Applying for a new house loan is not always difficult, although it definitely is an intricate process, as it is a time-consuming financial obligation. If you are aware of the necessary steps you need to undertake, it will save you time and trouble.
- Do your homework. Prior to your house loan application, ensure that you conduct research and planning on your choices. Know which type of mortgage is appropriate for you and your financial capacity. Determine your budget, your capacity to pay, and understand the most basic types of mortgage, the adjustable and the fixed rate mortgage loan. You may need to go for a fixed interest rate, which as the name suggests, remains the same throughout the duration of your loan even when interest rates shoot up over time. You can choose, of course, to refinance so as to get lower rates. Adjustable mortgages, on the other hand, are dependent on the market. Your interest rate rises and plummets with the market. While you can take advantage of the low rates, you should expect it to change throughout the duration of your loan. Know the available options and do a thorough comparison. You cannot decide on a type of mortgage loan unless you understand each preference.
- Select from various financial institutions. You can do your preliminary house loan application online. Mortgage loan resources and anything you need to know about house financing, equity loans, secured loans, bad credit, and mortgage repayment among others are available for your perusal. Free loan advice is also available on some websites. Depending on the type of mortgage you choose, you will receive offers from several lenders, which usually come with terms and conditions as well as interest rates. Review and compare the financing offers you receive, and it will be easier to narrow down your choices.
- Submit financial documentations. Once you have your chosen lender, it is time to submit financial requirements and other pertinent documents. It is best to submit valuable documents directly to the lender’s office for the security of your transaction. Various institutions may require different forms, but typically for home loans you are expected to submit your bank statements from the previous six months, savings and checking account details, account balances, IRS W-2 forms, a social security number, and current wage slips or pay stubs. Lenders normally gauge your capacity to repay, your collateral, and your existing assets to determine whether or not you are a good financial risk. Other questions lenders usually ask include the number of dependents you have, your personal insurance, personal loans and your credit card status.
- Wait for verification and underwriting. Your lender will normally explain how your loan will be qualified upon your application and submission of documents. The lender will give you feedback within three business days if you have submitted complete and accurate requirements.
Know that you are not the only house loan applicant entertained by your lender. While you can call for feedback on the status, do not harass your loan officer, as it will not speed up your application. It usually takes several weeks even if you have submitted complete requirements. If you need to ask, call at the acceptable time, as rest assured you will be given feedback.