How to Prepare for a Home Loan Application
Planning for home ownership is just as important as homeownership itself. Being prepared from the beginning can put you in a better place overall not only now but in the future. Nobody wants to purchase a home only to be foreclosed on or have too short sell it in five years. The purpose of buying a home is to gain equity, responsibility, and a long-lasting investment. If you’re like most of us, you have to have a mortgage or a home loan in order to purchase a property.
I want you READY – Here’s how!
Understand your finances and credit history.
Before you even sit down with the lender and discuss how much home you can afford, make sure you understand your finances yourself. STOP. Don’t stress…. Many people don’t even want to know but you MUST if you’re going to move forward. It can be very scary, I know. Just pull the trigger and know the info. You’ll feel better afterward, regardless, because you can either improve it, or use it as is.
Get a copy of your credit history from one of the three major resources, Equifax, Experian, or Trans Union. They should be able to provide you a free copy of your credit history at least once per year. If you’re really ambitious, get a copy from each of the three sources in order to compare and make sure that they are similar. Go over the credit history and make sure there are no errors or mistakes. If so, do your best to correct those errors and if they cannot be rectified, write a letter of explanation for your lender with as much documentation and proof as possible. Understand your finances and how much income and debt you have. If you have no idea how much is coming in or going out each month, you may not be prepared for a mortgage payment.
Collect the necessary documents you’ll need in order to apply for a home loan.
This will include:
- W-2’s
- Pay stubs
- Income Tax Returns
- Credit or Loan Papers
- Bank Statements
- Identification
- Proof of any other income
These are the most common documents that your lender will need, however, depending on your current financial situation your lender may request additional documents in which they will give you ample time to collect those documents.
Don’t assume we won’t need these. Just get them… no seriously.. Just have them ready.
Once you have all the documents needed you’ll need to present everything to a lender.
See: 100% Paper Free Loan Applications? Is that a thing?
Don’t forget to shop around.
Just because your bank seems to offer a great rate, a mortgage officer or loan officer made be able to have access to more options and programs that will better meet your financial situation.
Related Post: Why Does California need so many documents?
If and when you’re ready, give me a call. I’d love to help you make the first, second and tenth step to homeownership.