It is always a good idea to get a pre-qualified letter from the lender before you start shopping for a home. This letter will show the real estate agent or seller that you are serous and will also give you an indication in what price range you can shop.
You can save time by narrowing your search for the home you can afford. Once you have a signed purchase and sale agreement in place, you can submit your home loan application. If you are applying for a home loan, it remains a good idea to collect all the necessary documents prior to your appointment with the lender.
Home Loan Application and Supporting Documentation
The supporting documents typically include two personal identifications, such as a drivers license, Photo ID or Passport. One of the photo identifications and non-photo identification, such as a birth certificate, a Citizenship certificate or a recent utility bill, can also be submitted as an alternative identification.
The lender usually requests a confirmation of your income, such as three most-recent pay stubs and three-month bank-account statements that display your transaction history. You can also submit a notice of assessment, a letter from the employer or employment contract to confirm employment.
the Process of a Home Loan Application
Once the lender pre-approved your loan application, a proper property valuation will be carried out. A valuation should not be confused with an appraisal by a real estate agent. The building structure, location, comparable prices (for how much other properties recently sold in the same area), planning restrictions and the standard of presentation will be looked at. The property is the security offered to the lender. Evaluations are used to determine the security value. The lender will get a full report from the appraiser.
If the value is confirmed and the lender is satisfied by the security value, the application is submitted to the final stage of the credit department. The mortgage underwriter will investigate the quality of the application, and most importantly investigate the risks involved. The underwriter will make the final decision. The underwriter can approve or decline the application.
It is really important to build a good credit score in order to apply for a home loan. A healthy credit score and credit history can give you the assurance that you will be a successful candidate when applying for a home loan. An excellent credit score usually results into better deals and lower interest rate offers.