Financing a House

Financing a home can be the most stressful part of buying a new house. If you have not already started the process you will want to get the financing process started. Prior to placing an offer on a house you will want a pre-approval letter from a bank.  This letter is a simple statement from a lending institute that says if everything goes well you would be able to afford and make the purchase on your new house. Once I have the pre-approval letter from your lender than we are in a position to make an offer on a house if you find one that you like. This letter does not commit you to any purchase of a house or for that matter even the lending institute.  Often some buyers get multiple lenders involved to get the best rate possible.

Steps to Financing a House

A quick overview of a few things to keep in mind as your looking to get a home loan.

1 Contact a Lender.  Select one or two lenders that you would like to work with. The first stage will be to have them run a quick check to see if you qualify. If so then they will execute a pre-approval letter on your behalf. Be prepared for a credit check and verification of documents.

2 Prepare Documents.  In order to qualify and to process a loan you will need to provide certain documents. Most likely you will need to provide two years tax returns, last months pay stubs, written explanations for any discrepancies within your credit and any other items the bank may demand.

3 Loan Type. Discuss with your loan officer what loan type would be the best fit for your needs.  FHA or Conventional are the two most popular. If your credit score is a bit lower than what you would like and the loan amount you are looking to borrow is less than $271k, and you don't have a lot saved for a down payment than FHA may be the best choice for you as it requires a smaller down payment and will accept a lower credit score.

4 Select a Closing Company. A closing company is the law firm that does the title work and processes all the closing documents.