Whether you are a first time home buyer or a seasoned veteran the process of getting financing can be overwhelming. The key to making the process easier is being educated on the steps and have the documentation needed in order. Below is a step by step process to better prepare you for your loan.
Getting your documents in order.
Your lender will require a number of documents for your application. These documents are to verify your financial situation and calculate how much loan you can afford. It is important that these documents are current. Having the documents available prior to applying for your loan will make the process run much smoother. Some of these documents will include.
- Tax Returns
- Income Verification
- Credit Reports
- Bank Statements
- Child Support
Your lender may require more documentation depending on your situation and lending institution. Getting a head start on all documents that verify your financial status and identity will make your loan application run much quicker and smoother.
Most lenders will offer two options when starting the loan process. You will be able to get either Pre-Qualified or Pre-Approved.
Pre-Qualified. This is a fairly simple process and most lending institutions allow you to do it online. The lender will ask you a few questions about your finances and come up with an estimate of what you can expect. During Pre-Qualification the lender usually doesn’t verify the information. That being said the offer they give you is just an estimate. You would still need to be approved at a later date. Pre-Qualified buyers generally don’t carry as much weight as Pre-Approved buyers.
Pre-Approved. The process of getting Pre-Approved is much more in depth. For a Pre-Approval you will fill out an official application and provide the lender with all the verification documents. Once you have been Pre-Approved the lender will give you a loan amount and a ball park for the interest rate. A Pre-Approved buyer has more leverage when negotiating.
It is important that after either of these situations you do not alter your finances. During this time do not let a payment go late or make any big purchases. These can jeopardize your loan.
Choosing Your Loan.
There are a variety of different loans available to buyers in different situations. When choosing the loan that would be best for you, you will need to know the advantages and disadvantages to each. Our Team and your lender can work together to determine which loan type is best for you based on your short and long term goals.
Closing Your Loan.
Once you have been approved for your loan and come to an agreement on terms for your new home the only thing left is to close the loan and sale. This will take place in the presence of an attorney or notary public. It is important during this step to review all of the documents carefully and make sure everything is what you agreed upon. Your Real Estate Agent will be there with you to answer any questions during the process.