Do you want to get approved for a home loan?
The process is straight forward and you should get an idea what you qualify for almost immediately.
The 5 step process to get approved for a home loan…
- Complete an application
- Review your application with a mortgage specialist
- Provide confirmation of your income (employment letter & paystub)
- Check your credit
- Receive approval for a home loan
Step 1: Complete an application
Basically a lender will want to review you personal information. They want details about where you have lived and worked for the last 3 years. The basically use this to see how stable you are. They will ask for details about how much you earn, your assets and your liabilities.
With this information the lenders evaluate your net worth, you character and the likelyhood that you will repay your home loan.
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Step 2: Review your application with a mortgage professional
This really is the most important step. A mortgage professional has experience dealing with many different banks. He knows what they are looking for and can explain the options and choices that you have available to get approved for a home loan.
During this step you will review how much you qualify for based on your income. The mortgage professional could also make some recommendations that:
- help you qualify for more
- help you to increase your down payment
- help you to save some money with a lower rate or pre-payment options
- help you to get the house you want by including some home
- improvements in the home loan
- help you with other aspects of your home financing needs
Step 3: Provide confirmation of your income.
All lenders will ask to confirm your income. If you are a salary or hourly employee, the best way to confirm your income is by an employment letter and paystub. If you earn overtime income or bonuses, then you will need to provide 2 years history for your income so that the lender can average the overtime or bonuses you receive. If you are self employed, again most lenders will ask for the last 2 years of your income tax returns and notice of assessments to calculate an average.
Step 4: Check your credit
Another important step to get preapproved for a home loan. If you have bad credit then your options are more limited and you are likely to pay a higher interest rate – if you even qualify at all.
Most lenders use either Equifax or TransUnion to check your credit. These companies will provide your mortgage specialist with a detailed report summarizing all your current and previous credit cards, loans and leases.
It’s very important to check your credit before you just start shopping for a home. In some cases, client’s will have something reporting that they didn’t know about. The earlier in the process you can find this out the more time you have to fix the issue and make it easier to qualify for a mortgage when you find the home you want to buy.
Step 5: Receive approval for a home loan
Provided all the steps above go smoothly you will receive approval. For many, this is the starting point for the home search. At this stage you will have a very good idea how much a lender feels you can afford. You will also know how close you want to come to this number.
Go through this 5 step process to get approved for a home loan and you will save yourself time. You will save yourself money. You will also save yourself any potential problems, frustrations and anxiety at the last minute.