For The Buyer - Step-By-Step Guide In Obtaining A Home Loan

 When you decide to buy your first or next home, it’s important to know what to expect during the loan process.  This article will provide you with an over view of the process.

Check Your Credit

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 Look for inaccuracies, outdated information or anything that requires your attention.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

Obtain a Pre-Approval:

Depending on the lender you choose, they may offer you a pre-approval letter or require that you have chosen a home before they will discuss loan options. Discuss your options with you lender of choice.  Once you know your options it is easier to find the right home that meets your budget.  Be aware there are many different loan programs, you lender will help you find the right one for you.

With a pre-approval in hand that is right for you, you now have a better understanding of how much home you can afford. With interest rates at historic lows, the price range of homes you can explore is wider than if interest rates were higher.  With the pre-approval letter, your real estate agent will be informed as to what areas and price range to help you explore.

Choose A Home:

With your real estate agent’s help, find a home that meets your needs today and your future plans for the next 10 years or so. 

Be advised that several expenses may need to be paid during the buying process, they are an earnest money deposit, which secures the home while you obtain financing and have the necessary inspections completed in order to finalize the purchase. Inspection fees – inspectors for building, pest, radon gas are among the most common. Other fees may need to be paid at the time of closing.  The closing company will prepare a HUD statement with these fees.

Gather Documentation

After your new home has been found, you’ll need to apply for a loan. During this process 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. Documentation will include, but not be limited to current paystubs, bank statements, tax returns for 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:

It’s during this time you will complete a mortgage application and submit it for approval. Depending on the lender, it may take a few 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. Be sure to keep your real estate agent advised during this process.

The Details:

During the loan processing period the lender will order an appraisal for the property to protect both you and the lender.  They want to make sure the market value is there for the property you are purchasing. Depending on the lender, they may order an updated credit check; ask for additional documentation or other information related to processing the loan.

This entire process may take up to 30 days or longer depending on your loan. Be sure to keep you real estate agent advised of any changes in your loan status.  If all goes well, you will close on the loan and get ready to move into your new home.

By Bob Weibrecht,
Realtor
Coldwell Banker Gundaker
314-852-9566 / 636-461-2000
www.HeyBobStL.com


 FYI - The goal of this blog is to provide general information related to the buying and selling of residential real estate. The reader is highly encouraged to consult the services of a professional real estate agent during the transaction. This blog is not a substitute for any type of professional assistance which may be required.