Getting Qualified

Qualify for a loan before you start shopping for a home. If you take the time to get qualified prior to your search:

  • You will know how much you can borrow, so you don’t waste your time looking at properties you can’t afford.
  • You will have an edge when you make an offer, because the seller knows you’re qualified to get a loan and close the deal.
  • You will save time when you file your loan application, because you’ve already assembled the required paperwork.

Finding a Loan

Look at the different loan programs, types and the interest rates offered by several different lenders. Choosing a mortgage can take weeks if you contact several lenders, but saving money is worth the time and effort.

  • It is not all about interest rates. Getting a low interest rate is important, but it won’t be beneficial if you have to pay various up-front points and fees.
  • Understand how points and rates work. A point is prepaid interest, and each point you pay could equal to one percent of your loan amount. Paying more points may yield a lower interest rate over the loan term.
  • How long will you keep the loan. If you’re going to move to another house in a few years, you may want to consider an adjustable-rate mortgage since you may be able to sell the house before the rate increases. If you plan to stay longer than a few years, a fixed-rate mortgage may be an attractive option because your interest rate remains the same for the term of the loan.

Getting a Loan

When you submit your loan application, either online or in person, your lender evaluates the information on your application, the results of your credit report, the information about the property you want to buy, and your down payment to estimate your ability to repay the loan.

To improve the loan approval process:

  • Complete the loan application in its entirety. The lender needs all this information to determine your ability to repay the loan.
  • Respond promptly. Don’t delay in responding to the lender’s requests for additional documentation. Obtain the documents yourself and deliver them by hand if necessary.
  • Don’t go on a spending spree. Before the sale is scheduled to close, the lender may check your credit report to verify that credit card and bank balances to make sure that you still qualify for the loan.
  • Order a copy of your credit report. The mortgage lender will also order a copy, but you should see it first. This will give you a chance to clear any credit problems before you submit the loan application.
  • Organize your recent tax returns and financial documents. The lender will need your financial information to determine how much you can borrow. If you don’t have all the paperwork, you can get copies by contacting your tax-preparer, and any other people who deal with your personal finances.