When it comes to purchasing a property most can only do so by taking out a mortgage. A mortgage is money that a bank or lending institution loans you to purchase a house. Which you pay back over a period of several years. This is usually a 25 to 30 year arrangement and can be at a fixed or variable interest rate. The sizeable amount of money that needs to be borrowed, means that it is a little more complicated and time-consuming than simply applying for a car loan. To that end, in order to avoid having to go through the process at crunch time when you found that perfect dream home, it is advisable for future home owners to get a pre-approved mortgage first. Here is how to make that happen.
First find a Lending Institution
While many people assume the best option is to go straight to their bank! There are several lending institutions available which can secure home loans. Depending on your particular income and loan conditions, one may be better than the other; or be more inclined to offer you a loan. Be aware that different institutions may charge you different rates and offer different rates of interest. Shop around to find the one that is best fits your needs.
Gather your Paperwork
One of the most time-consuming parts of applying for a home loan is the amount of paperwork that is required. You can make this easier on yourself by knowing ahead of time much of what you will need. Most institutions require one or two years of tax returns as well as bank statements. You will be required to prove your identity, as well as give evidence of current income and expenses. Make sure you have all documentation for any current loans and assets as you may be required to give proof of savings that you have held for a period of time. Finally, there will be forms for you to fill out or documents for which you may have to submit online to finalize the process.
Take Time to Learn
Many people do not get approved their first time, and instead need to save for longer or pay down existing debts and loans before they are successful in getting any money. Regardless, treat each time you apply as a chance to learn and to figure out how to improve your chances in future applications. Should your application not be approved initially, ask the broker what the main reason was for the refusal. Ask how you can increase your rate of success in the future. And while it may be disheartening to not get your loan. Look at it as more time to save, allowing you to perhaps afford a better house the next time around
Getting a Pre-Approved Mortgage
Getting a mortgage, home buying and entering into the real estate market can be a stressful processes. Put your mind at ease by taking it one step at a time. Start by getting a pre-approved mortgage first. Knowing how much you can afford sets the stage for buying a home that you can afford.