Want to learn more NC pawn shop about the mortgage process, before you jump in? You’re in the right place. This tutorial explains how to apply for a home loan in step-by-step fashion.
How to Apply for a Home Loan – The 10 Steps to Success
Below, you’ll learn how to apply for a mortgage loan the right way. I’ve refined this list of steps over the years, to account for the common mistakes first-time buyers make. This list is designed to prevent problems before they arise. Here are the ten steps I recommend when you applying for a home loan.
We will discuss each of steps in more detail below. If you’d rather move forward with the process right now, you can use the link provided at the top of this page. It’s an easy way to apply for a mortgage online, through the LendingTree website.
A Closer Look at the Application Process
The mortgage application process varies from one borrower to the next. So your experience may be different from the one described below. With that being said, most home buyers will go through all of the steps below. Or at least they should.
You should know what your credit score is, before you apply for a mortgage loan. Why? Because it’s one of the key pieces of information the lender will use when reviewing your application. They will use your FICO score to determine (A) if you’re qualified for a home loan and (B) what kind of interest rate you can get.
If your score is too low, you might not get approved at all. So it’s something you want to know before you apply for the home loan.
Terminology note: FICO (pronounced fie-coh) stands for Fair Isaac Corporation. This company is named after cofounders Bill Fair and Earl Isaac. Among other things, FICO is known for its credit-scoring system. This formula considers the information in your credit reports and assigns you a three-digit number based on that data. This number is referred to as your FICO credit score.
Mortgage lenders use this number as an indicator of risk. It shows them how you have borrowed and repaid money in the past. A higher score will improve your chances of getting approved for a loan. It will also help you secure a lower interest rate. A lower score has the opposite effect.
As you apply for a mortgage, you will hear the lender talk about your credit score a lot. In fact, it’s one of the top-three factors that will determine whether or not you get approved for a loan (your debt and income round out the list). This is why you need to know where you stand. Applying for a loan without knowing your score is like playing poker with your cards facing the wrong way. The other person knows more about your hand than you do.
As you can see from the image above, your credit score is based on your financial activity. The length of your credit history . your history of making payments . any late payments or debt collections you’ve had . all of these things are used to determine your FICO score. So when you apply for a mortgage loan, your financial history will come back to help you — or haunt you.
The diagram also shows why you need to check your credit reports, in addition to your scores. They are related, but they are still two separate things.
For instance, let’s say you order your scores alone. You find out that you have a 550 FICO score. This is a low score, and it’s going to hurt your chances of getting approved for a home loan. So naturally, you would want to know why it’s so low. The only way to find out is by looking at your credit reports. This is where the negative entries will show up (late payments, bankruptcy filings, legal judgments, etc.).
