Preparing to Get Your Home Loan

If a potential homebuyer needs a home loan to make the purchase, they should first arrange an appointment with a mortgage lender before real estate shopping. To find a mortgage lender a borrower can check with a mortgage broker, mortgage bank or the mortgage section of the local bank. Another way to find a mortgage lender is to ask your real estate agent or REALTOR® to refer to you a qualified lender.

Although it is currently a buyer's market, with plentiful housing inventory in many communities, most sellers will not entertain an offer from a buyer without proof that the buyer can perform. With the recent mortgage troubles, it is especially important that would-be buyers first contact their lenders, and verify that they are qualified buyers.

Occasionally a potential borrower will discover they are not in the financial position to obtain a home loan. This does not necessarily suggest they can't buy, it simply may signify they need to first get their finances and job history in order before continuing. Qualified mortgage lenders can assist borrowers in preparing for an eventual home loan.

Another consideration is how much the borrower can afford to pay for a house. Before house shopping, determine your budget, and don't waste your time looking at prices clearly out of your range. Yet, with the buyer's market, it is not unfeasible that a buyer can look at homes priced 10 to 15 percent higher than their budget, and make a lower offer.

Depending on the type of financing, a borrower will need to have funds for a down payment. FHA loans can require 3% down, while some conventional loans may require 20% down. These amounts will vary depending on the type of loan and the applicant's credit history. Speak with your lender, so you will clearly understand how much cash you will need along with the loan. Since many lenders require the borrower's down payment be "seasoned", meaning they have been in the borrower's account for a specific time frame, and not a recent gift or loan, it is essential to discuss these matters with your lender.

When speaking with a mortgage lender, always be truthful. It is illegal to give false information when making a loan application; such as incorrect salary or job history. Should a mortgage lender suggest you be untruthful on your loan application, get a new mortgage lender.

Be prepared to give the mortgage lender the following information for every person who will be on the loan application: place of residence for two years or more, a photocopy of the driver's license number, social security number, recent pay stubs proving year to date earnings, income tax returns for the last two years, contact information for employers, copies of bank statements, a list of bank accounts, credit card numbers, car loans, and any other loans or payments currently owed, along with addresses and financial information of other real estate owned.

If you have been involved in a bankruptcy or divorced, your lender may require additional documents. Those applying for a Veteran's Loan will be asked for a Certificate of Eligibility, or DD214s.

There may be other requested documents. It is advisable to get a complete list of requested documents from your lender, and provide the complete information as soon as possible.

When applying for a home loan be prepared to pay for a credit report, and for an appraisal of the property. At your first meeting with your mortgage lender, ask what the fees will be for these items, and when payment will be due.

If you don't understand all the intricacies of the home loan you are about to receive, seek advise from qualified experts you trust, before you sign the papers. And remember, never falsify your financial information.