If you’re thinking about applying for a mortgage loan, it’s important to do your research before starting the application process. By arming yourself with the right knowledge and putting yourself in the best position possible, you’ll increase your chances of getting approved and get the money you need to buy the house of your dreams. While there are many factors involved in securing a mortgage loan, read on to learn how to secure a mortgage loan using these four tips.
1) Do your research
The application process varies from lender to lender, but there are some basic rules borrowers should follow. First, remember that no matter which loan program is used, the borrower must qualify for the loan.
There is nothing worse than putting in all the time and effort just to have your application denied because you don’t make enough money or have too much debt.
One way to avoid this situation is by researching lenders beforehand. Find out what they offer and what requirements they require before applying with them. Next, get pre-approved for a mortgage through one of these lenders.
Pre-approval requires an appraisal of the property being purchased and a financial statement showing income, assets, liabilities, and employment status. Thirdly, stay organized throughout the process by recording important dates like settlement date and closing date on paper or in an electronic calendar system like Google Calendar.
2) Start preparing early
It can be difficult to understand the process and requirements of securing a mortgage loan. But if you want one, it’s important that you don’t wait until the last minute.
The earlier you start planning your mortgage strategy, the better off you’ll be. Once you have all the paperwork in order, you should contact several lenders to see what they offer in terms of rates and terms.
You should also compare this information with other loans on offer before making a decision.
3) Know how much you can afford
To figure out how much you can afford, you’ll need to first decide if your down payment is going to be 20% or 30%. If it’s the latter, then your monthly mortgage payment will likely be significantly less than what you could afford with a 20% down payment.
Another step in calculating how much you can afford is looking at the length of time that your credit report indicates that you’ve had good credit.
4) Know what you can put as a down payment
The more money you can put down, the better. One of the most popular ways to put your own cash into the purchase is through an FHA mortgage loan.
There are two types of mortgages offered by the Federal Housing Administration: an FHA loan with a 3.5% down payment and an FHA loan with a 10% down payment requirement.
You’ll have to have good credit and take care of any outstanding debts before you apply for one of these loans. And while there’s no specific timeline for how long the funds must be in your account, it is usually at least three months.
Once approved, you’ll get access to the funds after closing on the home . If you use a FHA mortgage loan, the lender will pay off all of your upfront costs like homeowners insurance, prepaid interest and property taxes. As a result, borrowers don’t need to make monthly payments for those items.