Things You Need to Know Before Applying for a Home Loan
Buying a new home is an exciting experience, but it can also be stressful. If you're new to the process, there are things that you really need to consider before jumping right in. You do not want to sign the paperwork and find weeks or months later that you regret the decision.
Did You Compare Rates?
No matter how long you've been with your credit union or bank, they may not have the best home loan package for you. Never feel pressured into signing the papers until you have shopped around for the best possible rates. Rates will vary from bank to bank and applying for a home loan online often gets you the lowest interest rate available. You'll end up saving thousands over the life of the loan.
Have You Read Reviews?
After comparing interest rates and home loan offers, check out reviews for the financial institution. The Better Business Bureau is a good place to start. Negative feedback isn't a bad thing. Every company has its moments, but you need to pay close attention to how the company handled the complaint. Was it resolved satisfactorily or did they simply ignore the complaint?
How Much Can You Afford?
Do not borrow more than you can afford. It helps to consider your current income and forecast potential changes down the road. Are you planning to have children in a few years? You will be spending more on health insurance, food, clothing, and other necessities. You should consider these changes when determining how much you are comfortable borrowing. If you're in line for a promotion, you'll likely be getting a substantial raise and may be able to afford a house at the top of your price range.
Have You Checked Your Credit Report Recently?
Before you even consider applying for a home loan, order copies of your credit report. It takes up to three months to fix errors, so you should start this process before you apply for a mortgage. If you don't have time, arm yourself with letters from credit card companies and other creditors that prove your account is paid up or that you do not actually own the account in question.
Is Your Paperwork in Order?
Finally, before you apply for a mortgage or other home loan, there is paperwork you need to provide to your lender. This includes paycheck stubs, tax returns, and bank statements. If you do not have a scanner or copier in your home, you will likely need to head to a business center to acquire copies for your lender, especially if your home loan application is being processed by company in another state.
