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47. WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN?
The first step in securing a loan is to complete a loan
application. To do so, you'll need the following information:
- Pay stubs for the past 2-3 months
- W-2 forms for the past 2 years
- Information on long-term debts
- Recent bank statements
- Tax returns for the past 2 years
- Proof of any other income
- Address and description of the property you wish to buy
- Sales contract
During the application process, the lender will order a report on
your credit history and a professional appraisal of the property you want to
purchase. The application process typically takes between 1-6 weeks.
48. HOW DO I CHOOSE THE RIGHT LENDER FOR ME?
Choose your lender carefully. Look for financial stability and a
reputation for customer satisfaction. Be sure to choose a company that gives
helpful advice and that makes you feel comfortable. A lender that has the
authority to approve and process your loan locally is preferable, since it will
be easier for you to monitor the status of your application and ask questions.
Plus, it's beneficial when the lender knows home values and conditions in the
local area. Do research and ask family, friends, and your real estate agent for
recommendations.
To find a lender or to get a quote online, go to Credit and Financing.
49. HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT?
Pre-qualification is an informal way to see how much you may be
able to borrow. You can be "pre-qualified" over the phone with no paperwork by
telling a lender your income, your long-term debts, and how large a down
payment you can afford. Without any obligation, this helps you arrive at a
ballpark figure of the amount you may have available to spend on a house.
Pre-approval is a lender's actual commitment to lend to you. It
involves assembling the financial records mentioned in Question 47 (without the
property description and sales contract) and going through a preliminary
approval process. Pre-approval gives you a definite idea of what you can afford
and shows sellers that you are serious about buying.
50. HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY?
There are three major credit reporting companies: Equifax,
Experian, and Trans Union. Obtaining your credit report is as easy as calling
and requesting one. Once you receive the report, it's important to verify its
accuracy. Double-check the "high credit limit", "total loan," and "past due"
columns. It's a good idea to get copies from all three companies to assure
there are no mistakes since any of the three could be providing a report to
your lender. Fees, ranging from $5-$20, are usually charged to issue credit
reports but some states permit citizens to acquire a free one. For more detailed information, go to Review Your Credit Report.
51. WHAT IF I FIND A MISTAKE IN MY CREDIT HISTORY?
Simple mistakes are easily corrected by writing to the reporting
company, pointing out the error, and providing proof of the mistake. You can
also request to have your own comments added to explain problems. For example,
if you made a payment late due to illness, explain that for the record. Lenders
are usually understanding about legitimate problems.
52. WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS USE THEM?
A credit bureau score is a number, based upon your credit history
that represents the possibility that you will be unable to repay a loan.
Lenders use it to determine your ability to qualify for a mortgage loan. The
better the score, the better your chances are of getting a loan. Ask your
lender for details.
53. HOW CAN I IMPROVE MY SCORE?
There are no easy ways to improve your credit score, but you can
work to keep it acceptable by maintaining a good credit history. This means
paying your bills on time and not overextending yourself by buying more than
you can afford. |
