credit scores to improve. Some people may discover that their credit scores are too low to qualify at all, and they need to do some work improving their scores before they apply.
Find a Home Mortgage Program
Once you have determined that your scores are reasonable to apply for a home mortgage, your next step is to shop around for the right type of loan program to apply for. You can use the Internet for research, exploring FHA, VA, fixed and adjustable rate loans and more. By educating yourself about these loan programs, their requirements and other important information, you can more easily determine which program is right for you. Not all lenders offer all of these programs, so this step can help you to narrow down the options and find the right lender to work with.
Choose a Lender
While you need to find a lender that offers the type of loan program you need, there are other factors to consider as well. In your lender comparison, you will discover that some lenders offer the same programs, but their rates and fees for these programs vary. In addition, when you compare online reviews, you will find that some are ranked higher in the area of customer service or overall customer satisfaction. When you focus your attention on these important points, you can quickly determine which lender you want to apply for your loan with.
By educating yourself about the loan programs available and by shopping around to find the right lender to work with, you will be ready to take the next step. This is the completion of the loan application. Each lender has their own process for submitting the loan application form, and many have an online loan application that only takes a few minutes to complete. You typically will also be required to allow the lender to review your credit report in order to complete the pre-qualification step. The lender may provide you with one or several loan options to consider. After you choose a loan program, you may receive a pre-qualification letter, and this can be provided to your real estate agent or sellers when you make an offer on a house. After you have an executed offer on a home, you can then walk through the rest of the lender’s loan process.
Applying for a home loan can seem complicated, but it actually just requires you to walk through a series of steps. The pre-qualification aspect of the loan process is the first general step, and you can proceed through this aspect with ease by following these steps. If you have plans to purchase a home soon, getting pre-qualified is a great step to talk before you begin searching for homes. It can tell you if you are qualified for a home loan and what the loan terms may be. This information can help you to proceed with the home search with confidence.