Mortgage Basics: How to get a loan
If you’ve never gotten a mortgage before, you might be wondering about what it takes to buy a home, and get a loan. This guide should help you to getting started at getting your first mortgage.
First step, find out about your credit. By law you are able to request your credit report once a year for free. You can contact any of the credit bureaus and ask for your free copy of your credit report.
Your credit report is the greatest indicator of whether you should be able to get a loan, and what you’ll pay for that loan. If you can get rid of any of the negative items, you’ll be in a position to get a better rate, and be more likely to be approved.
What you’re looking to avoid in your credit file is any bankruptcies, foreclosures, judgments, repossessions and any late payments on any of your credit accounts. Even forgetting to pay a cell phone’s contract cancellation charge could end up being a deterrent to getting a mortgage.
Now hold on to that credit file, and make copies if you can. Take your credit file with you when you interview any lenders. The mortgage officer should be able to give you an idea of what to expect in your mortgage just by looking at your credit report, and not pulling a new report. The problem is that you can actually bring your credit score down just by having too many lenders pull your credit score while you are shopping for a loan.
There’s other documentation you should also have. You should gather your last two years tax returns, last two months of pay stubs and banking statements. The lender and the program you’ll be using will have different levels of documentation required, and it’s best to have as much of it gathered as soon as possible.
There are many different options to get a loan. There are mortgage brokers, banks, and credit unions. If you have an account at a local bank, you might want to start there. Take your credit file, and all your documentation and do not let them pull your credit until you decide to work with them. Understand that they win when they give you the loan, so make sure you stay in control of the process.
When you talk to a prospective lender you want to make sure that you connect personally with the lender’s representative. That’s the first step. And of course you want to make sure you’re not paying too much. You’ll need to get a Good Faith Estimate or GFE, which will give you a general idea of how much your new loan is going to cost you.
Price is only one part of the equation. But if you’ve done your homework you should be prepared to pick a lender who will be able to work with you to get your mortgage done as quickly and painlessly as possible.
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