Streamlining The Lending Process
If you are starting a search for a new home, most likely you’ll need to get a home loan. The process might seem overwhelming if you haven’t obtained a loan in a long time; even more so for first time home buyers.
The lending process doesn’t need to be difficult and by being prepared, you can streamline the process and ensure you are able to get the best loan for your needs.
Choose a Lender
The first step is to find a reputable lender. I’m always happy to refer my clients to top-notch lenders, so don’t hesitate to ask me. The lender should have access to a variety of programs, as well as the government options of both VA and FHA programs.
Before you talk with the lender, gather the information you will need. Generally, you will need to have current pay stubs, W2s, bank account statements and the last 2 years of your tax returns. If you have been divorced and/or have child support obligations, have the final court documents as well. The lender will likely need other items from you, depending on what your loan requires, but this is a good starting point for all loan types.
Understand Your Limits
Typically, you will be able to borrow up to 31% of your gross monthly income. In addition, the lender will require that you have no more than a total monthly debt of 36% of your gross income. Be prepared to disclose all your debt, even if it does not appear on your credit report. Your loan officer is your advocate and there to help you succeed. By being upfront with them, it saves a lot of time down the road to not have red flags popping up on your lending file.
Don’t Make Any Credit Changes
Once you’ve started the loan process, it’s critical that you make no changes to your credit. Postpone any big purchase, do not apply for new credit of any kind and do not pay off any credit cards. It’s also important not to change jobs during the approval process, even if it’s for more money. Before you do anything, talk to your lender.
Getting a home loan is not as difficult as it was a few years ago, but it’s important to plan early and do the right things. Once you make the decision to buy a home, call your REALTOR® and then speak to a lender following their advice and you’ll find the loan process simple to manage.