You've decided to take the leap from renter to homeowner. Maybe you've even found the perfect property to make an offer on. Now comes the stressful task of applying for home loans. You want to make sure that you can borrow enough for your perfect home, but you also want to make sure that you are not getting in over your head with debt - that's a normal feeling. This is just one reason why preparing to apply for home loans is so important. But what do you need to do?
Pull Your Credit Report
The first thing you need to do is get familiar with your credit report, as this is going to be the first thing that a lender checks when someone applies for home loans. You need to make sure that you do not have any incorrect information on there, such as delinquent accounts that do not belong to you. If there is incorrect information, make sure to dispute it with the credit bureaus. You should also sign up for credit monitoring so you can know who has accessed your credit report and if any new accounts are added.
Examine Your Payment Options
While you know that you are going to apply for home loans, you need to consider what type of repayment plan you want to go with. There are 30 year mortgages, 15 year mortgages, mortgages that have adjustable interest rates and even interest-only mortgages. You also want to consider how much of a down payment you will have, as this can decrease your monthly payment amount. Some lenders will even require a down payment, as most are no longer offering 100 percent financing on mortgages. Also, make sure that there are not any penalties if you pay off your mortgage early.
Get Paperwork in Order
Applying for home loans requires a lot of documentation and paperwork. Make sure that you get this in order before you begin the process. Documents that you will need when applying for home loans include:
- W2s and paycheck stubs
- Federal tax returns for the previous two years
- Bank statements
- Proof of any additional income
- Proof of any down payment amount and its source
- Any information regarding the home you are considering, such as an appraisal
If you are considering applying for home loans, contact a broker in your area. They can help determine what you may qualify for and even provide a pre-approval for you to include when making an offer to a seller. For more information, contact a local provider of home loans, like MCS Bank.Share