CREDIT
WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN?
The first step in securing a loan is to complete a loan application. To do
so, you'll need the following information:
Pay stubs for the past 2-3 months
W-2 forms for the past 2 years
Information on long-term debts
Recent bank statements
Tax returns for the past 2 years
Proof of any other income
Address and description of the property you wish to buy
Sales contract
During the application process, the lender will order a report on your credit
history and a professional appraisal of the property you want to purchase. The application process typically takes between
1-6 weeks.
HOW DO I CHOOSE THE RIGHT LENDER FOR ME?
Choose your lender carefully. Look for financial stability and a reputation
for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender
that has the authority to approve and process your loan locally is preferable, since it will be easier for you to monitor
the status of your application and ask questions. Plus, it's beneficial when the lender knows home values and conditions in
the local area. Do research and ask family, friends, and your real estate agent for recommendations.
HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT?
Pre-qualification is an informal way to see how much you may be able to borrow.
You can be "pre-qualified" over the phone with no paperwork by telling a lender your income, your long-term debts, and how
large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you
may have available to spend on a house.
Pre-approval is a lender's actual commitment to lend to you. It involves assembling
the financial records mentioned in Question 47 (without the property description and sales contract) and going through a preliminary
approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about
buying.
HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY?
There are three major credit reporting companies: Equifax, Experian, and Trans
Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important
to verify its accuracy. Double-check the "high credit limit", "total loan," and "past due" columns. It's a good idea to get
copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your
lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire
a free one. Contact the reporting companies at the numbers listed for more information.