Understanding the Loan Process to Finance Your Home
Applying for a mortgage can be quite intimidating - especially for a first time home buyer. With a bit of preparation, you can arrive at your lenders office with all required documentation and be well organized and ready to be evaluated to secure the financing for your home. A MABA buyer agent will assist home buyers in home financing options and facilitate how to finance a home by working with proven, professional lenders to improve the overall process for you, the home buyer. Not all lenders are the same, so leverage the experience of your MABA buyer broker to secure a solid lender.
To increase your chances for a successful mortgage approval, first evaluate your credit standing. If your credit report contains problems or errors, resolve them before applying for a mortgage. You can get one free credit report a year; do it before you apply for your loan to check for errors.
Gather the Information Needed
To finance a home requires a significant amount of information and documentation. It is recommended that you organize the information below in advance so you are prepared to apply for a home mortgage.
- Mortgage Application: This form requires detailed information about you: your employment record, the home you want to purchase, your personal finances, etc., for each person who will be listed as a borrower.
- Verification of Income: You will be required to provide earning statements such as W-2 forms, recent pay stubs, and tax returns for the past 2 years. If you are self-employed you will be required to provide profit and loss statements and tax returns for the current year plus the past 2 years. You will also be required to provide documentation for any additional income such as social security, child support, bonus, commissions, interest income, veteran’s benefits, etc.
- Verification of Assets: The lender will require all bank account numbers, the address of your bank branch, and checking and savings account statements for the previous 2 to 3 months. You will be required to furnish a list of savings bonds, stocks or investments and their approximate market value. You also may be required to furnish copies of title for any motor vehicles that are paid in full.
- Verification of Debts: The lender may request credit card statements for the past 2 or 3 billing periods, evidence of mortgage or rental payments, copies of alimony or child support agreements, verification of other debts such as car loans, furniture loans, student loans and personal or co-signed installment loans. Always provide the creditor’s address and phone numbers.
- Property Information: A copy of the completed purchase and sale contract, as well as a copy of your canceled deposit check if you made a deposit in escrow to the seller, will also be required.
- Origin of Down Payment: If the down payment is a gift from a relative, you will need a copy of the “gift letter” and a copy of the gift check. The gift letter is a statement from the person gifting you this money stating that it is a gift and will not have to be repaid.