Step One – Get Qualified
Understand how much you can borrow before you apply for a loan. A pre-qualification is normally conducted by your mortgage specialist after he has interviewed you and determined, based on the information you’ve verbally provided him, the dollar amount you can be approved for. Your mortgage specialist will then issue you a pre-qualification letter. Mortgage specialists, however, do not make the final approval, so a pre-qualification is not a commitment to lend.
A pre-qualification letter is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on.
Step Two – Establish Goals
How long do you plan to keep the property? Factors like when you plan to sell the property can affect the type of loan that fits your needs. Understand the relationship between rates and points. One point is equal to 1% of the loan amount. The more points you pay, the lower the rate will get. Consult your tax adviser for applicable tax deductions.
Compare different programs. This can become confusing and difficult because there are so many different programs to choose from. This is why it’s important to speak with an experienced mortgage specialist who will help you understand and make the best decision.
Step Three – Obtain Loan Approval
Once you have filled out a loan application, you will receive a set of loan documents to sign and sign an intent to proceed. I will begin the loan approval process immediately by:
Running your credit
Verifying your employment
Verifying the property value
Verifying your assets
You will need to provide supporting documents to assist in the loan approval process:
Two years W-2 and one month of pay-stubs or if self-employed, provide two years tax returns (all schedules attached).
Two months statements for each bank, stock, mutual fund account, and 401k.
If you own rental real estate , provide all rental agreements and two years tax returns, including Schedule E.
If divorced, provide a copy of the divorce decree and property settlement agreement (if applicable).
If you are not a US citizen, provide a copy of your green card, or H-1 or L-1 visa.
Step Four – Closing your Loan
Once your loan is approved, you will attend your closing appointment with your title company or attorney. This is where you will be required to sign your final disclosures and pay your closing costs.
Bring a cashiers check for the payment of closing costs. Personal checks are usually not accepted.
Review the final disclosures. Check the interest rate, terms and the name and property address for accuracy.
If refinancing or receiving a home equity loan, federal law requires you are given a 3 day right of rescission before your loan transaction is officially closed.
Tips for getting a faster Loan approval
• Respond promptly to any requests for additional documents, especially if your rate is locked or you need to close by a certain date.
• Fill out your loan application completely.
• Do not make any major purchases until your loan closes. This can have an adverse affect on your current application.
• Do not transfer money into your account that can not be traced.