Did you know the average down payment for a home is $59,880? While this number seems high, there are plenty of other things to factor in when applying for a home loan.
If you’re serious about giving the next step, you came to the right place. Read on to learn how to apply for a housing loan.
1. Save for a Down Payment
Before you start working with a real estate agent and attending open houses, you should figure your if you have enough to put down. Keep in mind that depending on the lender you qualify for, you will have to save between 2.25 to 20 percent of the home’s price.
If you don’t have any money saved up for a down payment, you have a few things to figure out. When you’re serious about buying a home, you could take a look at your budget and see where you can cut corners.
There are also other loan options for those individuals that can’t come up with a large downpayment. For example, there are FHA loans backed by the Federal Housing Administration that allow you to get a home with a small down payment.
Also, there are VA loans available for veterans that require zero down payment.
2. Find Out Your Credit Score
Although you can still get a home loan if you have a low or average credit score, you can get a better interest rate with a high credit score.
Before you talk to a lender about the possibility of qualifying for a home loan, you should get a general idea of where your credit score stands. If you don’t keep track of your credit score on a monthly basis, you should obtain a copy.
The three main credit reporting agencies are Equifax, Experian, and TransUnion, and you can obtain a copy for free once a year.
3. Get Your Financial Documents in Order
When you’re in the process of obtaining a home loan, your lender will want to see copies of your financial documents. Before you start the loan process, make sure you gather everything you need.
Put together a folder with your most recent paystubs, W-2, and your tax returns from the last two years. Some lenders will also want to see bank and brokerage statements.
4. Get Pre-Qualified
Before real estate agents take you on showings, they will want you to be pre-qualified. The process is quick and simple, and you simply have to show proof of income and other financial information.
Once you get your pre-qualification, you can begin looking for your new home.
5. Track Interest Rates
When you’re in the process of buying a home, interest rates are one of the most important factors. During your home search process, make sure you monitor interest rates to ensure you get the best rate possible.
How To Apply for a Housing Loan? Now You Have an Idea
Now that you have a general idea of how to apply for a housing loan, you’re ready for the next step. Start by saving for a down payment, find out your credit score, get your finances in order, and get pre-qualified.
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