4-Step Guide To Acquiring A Mortgage

By admin, March 11, 2013

Selecting a house is already a daunting task, but finding the finances to buy the house you want can lead to additional stress. As a first-time homebuyer, you need to know the important elements involved in buying a house, such as acquiring financial assistance. As you may already know, buying a house is a huge and expensive investment. For this reason, you will need the assistance of a lender to finance such investment- unless you can pay the full price of the house upfront.

With that said, you need to acquire a mortgage loan from a trusted mortgage provider. Choosing a mortgage is the first step towards owning the house you’ve always wanted. This process can become frustrating and stressful, especially if you are not well prepared. To help you understand what happens when you apply for a mortgage loan, here is a four-step guide to help you with your application.

Step 1: Examine Your Finances

You must first come up with a good estimate of how much mortgage you can afford. There are a number of lenders who are very eager to make your home application very enticing to help you qualify for a higher mortgage rate. Unfortunately, they might offer you a deal that is more than what you can afford. For this reason, it is best to have a budget.

You can come up with your budget by evaluating your income, expenses, and your monthly payments. After subtracting your expenses and monthly payments from your income, the amount left is how much mortgage you are capable of paying every month. Aside from the monthly mortgage, you must also take into account other expenses, such as insurance, taxes, and homeowner association dues.

Step 2: Correct And Improve Your Credit Score

Your credit score is one of the factors that a lender must evaluate. A high credit score will allow you to borrow money at a lower mortgage rate. To help you achieve a good deal, you must check your credit score. You can do this by getting your full credit report.

If your credit score is low, you must take the time to correct it. For instance, you can spend a couple of months paying your debts on time. You must also check for any errors or inaccuracies in your credit report. If you found any errors, you must immediately make the necessary corrections. Remember that you cannot immediately achieve a high credit score overnight; thus, you must take your time and exert your effort in preparing your credit score.

Step 3: Shop For A Loan

After you have done the first two steps, it is time to shop for a loan. You can look into the mortgage rates offered by banks, mortgage brokers, and online mortgage providers.

Banks: They offer a traditional form of mortgage funding. They are also more trustworthy and reliable since banks have recognizable brand names, and their fees are very competitive against lenders. Unfortunately, some banks lack a broad range of loan programs, which may translate to higher interest rates and fees.
Mortgage brokers: They can offer a wide variety of loans; thus, they can tender low interest rates. Additionally, individuals with a not-so-impressive credit rating can still apply. The downside is that mortgage brokers are usually more expensive than other funding options.
Online mortgage providers: This mortgage option also offers a wide variety of loans. The biggest disadvantage is that they do not offer face-to-face services.

Step 4: Loan Application

Applying for a loan is one of the easiest procedures, especially if you have gathered all the necessary financial documents to prove your claims. You must first fill out an application form with a loan officer. The application form might ask the following details:

Name
Social Security Number
Birth Date
Present address and address history
Details of current employment and employment history
Income, Assets, and Liabilities

After filling out the application form, the loan officer will then run your credit report and check your FICO scores. Additionally, you need to provide proof and other documents, such as paycheck stubs, bank account, tax returns, and investment earnings reports. If the loan officer believes that you are capable of paying the mortgage loan, they will employ a professional appraiser to ensure that the value of the home you want to buy is worth the purchase price.

Contributed by : Hayden Homes is a reputable home building company that offers their readers simple tips and advice on how to get a mortgage loan.