How To Apply For A Home Loan

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How To Apply For A Home Loan

Perhaps, your heart has been set on that home with a picket fence for years now and you think you’re ready to take that chance and make that dream a reality. As soon as you find that house that is to your liking and it meets your standards and of course, your budget, then maybe it’s time to apply for a home loan.

There are several ways to go through the application. With the new normal, it’s safer to do it online. There’s no need to worry about it as applying online has been the norm even before the pandemic. You may also apply by phone, if you’re comfortable with that and of course, you may apply in person.

Of course, you will be obliged to give the creditor pertinent information about yourself. Most likely, they will ask you information about your civil status. And if you are married, they will most likely ask about your spouse’s income as well as your combined income. 

Okay, so it’s time to roll up your sleeves and check out the next step. But don’t worry, if you carefully follow the steps and provide the requirements, you will finish your home application in no time.

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Table of Contents

Step 1: Find out how much you are eligible for a loan.

This is a very important part in the process as eligibility to borrow is where it all begins. Do you have an idea how this works? It is necessary to show basic information like, as mentioned earlier, income, assets and liabilities. 

Basically, this information will gauge the price of the house that is within your budget. Also, this will help you better understand your choices for home financing and a better analysis of your funds — like how much money you have to pay out every month including fees, mortgage insurance, property tax and interest.

Step 2: Discover the ideal loan for your specific needs.

There are tons of mortgages out there and you need to find out which loan is cut out for your financial status. Each customer has a specific issue when it comes to money matters, so it’s best to be informed which one works best for your situation. 

Find out which one suits you best among the list below: 

One of the most sought-after mortgages are the so-called “conventional mortgages.”  They normally have the lowest fixed loan rates. Most of these mortgages have a fixed-rate. This means the interest rate is constant during the loan duration. This will protect you from surprised increases in interest rates. Aside from that, this kind of loan may possibly give a low-priced rate of interest. 

Also, if you’re looking to repair, improve or upgrade your home, a 203k FHA Loan would be a good option.  

These kinds of mortgages will demand fewer documentation and will definitely speed up the general procedure.

Do take note of the requirements should you pick out this type of loan. For conventional loans, customers with good credit standing have a good chance to get approved. The amount of the loan also has a limit. These limits vary depending on the regions where home prices are slightly high-priced. If you do decide to get a higher priced house, you may opt to get the jumbo loan. You will also be asked for an initial upfront partial payment, at least five percent. Please note that you might be required to pay PMI (Principal Mortgage Insurance) should your down payment be lower than 20 percent.

Step 3: Have your loan pre-approved.

To show good faith to your sellers, getting a pre-approval will let you confidently move forward. This will give you an advantage over other prospective buyers out here and will help you swiftly go through the procedure. 

There is a difference between mortgage pre-approval and pre-qualification. For the mortgage pre-approval you will be required to produce some additional documents, which include tax returns and bank statements. Your credit history will also be checked out. This will help your creditor decide the amount of loan you can get. It usually takes only three months for the pre-approval process.

Step 4: Submit your application.

As soon as you’re all prepared to apply for the home loan, you need to prep up some paperwork. The necessary documents will differ from situation to situation. Generally, you will need to provide the real estate property information, your ID, Social Security number, federal tax returns, recent bank statements, proof of income, and the like.

Step 5: Fill out the application on the “U.S. Bank Loan Portal.

The most expedient way is through the “U.S. Bank Loan Portal” if and when you decide to proceed with your loan application online. The site is secure and enables you to conveniently upload files and documents. Please expect to receive your initial LE or Loan Estimate shortly within the week.

Step 6: Wait. Patience is a virtue.

During the waiting period, the creditor will take steps to protect both parties — you and the creditor. They will appraise the property and check out if the value of the home lines up with the selling price. They will also ensure that the property is clear from any liens. An important thing to remember… it’s best not to incur any more debts during this waiting period. Also, make yourself available should there be any additional requests and other necessary documents.

Step 7: Get ready for the closing.

Hooray! You’re almost done! 

The creditor should hand you the terms of the agreement. Take a second and third look at these papers and don’t hesitate to ask if there’s anything that is not clear to you. 

This is the last procedure in your application. The creditor will draw up the closing. The application for a home loan is not as easy as pie but just follow the process to a T, and this will be probably one of your most rewarding and fulfilling experiences. After all is done, you can heave a sigh of relief and tell yourself that it is definitely all worth it.

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