If you're getting ready to buy your first home, you'll need to apply to a mortgage lender for financing. Here are some tips that will help guide you through the process:
Improve Your Credit Score
Before you apply for a mortgage, it is a good idea to pull a credit report and see if there are any problems with it. For example, you'll want to look for debts that are still on your personal credit report that have already been paid off, or pay off debts that you have the cash on hand to get rid of. Your overall credit score plays a big role in your home financing, helping your financial institution to decide whether or not you are accepted and what kind of rate you get.
Pick Several Mortgage Lenders
It is a good idea to pick several mortgage lenders when you get your pre-approval; this will help you decide which one you want to use when it is time to get your actual mortgage. You may find that some lenders respond faster than others, and you may be more likely to want to work with them later.
Fill Out Pre-Approval Applications
Go through the pre-approval process with a couple of mortgage lenders that you like, to see if you are approved and what interest rate you are approved for; you may be surprised to see that the results between lenders can be quite different, even though you are applying for both with the same financial information. Expect it to take a few days to get back your pre-approval from the lender, and remember that you will need that letter when you decide to make an offer on a home.
Pick A Lender
With your pre-approvals in hand, you can move forward with picking a lender when you are ready to do so. Keep in mind that your pre-approval may only be valid for so many days, so you will need to move fast when finding a home on which you'd like to make an offer. Once you pick your lender, you may be required to pay some fees up front to get the process going, while others will roll them into the closing costs when the loan is finalized.
Make Your Down Payment
At closing, you'll be required to hand over your down payment towards your mortgage. You have up until your closing date to change how much you want to put down, but let your mortgage lender know beforehand to adjust your paperwork correctly. A large down payment can result in a lower interest rate on residential home loans, which will need to be reflected on your paperwork that you sign at closing.