Home loan is one of the biggest investments which we have ever made in our whole lifetime. People who don't have any knowledge about it, might have considered it as a very simple process. But in reality, getting a home loan seems to be very much frustrating and equally complicated to common people. Sometimes, you feel everything is getting out of your hands and the opponent is ruling over what is going on. Yet, it is also proved that if you do proper research, put all your hard work to find a right loan officer, you can definitely take over the situation and can participate in the process actively.
Steps involved in a home loan application process
Here are the 7 steps you need to take to complete the home loan application process:
You need to become aware of the different types of loans, their rates and related terms before searching for a home loan. The most easy and authentic way to find new listings is to scanning the local newspaper's real estate categories. Apart from that, online home loan broker websites can also be useful to find loan related information. For getting a fair view, regarding what you will be needed and what you should avoid for the whole process, you must prepare a sheet containing probable questions which you don't understand or which came into your mind. You will need to create a budget plan and determine an amount which you can afford to render towards your monthly home loan payments. More or less, you'll need to to maintain home loan payments regularly.
Determine your creditworthiness
You need to . Verify the report and look for any errors or unresolved problems. If you find any error or wrong entry, communicate with the credit bureau about those issues to make sure they are resolved as soon as possible. . It is very important to purify and produce a clean credit report to the lender. In these days, poor credit score or bad credit report might toss your dream of a good home away. Your inability to bear a big amount of down payment can demolish your homeownership prospects. That's why it is wise to look after your creditworthiness initially before starting the home-loan process.
Search and consider
you need to take in the entire home loan process. A professional, good loan officer can guide you and your loan application to overcome the hurdles towards loan approval very smoothly. The main qualities which you would like to see in your loan officer are -
- Proper knowledge about the subject
- Good experience for doing the duty in a critical situation
- Promptness for giving response to the client
- Patience for resolving all the problems and clearing up the loan process and terms.
While choosing the right person, you must keep in mind about the recommendations you are getting from family, friends, colleagues, neighbors and real estate experts. Sort out the options for the most preferable loan officers and make appointments.
Prepare right documentation
There is a lot of legal and financial paperwork involved in home loan process. , you'll need those files to meet several potential lenders. . As an income proof, you need to submit the last two years of W-2s along with latest one month's payment stubs. For self-employed persons, last two years of tax return files may be needed. You must provide past three month's bank statements and statements for the account where you have stored your down payment money. In addition, provide copies of any other credit accounts which you might be paying per month. Any court-ordered to the bank or lender.
The loan officer will assume what type of loan you are pre-qualified for. He will verify the information based on the documents you will submit. Basically it depends upon a Good Faith Estimate and Truth in Lending statement which has detailed information about loan terms and the closing costs. This document will be useful for you to compare vivid loan offers. So, work with a good loan officer who can offer you the best deals and select the one which suits you the best.
Get into the approval process
After selecting a lender and a good loan officer, you can proceed into the next segment, that is the approval process. . He will then gather additional information and verification and initiate the appraisal. The loan processor might ask for more information from you via the loan officer. You must give a prompt reply to his request. After completing the appraisal process, your file would be given to the underwriter, who will finally take the decision regarding your loan approval.
Once you are approved, all that is left is to schedule your closing. You will then sign all the loan documents and transfer your property. But remember, whether you are buying a new property or are refinancing your current home, never forget to read your copy entirely with care. Verify the HUD 1 Settlement Statement before getting ready for the closing. It will save you from being pressurized by the lender for taking such loan terms which you don't want to accept. Gather sufficient cash for the closing if required, and make sure to have valid identification documents like a driver's license or passport, if required. The entire process will be completed in more or less within 30 days.
Now, all the steps are completed, celebrate joyfully as you have just overcome one of the toughest financial hurdles of your life.