The first thing anyone who aims to purchase a home should do is to clear up his or her credit. The credit report should be checked and all liabilities should be paid. After this, one should look for a good mortgage. This article provides the steps in acquiring a mortgage and checking out the different types of lenders in the market.
Pre-Qualification
Pre-qualification requires meeting with the lender and providing income, asset. and liability information. The lender will provide an estimate on the money a home buyer can borrow using the information provided. The process will be informal and no verification, fees, or formal agreements for approving a mortgage are made.
While loan approval is not guaranteed by the pre-qualification process, home buyers will have an idea on the amount they can borrow. It gives them an idea on the kind of properties they are qualified to acquire.
Pre-Approval
The pre-approval process entails checking the credit history of a home buyer. The lender will verify the employment and financial information of the home buyer. The lender will also confirm whether a home buyer is qualified for a mortgage or not. Sellers usually accept offers from pre-approved buyers since they have the capability of purchasing a house.
Selecting a Lender
Mortgages can be acquired through different sources, each having its own advantages and disadvantages. Homeowners can seek services of mortgage brokers to facilitate the acquisition of loans. Their services are especially beneficial for homebuyers with poor credit ratings. However, homebuyers should bear in mind that the fees collected by mortgage brokers can be quite high, which means they should look for the best one before they commit to an agreement with the mortgage broker.
Funding for mortgages is offered by banks as well. They provide attractive terms and decent interest rates. However, mortgage programs offered by banks are normally limited, and they are not flexible when it comes to the fees they charge.
Real-estate agents can also connect homebuyers to lenders as they are in the business sale of houses, and have contacts within the mortgage industry. However, lenders suggested by real-estate agents may charge higher fees and you may only get to choose from a limited selection of vendors.
Online Lending
With the increasing popularity of online shopping, potential homebuyers can look for lenders from the comfort of their homes. They can easily compare loans and terms offered by different vendors. However, due to the impersonal nature of online shopping, there is a possibility that you can inadvertently end up hurting your credit rating. A huge number of credit checks can also have a negative effect on the credit rating of the homebuyer. Due to this, it is essential to limit online shopping to just one time.
Borrowers Can Choose Where To Get Their Mortgage
Homebuyers have a huge number of loans, vendors and shopping methods to select from. Ultimately, they will have to make a choice on the best mortgage when they are ready to purchase a house. Some homebuyers may opt for low-price programs while others prefer convenience. Specific loan requirements and personal experience may also matter to some homebuyers. But, in the end, the homebuyer will decide where he or she will get the mortgage to purchase a brand-new house.
