The Solution Requires Preparation
When you are not looking to finance a home purchase it seems like everywhere there is someone trying to sell you a home loan. But when it is crunch time and you need to have financing in place to actually purchase that dream home then you start to appreciate all of the obstacles blocking the way.
Buying your home is one of the most complicated transitions you can go through and there are so many ways that it could go wrong; many of them center on getting the loan to make it happen.
You need to make some preparations and take the initiative in advance of choosing your dream home. Not doing so will very likely slam the brakes on the process just as you get to the point of commitment. Unless you have cash in the bank or a rich relative to gift it to you it takes time to get set up financially for a home purchase.
Prequalify For A Foot In The Door
You need to start preparing early on in the process, before you start seriously shopping for homes and probably even before you seek a realtor to represent you in negotiations. The term for this is to pre-qualify for a loan. This pre-approval is the process of lining up your finances, finding a banker or broker you can work with and complete an application.
Finding the right loan company, broker, bank or credit union offer is the first step in the process. You are likely to be shopping around for about two weeks to find the deal that suits you and for which you can estimate that you will qualify. To qualify you must have a high enough credit score and income ratio that allows for your present spending and the new loan on top of that. There are many calculators and worksheets online that will allow you to figure out if you have a chance of qualifying.
When you have someone to work with on your home loan ask the lending company to issue a prequalification letter. This states that you are generally fit to get a home loan. It takes generally less than a week to have a so-called prequal issued once they have determined that they can lend to you.
Home Loan Preapproval
The next stage to proceed through is that of obtaining actual pre-approval in detail, based upon your exact and documented financial records and credit history. In the most straightforward cases you will receive approval within two weeks. However, if you have finances or obligations that need to be considered it can take significantly longer. If you have regular paid income from and employer and few debt obligations it is easy.
If your circumstances are more complex, say, you are self-employed, divorced, existing financing or past bankruptcies then, even if you can confidently make the payments, the lender is going to look very carefully at your finances before issuing a final approval. On the high end it might take several months before you get a final yes to your application.
Once you are in possession of that all-important preapproval letter you are set to choose a home and make a move. This is the point at which professionals in real estate and sellers will be willing to work with you to make a sale. The next part of the process is to get approval on the property you intend to buy.
Qualify Your Home
So, now you have approval but the lender now needs to ensure that the asset secured by your mortgage or trust deed will be a sound investment. At this time you will send in the inspectors and appraiser to determine the quality of the property. This last part should take less than a week.
In total there a process that take about six weeks at a minimum. You do need to be prepared to patiently wait out the various applications and approvals but once you do you will be in a powerful position to select the home that fits your budget and your needs and which becomes an important part of your life for years