Homes cost a lot of money, which is why most people get mortgage loans to buy them. If you want to purchase a house and need to borrow money, you will also need to apply for a mortgage loan. If you are unsure how to do this or what you will need when applying, here is some information to help you know what you will need and what to expect when applying for a home loan.
You Can Apply for a Preapproval First
You might not realize that there are actually two levels of approvals you can get when buying a house. The first level is a preapproval for a home loan. A preapproval is not equivalent to an approval, but it is a vital step to complete when buying a house. A preapproval tells your real estate agent and home seller that you meet the criteria for getting approved for a home loan. It also tells you how much money you can spend on a home purchase. It is a guide for you, but it is security for the person who agrees to sell you a home. It is also security for the agent that helps you shop for a home.
To get a preapproval, you will need to fill out a home loan application. The lender will also verify many things, including your income and credit score. Lenders work through a series of steps when processing preapprovals, and your lender will likely let you know their decision within a week or so.
You Can Apply for a Home Loan After Choosing a House
A preapproval does not guarantee that the lender will issue you a mortgage loan when you need one. Therefore, you must move on to the next step after finding a home to buy. This next step is asking the lender to approve your loan for a particular home. Your lender will once again evaluate your credit and income before approving it. During this step, the lender will also evaluate details about the home you want to purchase, including the home's appraised value.
To begin shopping for a house to buy, you will need a real estate agent and a preapproval letter from your bank. To close on the house, you will need approval from your mortgage lender. If you would like more information about home-buying loans and the application process, talk to a home loan lender today.