The financing process works in a series of steps and sometimes it is very tedious. To make things easier, I've compiled a breakdown of steps to take for the financing process including:
1. Rechecking Credit
a. Make sure that your credit report is as accurate and up to date as possible.
b. Get a credit score & report- obtainable by going to any of the 3 credit bureaus (Experian, Trans-union, and Equifax). You may go to www.equifax.com and click the option on the website for a one time purchase of your credit report and score for $15.
2. Get prequalified
a. When financing a home, it is a better idea to be pre-qualified. This allows a lender to calculate an estimate on how much you can afford using the information that you provide. Getting prequalified helps you make an informed application for the mortgage preapproval and is evidence that realtors know you will be able to get financing.
3. Shop for loans
a. Shop around for the right terms for you. There are a number of different kinds of loans you can shop for. The more terms on your mortgage, the higher the monthly payment. Mortgages are typically 15-30 years, and prepaid interest is called “discount points” or “points”. I can recommend 3 professional lenders for you to decide, but I wouldn’t stop there. Keep shopping around online or through friends and referrals to decide which terms offer the best rates.
4. Get Preapproved
a. Getting preapproved is a firm commitment from a lender to loan you up to a certain maximum amount without the specific property. This is a very positive step, it lets you go through the financing process before making your offer, which in turn saves you time and energy down the line. After you’re preapproved, closing the loan is quick depending on a good appraisal review and title report.