Some of the best advice I can give for getting a home loan is to start early. I've included some information in this article to help you get started. Even if your time frame for buying a home is a year away, it's a good idea to talk with a home loan officer and find out if there is anything you can do to improve your financial status in the mean time. He or she may recommend ways to improve your credit score, and many are trained to help you increase your buying power well before it's time to buy.
I have included a list of everything you'll need to get started on your home loan. These requirements are standard for any lender. Depending on the lender, you may not need all of this information upfront, but they'll request the following at some point during the approval process:
1. Pay stubs for the most recent 30-day period.
2. Bank statements for all your accounts (checking, savings, 401K, etc.) for the last 2 months.
3. W-2 tax statements for the past 2 years (if you're self-employed or have a commission-based income, you'll need to provide personal and business tax returns for the past 2 years along with your most current year-to-date profit/loss statement).
4. Employer info (name, phone number, and address) for your most recent 2 years of employment.
5. Address(es) for your residence in the past 2 years (if you've rented, you'll need to give your landlord's name and phone number).
6. Money for a credit report and appraisal (which is usually $415).
When you're ready to talk with a lender, be sure to use a good name with a long-standing track record. One of the most important parts of choosing a lender is usually the last thing people think of. Make sure that the lender you choose is actually going to have the money at the closing table. Believe it or not, this has been one of the biggest problems over the past year - and especially in the past few months, since lenders are really having to minimize their risk in giving out loans. Work with a bank that closes on the loans they approve or commit to.
One way to make sure your loan will close is to make sure you're working with an in house underwriter. This means that when he/she approves a loan, it has already been signed off on and approved. Some home loan officers have to send off the loan to get approved. This is a major benefit of one of the lenders we personally use. Everything is local - even the funding is local. Nothing has to be sent off. Everything is done in house.
When any lenders takes your loan application, they have roughly 300 products (or loan packages) that you may qualify for. Using this large inventory, they find the best product for you. Some brokers have to go to another company to find their products. When this happens, many brokers look for who's going to pay them the most for sending their loan to a buyer. In these cases, the brokers are not finding what is truly the best loan product for you.
If you need recommendations for lenders, your real estate agent should be able to give you several recommendations of good ones to use. We work with so many lenders that we have a short list of home loan consultants we trust - and consultants who can give you credit counseling. So, if you have any questions, feel free to contact your real estate agent. And, know that it's never too early to start building your credit for buying a home!
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