Buying a home typically requires a large financial investment, the assistance of a trusting lender, and the undertaking of many new responsibilities. If you’re not sure where to start, don’t worry – you’re not alone. Learning how to apply for a home loan can be overwhelming and involves many important decisions, so take your time. With the help of a reliable lender, you’ll soon learn everything you need to know.
How to Apply for a Home Loan
When it comes to securing a good deal on a mortgage, proper preparation is invaluable. Obtaining a good loan involves more than just filling out a few lines on a form, so strategizing about how to apply for a home loan beforehand is smart.
Before you even start filling in the blanks on an application for a home loan, educate yourself. Factors like your credit score, your debt-to-income ratio, your income, and the amount you have available for a down payment all play pivotal roles in determining what types of mortgage you qualify for (source). Do your homework and learn what these things are and how to manage them appropriately so that you’ll be in a strong position when you’re ready to begin applying for a home loan.
Learn How Much You Can Afford
A mortgage is a long-term commitment, and overextending yourself can be a financial nightmare. How do you avoid biting off more than you can chew? For starters, you can use an online mortgage calculator to play with the numbers and determine how much you can comfortably afford. You can also meet with a financial professional to explore the various loan programs available, learn which ones might be a good fit for you, and get prequalified.* Getting prequalified for a home loan can be a great way to determine how much you’re likely to qualify for, and it’s all informal; no commitment is required.
Gather What You Need to Apply
Completing a mortgage application requires a massive amount of paperwork, so it’s no real surprise that you will be responsible for gathering together a lot of documentation. While the exact requirements will vary from lender to lender and can also be influenced by factors like whether you’re self-employed, have discrepancies in your work history, or have received notable gifts, there are certain items that you will almost certainly be called on to provide. So before you apply for a loan, begin the process of gathering everything you’re likely to need in order to apply. At PrimeLending, we require all of the following items:
- A copy of the driver’s license of anyone applying for the home
- Employment histories for the last two years
- Residency histories for the last two years, including the names, phone numbers, addresses, and account numbers of the mortgage or land companies
- Copies of applicants’ paycheck stubs for the last 30 days
- Copies of appropriate documentation for any commissioned or bonus income
- Copies of all checking and savings account statements for the last three months
- Copies of quarterly or semi-annual statements for financial assets (like checking and savings accounts, money market funds, stocks, individual retirement accounts, 401k plans, certificates of deposit, and profit-sharing plans)
- Copies of applicants’ Form W-2s for the last two years
- Copies of applicants’ recent income tax forms
- Copies of leases and mortgage information for any rental properties owned
- Copies of the HUD-1 settlement statements for any mortgages paid off within the last two years
- Copies of appropriate documentation for a paper trail detailing the utilization of assets for the down payment, closing costs, and cash reserves
- Copy of ratified sales contract when available
- Copies of your refinance note, deed of trust, settlement statement, survey, and insurance information
- A check to cover the cost of the appraisal and credit report
- The canceled earnest money check or corresponding bank statement once the check clears
Complete Your Application for a Home Loan
Has our list of required documentation left you feeling overwhelmed? Don’t panic. Take the process step by step, and follow the tips outlined in the video above (and the bullet points below) as you complete your mortgage application:
- Fill the application out completely. Missing information can delay the processing of your home loan application, so check carefully to ensure that everything is filled out properly.
- Include all the requested documentation. The list may be lengthy, but your lender really does want all of the specified documentation to be included with your application. Again, missing documentation can cause delays.
- Be accurate. Mistakes happen, but inaccuracies in a loan application can cause serious headaches. Check over your home loan application carefully to verify that all of the information included is accurate to the best of your knowledge.
- Respond to requests for additional information or documentation promptly. It’s not unusual for a lender to request additional information. While this can feel frustrating, it’s important to respond to any request for additional material as quickly as possible so that the lender can continue the process of vetting you for a home loan.
Understanding how to apply for a home loan is just one step in the process of buying a house, but it’s a very important one. To learn more about the ins and outs of applying for a home loan, contact PrimeLending today if you live in the Kansas City area.
Our team is committed to helping you navigate the home financing process, so that you can purchase the home of your dreams. At our branches located throughout Kansas City, we can help you explore our wide variety of loan products and programs. Plus, PrimeLending utilizes delegated underwriting, local appraisers, and cutting-edge technology to accelerate the underwriting and closing processes. If you’re ready to learn more about how to apply for a home loan, please give us a call at 844-701-5626.
* The prequalification process is not comprehensive and therefore is not guaranteed, nor is it considered any type of loan commitment. It simply shows that you’ve approached a lender who was serious about helping you determine what you can afford and will walk you through the process (source).