Loan programs backed by USDA, VA, FHA and conventional loans offered by private lenders help millions of U.S. families realize their dream of owning a house.
The programs have their share of pros and cons. To get the best deal, it is important that buyers learn about the pros and cons of USDA loans or any other program they seek to access. To also prepare in advance and avoid confusion, buyers must learn about the loan process and the steps they need to take when applying. To help, this post discusses the loan application process. Take a look.
Mortgage consultants are experienced professionals and can answer all your questions regarding the loan process. Expert loan officers will compile your case report including your personal info. Based on their findings they will advise the best program according to your needs. If requested, they can also suggest reputable lenders with a healthy service record.
The next step involves filling out the loan application form. The lender uses this form to collate and store important borrower info concerning their employment status, income, assets, property details, and credit references. You will also be required to attach important documents such as latest statements of your bank accounts, last two years tax returns (if self employed), and salary slips for the last three months.
After you submit your loan application form, the lender evaluates your personal info to determine the loan amount you can afford. The lender will issue a pre approval letter, that serves as an evidence about the amount you can borrow. You are, however, under no obligation to borrow from the lender. The lender too reserves the right to reject pre approved applications.
After you are preapproved, the lender will start processing your application. You would be required to submit important financial documents such as W-2 forms, medical bills, and profit and loss statements (if you own a business). To determine your debt-to-income ratio, the lender will need a list of assets and liabilities and outstanding debts, if any. To determine the fair value of the house, the lender will also order an appraisal.
After evaluating the case, the lender will forward it to the underwriter for approval, who will decide on whether to approve, suspend, or decline the application. Borrowers whose application is suspended would need to provide additional documents. Applicants who are declined must talk to their lender about the steps they must take before applying again.
To pre-close your loan successfully, request a home inspection which would help uncover any structural,plumbing or electrical issues. To assure the seller that you are serious about buying the house, pay the earnest money. To avoid any future title disputes, work with your lender to secure title insurance and get all real estate documents in place.
To determine any damages or any other issues, walk through the property at least 24 hours before closing. On the closing day, carry all your documents when visiting the seller. You and the seller will need to sign property transfer and ownership documents. You must also sign mortgage documents and pay closing costs, and escrows.
The process of applying for and getting a home loan need not be a daunting task, if you plan everything in advance. Knowing the loan process will equip you with important info and help take steps in the right direction. You also need a trusted loan consulting partner who can guide you at every step, thereby, helping you avoid pitfalls when applying for a loan.
Stories by Darrick Ethien