Finding the Right Lender Matters
Different lenders offer different types of loans so it's important to understand what your lender offers. For example, your bank might offer limited loans while another lender, such as Great Plains Loan, might offer more options.
It's Important to Know the Different Types of Loans
There are several different factors to consider when getting a loan.
- Consider how much you want to put down. Some loans will let you put down 5 percent or less. You might even find a lender that offers no money down. Keep in mind that if you put down less than 20 percent, you will more likely have to have your mortgage guaranteed by some sort of outside third-party. This could be a private mortgage insurer, the Veterans Administration, or the Federal Housing Administration.
- You should also consider your credit when looking for the best loan for your situation. Ask your lender which type of loan works best with your current credit situation.
- Remember there are special loans for first-time buyers. Many people think that presenting themselves as a first-time buyer means you have never owned property before. This is not always true. In many state programs, this term also refers to individuals who have not owned property during the past three years. The benefit of this type of loan is that it often comes with smaller down-payments and interest rates that are below-market.
You Must Have Your Documentation in Order
Paperwork is never fun, but with a bit of preparation, getting your loan doesn't have to become a nightmare. Get the following paperwork in order, and your loan process will most likely run smoothly:
- Get a copy of your monthly wages. Gather up all your pay stubs for the month for each wage earner in the household. If you are self-employed, bring photocopies and records of the previous month's income.
- Gather your tax forms. You will need to show proof of the past two years' federal tax returns. You might also have to show copies of the W-2s for these years.
- Offer banking information. Provide copies of the past three statements from all your accounts: checking, savings, CDs, IRAs, etc. You will also have to show all your credit card information and proof of other debts.
- Obtain a copy of your credit score.
- Collect information on the house you wish to purchase. Some lenders might want information on the new property.
Knowing these three steps — finding the right lender, knowing your loan options, and collecting the proper paperwork — you will be well on your way to purchasing your dream home.