A Guide to Getting a Home Loan: The Ultimate Checklist: South Florida Caribbean News

There are a lot of things you need to think about before applying for a home loan if you want your application to be successful. So be sure to check off the items on the following ultimate checklist.

1. Look for a loan at the best rates

Before applying for a mortgage, it is imperative to shop around. By comparing different lenders, you can find the best rates and terms for your needs. For current up to date mortgage rates from a multitude of different lenders, read more here.

2. The documents you need

You need to make sure you have all the documents that might be required by the lender. First of all, you need to provide documents to prove your income. As an employee, you may need W-2 forms from the last one to two years or pay stubs from the last thirty days in addition to other documents. If you are self-employed, the majority of lenders require that you have worked in the same industry for at least two years. The documents you may need include two years of federal income tax returns, a cash flow analysis form, and a year-to-date profit and loss statement.

3. Qualification standards for approval

Although each mortgage lender varies, there are certain standard qualifying criteria that you will need to meet in order to be approved for the loan. Your income should be sufficient to cover the cost of your loan. Your assets and your credit score will also be taken into account. You will generally need a FICO credit score of 620 or higher to qualify for a home loan. The other important element taken into consideration by lenders is your debt to income ratio. The percentage tells lenders how much of your monthly income you spend on required bills each month. The lower your ratio, the more likely you are to qualify for the loan. Typically, you need a debt-to-income ratio of 50% or less to qualify.

4. What to expect from your loan officer

A mortgage loan officer represents the bank, credit union, or other financial institution from which you intend to borrow. Loan officers have extensive knowledge of the mortgage process, so they can be very helpful in helping you with your application. For example, they know what documentation you need to provide and they understand all of the industry rules and regulations.

5. Closing costs and down payment

There’s no point in qualifying for a home loan if you can’t afford the down payment and closing costs, so make sure you know what they will be before you start. Closing costs are additional costs in addition to the price of the real estate that are due on the closing of the real estate purchase. The costs can cover items such as your loan origination and underwriting, taxes, real estate commissions, securities and records deposits, and insurance premiums. Typically, closing costs range from 3% to 6% of the purchase price of a property.

The down payment refers to the percentage of the home purchase price that you pay up front when you close your mortgage. Different lenders have different requirements, but a 20% down payment tends to be the norm. However, you can deposit as little as 5% with some lenders. The amount of your down payment will affect how much the lender allows you to borrow and your interest rate. It can also affect whether you need to pay for private mortgage insurance.

6. Final preparations before applying for your loan

To have the best chance of success with your loan application, work on having an excellent credit rating, a low debt ratio and a high down payment. And before you apply, make sure you have all the relevant documents. The more prepared you are, the more mortgage the process will go.


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