If you want to know how to get approved for a home loan, you've come to the right place. According to the National Association of Realtors® 2020 Home Survey Report, 57 percent of Americans believe it would be difficult to qualify for a mortgage. Nonetheless, about seven out of 10 people who apply for home loans get approved. Most lenders regularly review their qualification requirements and create new programs when needed so their members/customers can turn their dreams of homeownership into reality.
Home Loans Shouldn’t Intimidate You
Although there are numerous steps involved, the home loan process shouldn’t be intimidating! Working with the right lender and starting your research early will help you get that much closer to getting pre-approved for the mortgage you need for the home of your dreams. Follow these simple steps to get started.
1. Save for a Down Payment on Your Home Loan.
Over the past year, according to the Mortgage Reports, the average down payment on a house or condo was just 12 percent. For home buyers under the age of 30, home loans averaged a down payment of just 6 percent. Although a down payment of that size will substantially reduce the loan's overall cost, certain government programs and first time home buyer programs offer lower down payment options.
2. Request a Free Credit Report and Carefully Review it.
This will help you identify ways to boost your credit score and the likelihood of approval. For example, you may discover errors that need to be reported to a credit bureau. Be sure to clean up your credit several months prior to beginning your home loan application to allow time for the corrections to be made to your credit report.
3. Consider Paying Off Some Accounts Before You Apply for a Home Loan.
Many lenders won't approve your home loan application if you owe money to a collection agency. A high credit card balance can also reduce your score, so it’s best to settle at least some of these kinds of debts.
4. Home Loans Require Paperwork. Start Gathering it Now.
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 now to find everything is a good idea.
5. Select a Lender that Offers Desirable Mortgages Before You Schedule Any Real Estate Showings.
Rather than just comparing numbers, remember to consider factors like customer service, convenience, flexibility, and familiarity. You will also 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 will work with know you’re serious when you make an offer to buy a house.
6. After Learning How to Get Approved for a Home Loan, Ask the Lender to Prequalify You for a Mortgage.
Your lender will make this decision by examining your financial documents and looking at your credit report. If the lender prequalifies you, it will estimate a maximum home price that you can get approved for.
7. Look Online as You Search for Possible New Homes.
Browse real estate listings and find a house that you can afford to buy, maintain, and insure. When you’re ready, make a reasonable offer on the property. Sellers readily accept offers when they know that reputable lenders have prequalified buyers for mortgages.
8. Don’t Get Caught Up in the Excitement and Over-Pay for Your New Home.
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 important to select a home that's truly worth as much if not more than the amount you need to borrow.
9. Be Patient When the Home Loan Process Requires Time.
The underwriting process can take some time. It includes the underwriting team assessing the property and your mortgage application. It may take a few weeks. To expedite this process, be sure you have completed all the required documents and included all the paperwork required. In the meantime, avoid making purchases with your credit cards and put off any plans to apply for other loans.
10. Appraisals Don’t Have to Be the Final Word on Your Home Loan.
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!
Your Local Lender Offers Home Loans
Peach State’s Mortgage Team can help you through the complicated home buying process. Our team of experts is here to help you find the right mortgage to fit your needs and budget. We offer a complete suite of mortgage products including fixed rate, adjustable rate, conventional, First Time Home Buyer Programs, VA Loans, FHA Loans, and USDA Loans to help you finance your home. Apply today, so you can start shopping for the home of your dreams.
For more tips on home loans and finding the right home and mortgage for your budget, download our "How Much House Can I Afford in Georgia or South Carolina?" guide.
