When looking for a home, it can be difficult to know how to get your loan approved. There are so many variables that go into getting a loan approved, and getting the most out of your home loan is no different. If you’re applying for a conventional mortgage, you need to ensure that you meet the creditworthiness requirements as set forth by your lender. It could take months or even years to get approval on a traditional mortgage, which is why getting your loan approved in principle is such a powerful tool for first-time homebuyers. Once you have your mortgage approved in principle, you’re one step closer to being able to make an offer on your dream home.
Know Your Options
Before you apply for a mortgage, it’s important to understand your options. Most lenders will give you a financing calculator to help you estimate the amount of loan you can obtain. Keep in mind that when you’re applying for a conventional mortgage, your lender will only give you a ballpark figure. You also have the option of refinancing your existing mortgage to a more affordable rate.
Make An Offer On Your Dream Home
Once you’ve determined your financing needs, it’s time to make your offer on your dream home. Although many lenders will accept your offer, they may also require additional documentation to prove your ability to pay for the home. Even if you have the funds needed to buy the property, your lender will still want to see some proof of income. This is usually the case with first-time homebuyers, who might not have any experience in property ownership.
Get A Mortgage Approval In Principle
Now that you’ve made your offer, it’s time to get your mortgage approved in principle. Most mortgage lenders will require additional documentation, but this is a good time to provide them with some proof of income. Typically, this will be a pay stub from your last job or letters from your college or current employer. If your company provides benefits, make sure you’re aware of how long you have to continue them and the restrictions that apply to your position.
Looking To Trade Up? Consider A Conventional Loan
If you’re looking to trade up and want to consider a conventional loan, make sure you are aware of the terms and conditions that apply to that loan. Typically, you can only get a conventional loan for homes listed for more than price-approved for VA loans. You can explore all of your options, but you will probably have to settle for a less attractive loan type.
Get A Refinance Loan
If you’re interested in a refinance loan, make sure you are aware of the terms and conditions that apply to that loan type. Typically, you will have to pay a higher interest rate on a refinance loan compared to a conventional loan. This is usually the case when you are refinancing your mortgage rather than refinancing your existing loan. You may also have to pay higher fees for refinancing your existing loan compared to a refinance loan. Make sure you know what you’re getting into.
Getting your loan approved in principle is just the start of the home buying journey. Your lender will need to review your application and contact you with questions. Once they do, you’ll have several options for resolving the issues they identify. Depending on the lender and your individual circumstances, the path to getting your loan approved may include additional documentation, a trade-up offer, a conventional loan, a refinance loan, or none of the above. For many first-time homebuyers, the process of getting their loan approved in principle can be daunting. If you’re interested in purchasing a home, it’s important to remember that there are many options available to you.
