If you have decided to take the step of buying a property, obtaining financing will be quickly on your horizon. Here are some tips to prepare to apply.
Research is the first step in the home loan application process. Familiarity with your budget, the type of property you want, and the type of mortgage that will work best for you are some of the vital things needed to apply for a mortgage.
A strong credit history can be one of the most important factors in securing ultimate ownership. Mortgage borrowers often go through their credit report with a red ink pen in full mode to dispute any charges made in error. In fact, more than forty percent of all credit reports contain at least one error. Before applying for a mortgage, pay off all credit cards with low or outstanding balances. Mortgage lenders follow presumed “credit happy” applicants with a roving eye; refrain from opening new credit card accounts in the months leading up to applying for a mortgage.
Mortgage lenders pride themselves on asking hard-hitting questions. Loan officers want to be full of information about a mortgage applicant before they make the decision to seal your loan application with APPROVED or DENIAL. Income information is one of four central areas of concern for lenders when applying for a mortgage. Lenders are interested in pay stubs covering the last thirty days, as well as more unconventional sources of income. Copies of divorce settlements, income from spousal and child support payments, monthly investment statements, and bank statements covering the last three months are additional forms of income verification needed to apply for a mortgage. Some of the income documents possibly required by a mortgage lender include:
1. W-2 forms covering the last two years.
2. Award letter from the Social Security Administration
3. Letter of pension award
Access to assets can come in handy when it’s time to close on the property and also when it’s time to apply for a mortgage. Evidence of assets is typically incorporated as part of the mortgage application process. Checking statements covering the last three months can serve as documentation to verify that a loan applicant has access to sufficient funds to close on the property.
When you apply for a mortgage, lenders want to know about other financial obligations, in addition to credit card bills, that have already been assumed. Child support debts, monthly spousal support amounts, and other payments in particular influence the mortgage application process. Mortgage applicants will need a fully executed copy of a divorce decree or other court order to validate such debts.
At the end of the day, applying for a loan is all about getting your finances in order. Be sure to check before you make an offer on a house. Getting pre-approved for your loan always makes sense.