Preparations Before you Apply for a Home Loan

by : Vicky Edema

Applying for any kind of mortgage or home loan is not the tedious task as it used to be before. Even mortgage lenders have gone out of their way to make things easier for you. However, there are a number of points you should take care of before you apply for a home loan or during the application process. Knowing every step of the process in detail will not only help in reducing your headache but also help you get approval of a home loan faster than usual and get settlement of your new home even faster than that.

Following are preparations you should do initially before applying for a mortgage loan:

1] You should have good knowledge of your finances and your budget. You should in fact prepare a list of all your assets and liabilities, as well as your monthly income and expenses.
2] You should do some research regarding home loans and mortgages before you apply for one. There are various loan options available in the market and you should learn about the features of each one so you can determine which loan is best for you.
3] If possible, try to get as much information as possible about the mortgage lender or agency you have short listed for your loan application. Look for a referral from other customers of the lender.
4] You must try and find out names of the loan lenders listed in the broker's panel. In other words, names of the lenders the broker usually deal with and what are the loan types that a lender is providing.
5] Ask for advice on how much money you can borrow against the value of the property before you reveal your finances and personal details. Not all lenders will provide accurate information without knowing your personal details and financial situation but asking for a recommendation on the loan amount can be a good idea.
6] Meeting should be fixed as per your specification. Always prefer to meet the lenders in their office. Before scheduling meetings with anyone always ask them what papers you should bring for the initial meeting. This can save you valuable time and get you organized.

Once you have covered the initial checklist as mentioned above, you should know there are 4 typical stages before you are granted the loan.

1] Introduction of the company: this will cover information of the business you are about to deal with, their group of lenders, their fee structures etc.
2] Qualification: in this round your documents which assist and show your financial condition and budget will be checked. The amount and the type of the loan you require will be discussed along with its use, such as, is it for investment or for purchasing a home to move into as your primary living residence.
3] Offers: during the third stage loan products will be discussed with you. Emphasis will be paid on the loan you want. Different loan products will be compared to provide you the best deal. Loan calculators will come in useful to set the repayment amount, upfront and ongoing fees.
4] Application: If you are using a broker, here the finance broker contract is signed. Remember that a privacy declaration pact is also signed. This will allow them to provide information to third parties. You will also complete the application form and sign a declaration declaring that the information given is 100 percent correct.

In the application stage a mortgage provider will check your completed application, check for details and point out if any information is missing. He will also attach all the supporting documents and will complete the serviceability form and send it to the evaluator. This is to show your capacity to pay the loan back. The lender's evaluator will log that application and will allot a serial number to it. He'll also confirm the receipt of application. He will crosscheck it for every detail and every document. If everything is as it should be then a conditional approval is sent back for the borrower.

After such formalities, finally a loan is provided to the customer to go ahead and purchase their dream home. Knowing the application process and organizing yourself beforehand will go a long way towards making your dream into reality.