Guide to Finding a Lender + Getting Preapproved
THE FIRST STEP: GET PREAPPROVED FIRST
This is the first step so that your realtor and sellers know you're a serious buyer (and you can afford to buy the house you are wanting! ) Being pre-approved, unlike being pre-qualified, means you've actually been approved by a lender for a specific loan amount. You will need to provide documented financial information (income, statements, assets, debt & credit reports etc.) to be reviewed & verified by the lender.
A pre-approval can help to speed up the closing process since much of your financial information is already collected and in the lender’s system.
PREAPPROVAL LETTER
Lenders typically check your credit before issuing a preapproval letter, and the letter may have an expiration date on it (typically 30 to 60 days).
UNDERSTAND YOUR LOAN OPTIONS
A conventional loan is very common and you’ll be able to buy a home with a minimum of 3% down payment.
VA loans are only for veterans, members of the armed forces, National Guard, and their spouses. With this loan, you’ll have to meet service requirements and such, but you won’t have to make a down payment.
FHA loans are less strict when it comes to your finances and credit score. The minimum down payment is 3.5% and your credit score can be as low as 580.
USDA loan also doesn’t require a down payment but this is subject to income restrictions.
MAXIMIZE YOUR CREDIT SCORE
Generally, to qualify for a home loan, you'll need good credit, a history of paying your bills on time, and a maximum debt-to-income (DTI) ratio of 43%
YOUR CREDIT SCORE
Payment history % 35
Credit utilization %30
Age of credit history %15
Credit mix/types of credit %10
Amount of new credit %10
QUESTIONS TO ASK WHEN SHOPPING FOR A LENDER
What types of home loans do you offer?
Which type of mortgage is best for me?
What will my interest percentage rate be?
What is the loan estimate?
Do you handle underwriting in-house?
What Is your average loan processing time?
What happens if my appraisal comes in low?
What might my monthly mortgage payment include?
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