How To Apply For A Home Loan

How to apply for a home loan. Learn how to apply for a home loan. According to Richard Fryer, an expert with over 30 years of experience in the real estate business, "the [most important] thing is to make...

According to Richard Fryer, an expert with over 30 years of experience in the real estate business, "the [most important] thing is to make sure that you have got your personal business in order." It is very important that you have the proper documentation and fill out your application thoroughly in order to prevent your application being delayed in processing. If you are meeting your prospective lender for the first time, you will need to bring adequate proof of identification in order to get the ball rolling. This is commonly referred to as a "100-point check" because certain pieces of identification are assigned a certain numerical point amount. For example, a driver's license or other state-issued identification is worth 40 points, an original birth certificate is worth 70 points, a credit card in your name is worth 25 points, etc. In order for your application to be processed, the total "value" of your identification documents has to be at least 100 points.

After your identity has been verified, it is time to start filling out the actual application. A mortgage loan application can be as long as 10 pages, and it is important that all questions are assigned as completely as possible. You will be asked several; questions regarding your dependents (if applicable), your assets, personal insurance and any credit accounts you may currently have, just to name a few. A one-time processing fee may also have to be paid at this state of the application process as well.

You will then need to provide the lender with certain documents in order to verify your income. You need to bring your last two paystubs or earnings statements along with verification of employment or a letter from your employer detailing your salary and length of employment. If you have been at your current job for less than a year, you will need to provide the contact and salary information for the last place of employment for the past five years. If you are self employed, you will need to provide tax returns, balance sheets and profit and loss statements from the past three years. These documents will need to be certified by an accountant. You will also need to provide a letter explaining the nature of your business and your total net worth.

After you have been approved, you will then need to figure out how much money you can borrow and how much house you can actually buy. The amount you will be allowed to borrow depends on the price of the home you are buying and the amount of money left when you remove your fixed obligations form your net income. The majority of lenders will let you borrow up to 80% of the purchase price of the house. Some lenders will allow you to borrow up to 95% if you are willing to purchase mortgage insurance.

It is also important to remember to not apply for new credit or make any major purchases immediately prior to applying for a home loan. Fryer warns "Somebody should make sure that their credit is in good shape and that they have got their bills well in control. Anybody who is overtly obligated is going to have a hard time getting the loan."

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