Key Points To Consider When Getting A Home Loan


Buying a home is one of the biggest accomplishments of a person’s life. But, if you are a first-time homebuyer, you may feel overwhelmed by the tedious process of home buying, especially because you may not be familiar with some crucial aspects of home purchase, like how to get a home loan, how to find competitive interest rates from different lenders, and what documentation is required, among several other things.

If you are not fully acquainted with all the details about the home buying process and about how to get a home loan, you can seek professional help from a number of online services which give you a clear idea about all the facts linked to the home buying process. With a little assistance from these online services, you can learn some important things related to the purchase of a home such as determining your budget, applying for a home loan, calculating your monthly payments, and keeping track of your home-ownership process.

When you are doing the prep work to apply for a loan for purchasing a home, you should remember that getting a home loan pre-approved by a lender can be a less time-consuming process if you have all the requisite documents in order.

Though your lender may ask you to supply some additional documents or other information for completing your home loan application, there are some important documents which you should keep ready when you decide to apply for a home loan. These documents include:

  • A recent salary stub with year-to-date pay details
  • Two years of W-2 (wage) forms/tax returns
  • Contact information for all employers for over the last two years
  • A copy of transfer orders/relocation agreement
  • Bank/stock statements for the past two months
  • VA documentation including COE (Certificate of Eligibility)
  • Year-to-date Profit and Loss Statement (if you are a self-employed borrower)

Along with the above-mentioned documents, more documents may be needed if your income is not regular or if you receive government benefits, alimony, or child support. Moreover, a lender processing you home loan application will also require you to provide details about your liabilities. You will have to provide account, balance, and payment details for all obligations like mortgage loans, auto loans, student loans, and credit card accounts.

Furthermore, in some cases additional disclosures may also be required if you have filed for bankruptcy, or sold your home in a short sale (or lost a home in a foreclosure), or if you plan to keep your present home as an investment property.

Finally, when you know all the basics about how to get a home loan, you can keep all the necessary documents ready, for providing them to the lender from whom you want to get your loan application approved. In addition to the required documentation for a home loan, you should also find out your credit score, because lenders mostly predict your future financial behavior on the basis of credit report and credit score. Overall, all lenders generally require borrowers to have ample down payment, excellent credit, and two years of employment history.