Qualifying for a home loan depends on many factors including how much house a borrower can afford, home interest rates and how much money a lender is willing to lend the borrower. Here’s some information on how to qualify for a home loan.
After a borrower has determined how much house they can afford, it’s time to check their credit history by requesting a credit report. A credit report shows the borrower’s credit history and FICO score, also known as credit score. A higher credit score makes it easier to obtain a loan and pre-qualify for a mortgage. A lower credit score could cause lenders to reject a mortgage application, require a large down payment, or charge the borrower a higher interest rate. Before applying for a home loan, the borrower should check their credit score and resolve any issues before pre-qualifying or applying for a home loan.
If a borrower wants to know an estimate of how much money a lender will loan, pre-qualification is a fast and easy way to find out. To pre-qualify for a home loan or mortgage, a borrower needs to contact lenders or banking institutions. The lenders will then ask the borrower questions about their income, assets, debts, and how much the borrower is willing to put down for a down payment. After this information is gathered the lender will let the borrower know what type of loan they qualify for and if they are pre-qualified for a mortgage.
Once a borrower pre-qualifies for a home loan, they are ready to begin the pre-approval process. During this process, the lender or bank, gathers information it requires to offer the borrower a loan. The lender will check the borrower’s credit report either for free or for a small charge. The pre-approval process usually requires a meeting with the bank or lender. The bank or lender will let the borrower know what documents they need to bring to the appointment.
Below are some items the borrower should bring to the pre-approval appointment.
At the end of the pre-approval process, if the lender decides that they want to give the borrower a loan, the borrower will receive a good faith estimate (GFE). This is a document that lays out the terms of the loan including interest rate, type of loan, and closing costs. Pre-approval for a loan does not mean the bank or lender guarantees the loan, it means the borrower is approved to get a loan once the property has been appraised, purchase contract signed, and title report is approved. During the pre-approval process, a borrower should compare loans from multiple lenders to make sure they are getting the best loan possible.
Once a borrower has been pre-approved and determined the best loan for them, they can continue the home buying process.
For more information on home loans or pre-qualifying for a mortgage, contact Meridian Mortgage at 317-968-9500 or contact us online.
Meridian Mortgage Solutions is a subsidiary of Endeavor Capital, LLC Licensed through the Indiana Department of Finance and Insurance. License #17519 & 17520, NMLS#222524
Endeavor Capital, LLC and its DBA's are not acting on behalf of or at the direction of HUD/FA or the Federal government.
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