FINANCING - FIRST STEP
WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN?
Answer: The
first step in securing a loan is to complete a loan application.
To do so, you'll need the following information.
| Pay stubs for the past 2-3 months | |
| W-2 forms for the past 2 years | |
| Information on long-term debts | |
| Recent bank statements | |
| tax returns for the past 2 years | |
| Proof of any other income | |
| Address and description of the property you wish to buy | |
| Sales contract |
During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.
FIND A MORTGAGE FOR YOUR HOME BY STATE:
HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT?
Answer: Pre-qualification
is an informal way to see how much you maybe able to borrow. You
can be 'pre-qualified' over the phone with no paperwork by telling
a lender your income, your long-term debts, and how large a down
payment you can afford. Without any obligation, this helps you arrive
at a ballpark figure of the amount you may have available to spend
on a house.
Pre-approval
is a lender's actual commitment to lend to you. It involves assembling
the financial records mentioned in Question 47 (Without the property
description and sales contract) and going through a preliminary
approval process. Pre-approval gives you a definite idea of what
you can afford and shows sellers that you are serious about buying.
HOW DO I CHOOSE THE RIGHT LENDER FOR ME?
Answer: Choose
your lender carefully. Look for financial stability and a reputation
for customer satisfaction. Be sure to choose a company that gives
helpful advice and that makes you feel comfortable. A lender that
has the authority to approve and process your loan locally is preferable,
since it will be easier for you to monitor the status of your application
and ask questions. Plus, it's beneficial when the lender knows home
values and conditions in the local area. Do research and ask family,
friends, and your real estate agent for recommendations.
HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY?
Answer: There
are three major credit reporting companies: Equifax, Experian, and
Trans Union. Obtaining your credit report is as easy as calling
and requesting one. Once you receive the report, it's important
to verify its accuracy. Double check the "high credit limit,"'total
loan," and 'past due" columns. It's a good idea to get
copies from all three companies to assure there are no mistakes
since any of the three could be providing a report to your lender.
Fees, ranging from $5-$20, are usually charged to issue credit reports
but some states permit citizens to acquire a free one. Contact the
reporting companies at the numbers listed for more information.
CREDIT REPORTING COMPANIES
| Company Name | Phone Number |
| Experian | 1-888-524-3666 |
| Equifax | 1-800-685-1111 |
| Trans Union | 1-800-916-8800 |
WHAT IF I FIND A MISTAKE IN MY CREDIT HISTORY?
Answer: Simple
mistakes are easily corrected by writing to the reporting company,
pointing out the error, and providing proof of the mistake. You
can also request to have your own comments added to explain problems.
For example, if you made a payment late due to illness, explain
that for the record. Lenders are usually understanding about legitimate
problems.
HOW CAN I IMPROVE MY SCORE?
Answer: There
are no easy ways to improve your credit score, but you can work
to keep it acceptable by maintaining a good credit history. This
means paying your bills on time and not overextending yourself by
buying more than you can afford.
WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS USE THEM?
Answer: A
credit bureau score is a number, based upon your credit history,
that represents the possibility that you will be unable to repay
a loan. Lenders use it to determine your ability to qualify for
a mortgage loan. The better the score, the better your chances are
of getting a loan. Ask your lender for details.
