The average home on the market gets four or more offers. If you’re buying a home, you’re competing with cash offers and other offers that make your offer get lost in the crowd.
Since the homebuyer’s market is so competitive, you can’t afford to waste time with your home loan. You have to have everything in order before you start house shopping.
Knowing the mortgage loan process allows you to get everything in order before you place an offer on a home.
You certainly don’t want to miss out on a great opportunity because you couldn’t get your stuff together in time. Keep reading to find out how you can get through the mortgage loan application process. You’ll improve your chances of getting into your dream home.
- Know How Much Home You Can Afford
The mortgage loan application process starts with your budget. You should know how much you can truly afford to pay each month.
Keep in mind that there are more costs to buying a home than just the mortgage payment. You might have to pay mortgage insurance if you have a small down payment. There’s home maintenance, too.
Add these to your budget and come up with a figure that works for you.
- Get Your Credit in Order
Mortgage lenders pour over your credit history to determine if they should approve your loan or not. Your credit score also determines your interest rate.
It’s worth it to get your credit score up a few points before you start the mortgage loan application process. You can save a lot of money in interest just by increasing your credit score by a few points.
- Look at the Big Picture
The interest rate isn’t the only thing that matters in a mortgage. You should know the difference between an adjustable-rate mortgage and a fixed-rate mortgage.
There are different types of loans, too. You could qualify for a VA loan or a first-time homebuyer loan.
You’re going to carry the home loan with you for years. It’s important to understand the terminology and how your decisions now impact you for years to come.
- Gather Your Documents
You don’t want to be in a position where you have to dig for documents at the last minute. Have everything ready to go.
You’ll need a mortgage loan application, your last two tax returns, pay stubs, your credit report, copies of your ID, and proof that you own your current property.
- Shop Around for Home Loans
Don’t go for the first lender that pre-qualifies you for a loan. Shop around for home loans with a few lenders before deciding.
Most banks have home loan information on their websites, such as https://www.farmersbankidaho.com/personal/home/mortgage-loans.
Compare the differences between the loans by looking at the interest rates first. Then look at the administrative fees for the loan. There may be other fees that aren’t clear during the mortgage application process.
Look at the customer service record for the lenders. You’ll have to contact them at some point, so you should know that you’ll get the help that you need.
- Get Pre-Approved
There’s a huge difference between getting preapproved and prequalified. That difference could be the deciding factor in getting your dream home or not.
What’s the difference? Pre-qualified gives you a general idea of how much you can get approved for. A lender does a soft credit check to provide the information.
Pre-approval means that you gave the lender your documentation, they do a hard credit check, and you know how much you can afford to offer on a home. A pre-approved offer is almost as good as a cash offer.
It’s best to get pre-qualified months before you’re ready to start shopping for a new home. This gives you time to take care of any issues and raise your credit score.
Get pre-approved when you’re ready to start shopping for a home.
- Be Responsive
Things happen in the mortgage industry at lightning speed. Just ask your lender how many times interest rates can change in a day.
Your lender could have a great deal for you that you need to lock in right away. If you take a few days to respond to the lender, that opportunity will vanish. That wait could cost you thousands of dollars in interest over the life of the loan.
Home loans often get held up because of paperwork issues. If a lender calls with questions or a request for documentation, respond right away.
Place your lender on speed dial during the mortgage loan process. Your lender should know the best way to reach you to ensure an immediate response. Make sure that you respond to their inquiries immediately.
- Don’t Make Sudden Changes
You have a pre-approval letter. You put down an offer on a home and it was accepted. You’re all clear to move forward with a few things you’ve been holding off on.
Not so fast.
Just because you got pre-approved for a mortgage doesn’t mean that you can make changes in your life. The pre-approval was based on the information at that moment. Changes to that information could cause your home loan to fall through.
Don’t get a new job just yet. If you have a great offer on the table, talk to your lender first to find out how that impacts your approval.
Don’t go on a shopping spree for your new home until after the home closes. Getting new credit cards or maxing out the ones you have will kill the deal.
Navigate the Mortgage Loan Process With Ease
Buying a new home is stressful because there are so many steps between the offer and the close. You can make life easier by simplifying the mortgage loan process.
If you follow the steps in this article, you’ll get approved and into your dream home in no time.
Check out the other articles on this site for more financial wisdom today!