The first step in purchasing your dream home is getting pre-approved for a home loan. Most real estate agents will request a pre-approval letter before showing you homes. A pre-approval letter lets your agent know that you are a serious buyer and which homes you are qualified to purchase. Qualifying for the perfect home loan is easy when you prepare for the process.
When should you get pre-approved
The best time for you to get pre-approved for a home mortage is now. This allows you to narrow your search by shopping for homes in your approved price range. Many financial factors affect your home loan approval, and you can start preparing to increase your approved mortgage amount by learning about how to improve your credit score. Other ways of getting your financial house in order include saving for a down payment and identifying which debt is negatively affecting your loan amount to develop a plan.
Gather Your Documents
You will need to bring a few documents to your home loan officer. You need these documents to verify your income and employment.
- Two months recent history of bank statements.
- 30 days of recent pay stubs.
- Two years recent W-2 forms or personal tax returns.
- Drivers license, passport, Social Security card, or ITIN to verify identity.
How Much Do You Need for a Down Payment
Down payment requirements vary depending on the type of home loan you apply for. For example, a Federal Housing Administration (FHA) Mortgage Loan will require you to have a down payment of at least 3.5% of the purchase price. You may qualify for special mortgages such as a Veteran’s Affairs (VA) Loan, which does not require a down payment. If you can save enough for a 20% down payment, you can opt-out of Private Mortgage Insurance (PMI), which will reduce your payments and help you qualify for a higher loan.
How Much Will You Qualify For
Only a home loan officer can approve your application for a home mortgage. Many loans require you to have a debt-to-income (DTI) ratio of 36% or less. You should reduce other debts as much as possible in order to maximize your home loan. Car loans, student loans, credit card balances, and other debts contribute to your debt-to-income ratio. You can use a home mortgage calculator to estimate your mortgage payment and loan amount.
What You Should Do Next
Find a reputable home mortgage lender. Granville Homes has over 40 years of award-winning service and is proud to simplify the home mortgage process with Granville Home Loans. Granville Home Loans Officers have experience with home loans such as FHA, Conventional, VA, Jumbo, USDA, and more. They will connect you with the best possible mortgage available to ensure you qualify for your dream home. Click the link below to get in touch with an experienced Granville Home Loans Officer today.
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