Getting a home loan can be a challenge. Many people find that they are only successful after trying 2 to 3 times. By preparing yourself beforehand, you can ensure that you will be successful the first time you apply. Let’s look at some of the steps to secure that home loan and obtain the keys to your dream home.
Be Prepared for Paperwork
Paperwork is the annoying part of the loan process. To ensure that you are ready when the time comes, it is important to plan. Gather all previous pay stubs for the last 2 to 3 months, your last 2 years’ worth of income tax paperwork and relevant social security numbers, proof of address and of course proof of employment. Depending on your home load provider, there may be additional paperwork. To feel confident that you have gathered all the necessary paperwork, give your provider a call to double check what you will need.
Review Your Credit
By ensuring that your credit is up to par, you can bypass a serious hurdle in the home loan process. Free sites like this one credit karma can give you an idea where you stand in the credit worthy pool.
Know Your Limits
It is vital that you know what you are willing to spend on a house. Just because you can get approved on a $200,000 home does not mean you should purchase a $200,000 home.
Be sure you do not waste time looking at homes that are out of your reach. By not over extending your credit and monetary resources, you can ensure you will not suffer from foreclosure in the future.
Do the Math
In the home loan process you will come across terms such as debt-to-income ratio and residual income. It is important that you do the required math before applying for a home loan. These are requirements for many of the loan types available and if you do not meet these requirements your home loan will be denied. You can find out how to do the math for these requirements by following this link
No matter how prepared you are there will always be additional steps. If you are in the Alabama area, simply google “home loans AL” and you will find many options on where and how to obtain a home loan.
Do Not Open Any New Lines of Credit
This is vital to the survival of your loan application. I have seen people make this mistake time and time again. Do not open any new lines of credit and do not increase your debt on established lines of credit. Even after approval, if you open additional credit lines, this will affect your credit report. If you go out and buy a new furniture set because you think your loan is approved, this will change your debt-to-income ratio thus resulting in denial. Wait until you have the keys in hand and the title has been transferred before buying anything.