The largest purchase that almost everyone ever makes is the purchase of a home. Almost all home purchases must be financed through a financial institution due to the size of the purchase. The loan on your home is called a mortgage. Before you find the home of your dreams, you should consider getting pre-approved for a mortgage loan. There are a number of ways to do this.
- The local bank. The most common way to get a home mortgage is to contact your local bank. Almost all banks, whether national like Bank of America, or local, will offer home mortgage loans. Call your local branch or go in and ask to speak with a mortgage specialist who will walk you through the steps to get pre-approved.
- The Internet. Most national banks and financial institutions offer the ability to get pre-approved over the Internet. Point your browser to the website of a major bank and click on the link to "Get a Mortgage Quote" and fill out the requested information. There are also a number of sites that will write your loan. These can be found by an Internet search for "mortgage loan" through a search engine.
- Through the builder. If you are looking at buying a new home, the home builder may have a deal set with a local loan company. Talk to the builder and they will point you in the direction of who you need to talk to for your quote.
You can better prepare yourself for a good interest rate by taking some simple steps, prior to locking your rate. These can include:
- Running a credit check. This can be done through the Internet. Simply search for "Free Credit Check" to find a good site. A higher credit rating can make significant difference in whether you are approved and, if you are approved, your interest rate.
- Pay down credit cards and bills. If you can have your credit card balance at less than 50% of your credit limit, you will take less of a hit on your credit report. The best solution is to completely pay off all debt if possible.
- Increase your savings accounts as much as possible. If you can pinch pennies for a few months prior to applying for a loan, this can also make a difference.
Once you have gotten pre-approved, you will need to find a home within the price range that you have been approved for. When you've found your home and made an offer that has been accepted, contact your loan officer to discuss what needs to be done next. Typically, the following will need to be provided to complete your loan.
- Your bank records from the past three to six months. Depending on your credit and financial history, you will need to provide copies of recent bank records.
- Paycheck stubs from your current employer. The bank may ask for proof of your income by way of your check stubs from the past month or two.
- Tax documents from the past two years. Most banks will ask for your past two years of W-2s to show prior income history.
- Proof of insurance on the new home. Prior to financing the loan, your bank will require that you provide them with proof of insurance. Remember, you may live in the home but it belongs to the bank until you have paid it in full. As a result, the bank wants to make sure that its investment is protected. Earthquake, flood and hurricane insurance may also be required for purchase.
The exact information required when applying for a loan may vary, depending on your credit and financial history. Prepare yourself with the listed information and you will have the majority of what you will need. After you have provided the necessary information, the bank will ask you to sign some papers and you now have a home mortgage loan!