If you want to know how to get approved for a home loan, you've come to the right place. Nearly 48 percent of Americans doubt that they could qualify for mortgages. Nonetheless, lenders approve about seven out of 10 people who apply. Follow these steps if you'd like to join them:
Most people need at least five percent of a home's price, according to The Motley Fool. A 20 percent down payment will substantially reduce the loan's overall cost. Certain government programs can help, especially if you've served in the military.
This will help you identify ways to boost your credit score and the likelihood of approval. For example, you may discover harmful errors that you should report to a credit bureau. Make sure you clean up your credit several months prior to beginning your home loan application to give the errors time to be removed from your credit report. You can request your free report from AnnualCreditReport.com.
Many lenders won't approve your application if you owe money to a collection agency. A high credit card balance can also reduce your score; try to settle at least some of these kinds of debts.
Independent contractors may need their 1099-MISC forms. If you work for an employer, you should find your W-2 forms, paycheck stubs and a document indicating when the company hired you. You will likely need two or three years of documents for any home loan application, so taking some time to find everything is a good idea.
Rather than just comparing numbers, remember to consider factors like customer service, convenience, flexibility and familiarity. You also may want to find a lender who is familiar with your market and can provide you a pre-approval letter so that your real estate agent and any possible sellers you work with know you mean business when you make an offer to buy a house.
Staff members will make this decision by examining your financial documents and looking at a credit report. If the lender prequalifies you, it will estimate a maximum home price.
Browse real estate listings and find an appealing house that you can afford to buy, maintain, insure and cool/heat. Make a reasonable offer on the property. Sellers readily accept offers when they know that reputable lenders have prequalified buyers for mortgages.
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If an owner accepts the offer, the homebuying contract goes into effect and your lender can approve the purchase. This decision largely depends on the results of an appraisal. It's crucial to select a home that's truly worth more than the amount you need to borrow.
This may take a few weeks. In the meantime, avoid spending considerable amounts of money on credit. Put off any plans to apply for other loans or credit cards.
If the appraisal prevents a mortgage approval and the estimated value doesn't seem realistic, you can request an appraisal rebuttal. Otherwise, you're probably ready to schedule a closing and start planning to move into your new home. Congratulations!
Be sure to consider Allegiance Credit Union when seeking a lender. We simplify home loan applications, offer personal service, and don't add any hidden charges. Please use our website or dial (405)717-9919 to apply.