Applying for a home loan can be smooth or challenging; the nature of the outcome depends of a buyer’s preparedness. Though the nuances of new home-buying process are never without a few surprises, perform your due diligence and learn what you need for a smooth loan approval.
All documentation, including your social security details, credit report, pay stubs, W-2 statements, proof of income and other information required by your loan representative will be forwarded to the loan underwriter along with mortgage prequalification application.
Mortgage underwriting is the process that assesses the risks of lending. For most underwriters, these terms will fall under:
In the meantime, you can make an offer for a new home. However, you will have to submit the details of your loan to the seller, as the success of the home purchase is tied up to the approval of your mortgage loan.
Choosing The Loan
Different loans apply to different homebuyers. For instance, the minimum down payment on the FHA loan may be as low as 3.5 percent, but only with a high credit score. The certificate of eligibility (COE) is a necessary part of a VA loan application. Besides your own financial strength and the value of your property, check for such specifications before selecting a loan.
Rehab Loan Requirements
The loan for a property that needs additional repairs to become livable include property plus repair costs. The FHA 203K Rehab Loan Program is the ideal type of financing in this case.
In addition to standard loan application information, you need to provide details the repairs your home needs, including the extent of repairs and the costs involved. Once approved, these costs will be incorporated in your loan terms. The lender will invest these in an escrow account, and control these to pay off work completed by your contractor after loan closing.
This is when all loan costs are confirmed, the seller is paid off by your lender, and all mortgage payments agreements between you and the lender are finalized and sealed.
It pays to a reliable mortgage broker, who can guide you through each step of financing your dream home. You’ll find this expertise here at Mortgage Scenarios.