Finally, you’ve made the decision to buy a house and you’ve gone around searching for different houses or you already have a property in mind, the question now is, how do you go about the process? How do you go about financing? Buying a home is one of life’s most important and exciting decisions, and it could still be the most challenging most especially if you have no idea on how to handle the mortgage process. Having a clear understanding of how a home loan works and being prepared for the process before approaching the buying will have you save much with the best experience.
To help and educate you on the home loan process, I’ve put together this detailed step by step guide explaining the home loan process for your better understanding.
- Being pre-approved: The pre-approval process helps give you a smooth experience of the home buying process with no financial stress. Since the real estate meltdown some few years back, some basic features have been changed. The real estate agent will first inquire from you if you would consider applying for a loan. At first, lending institutions would provide funds for anyone with a heartbeat before soft lending standards help brought up and eventual rash for foreclosure. Conditions for the home process has been changed since then as buyers seek to be pre-approved with a lender before approaching a real estate agent.
- Know your credit score: Every lender will require to have a copy of your credit report before they can get you approved for financing. Having a good credit score is a major key to securing a loan with a good interest rate. Being aware of your credit score in advance gives you the chance to make it better if need be. Activities, like paying off debts and scrapping unused credit cards, will help increase your credit score.
- Monthly mortgage payment: Having constant funds for a monthly mortgage payment is a must. This helps you know what home standard you can comfortably make monthly You can base your budget on your usual monthly spending habit. Some lenders will go as far as referring you to a homeownership education counselor so you can make more informed decisions.
- Get used to the world of real estate: Before going in for more details, potential home buyers should consider familiarizing themselves with common loan, terminology, and I would suggest you start by having a clear understanding of some basics.