How do you get financing for a house?
Some homebuyers are fortunate enough to be able to pay cash for a new home purchase. For many, however, applying for a home loan is preferred or necessary. Financing this type of purchase may be a new experience for you, but you will be pleased to learn that it is a relatively straightforward process. These are some of the initial steps to get you started with the process when you are using a home loan to finance your real estate purchase.
Review Your Personal Financial Situation
Your personal financial situation will play a major role for your homebuying plans. You need to know how much money you can afford to pay as a down payment. Remember to avoid becoming cash poor through this process by putting down more money than is comfortable for you. You also need to understand what monthly housing expense is affordable for you. Your housing expense includes your new mortgage payment, and it also includes taxes, insurance, HOA dues, utilities, repairs and other related expenses.
Compare the Loan Options
After you understand more about your current financial situation, you need to explore loan options available that may be right for you. This includes FHA and VA loans, conventional loans and others. Each has a different down payment requirement and underwriting guidelines. Pay attention to interest rates and credit score requirements as well. When you have a reasonable idea about the interest rate and loan term that you may qualify for, you can use an online calculator to determine what loan amount may be most affordable for you. With this information, you can start exploring the market to find homes that may be ideal for you to purchase.
The next step in the loan process is to get prequalified. This step requires you to complete a loan application and to allow the lender to pull your credit report. Remember that all information in the loan application will need to be verified during the loan process, so only provide accurate information that you can support with your tax returns, bank statements, and other documents. With a pre-qualification letter from your lender in your hand, you can then make a strong offer on the house that you are interested in.
As you can see, getting started with the home loan process is relatively easy to do. In fact, these steps may only take a few days for most people to walk through. The steps can also pave the way for a smooth loan process. They can also help you to feel more confident when you make an offer on a new house. After your offer has been approved by the seller, you can work with your lender to walk through the remainder of the steps in the home loan process.