Applying for a Home Loan
When you apply for a home mortgage loan, the lender will check the following:
* Your credit score
* Your credit history
* Your current income
* Income of co-signer
* References (professional and personal)
* Requested loan amount and repayment terms
* Current interest rates based on the amount you are asking for
* Status of other loans you may have
* Number of years you have been eligible to work
* Number of years at your current job
* Number of years you have had credit
* Rental history
* Number of dependents
Lenders will require several statements from you, including:
* Recent bank statements for all accounts
* Pay stubs for the past 3 months
* Tax returns for the past 3 years
* W-2 forms for the past 2 years
* Information about your long-term debts, including the names of the creditors, account numbers, payment amounts, etc.
* Proof of any other current income
* The executed sales contract – also referred to as an Earnest Money contract.
If you do not have your back tax returns, you can contact the IRS and request them by year. Usually lenders want to see the previous three years’ tax returns. Bank statements and bill statements from the past year should be enough to secure a loan.
Other important information the lender will need before granting you a loan include:
* The home inspection report
* The termite inspection report
* The home appraisal
These reports are very important to a lender because they will tell the lender how much the home is worth and disclose any damages that may have lowered the overall value of the property.
There are many factors that will go into the lender’s decision to offer you a home loan. You should contact a few lenders to see which ones will give you the best deal. Carefully consider all offers.
The approval process for a loan can take a week or longer. Background checks, credit checks, and reference checks must be completed before the loan will be processed.
If you are turned down for a home loan, the lender will notify you and provide their reasons for not approving a loan. Common reasons for denial include:
* Poor credit or not enough credit
* Length of time at your job is too short
* Income level for the amount of loan requested
* Loan default
* Failure to pay rent or other bills
* Too much credit
This can be devastating, but you should take steps to fix issues negatively impacting your application and apply again. If you have bad credit, you may need to go through a lender that specializes in granting loans to those with bad credit. These loans often have a higher interest rate, but at least you will be granted a loan.
Applying for a home loan can be stressful, but if you have good credit, steady employment, and enough income, you should have little trouble qualifying for a loan.