First-time homebuyers are often intimidated by the process of searching for a home loan. Between worrying about credit scores, fixed and variable rates, and all the other stress that comes along with purchasing a house for the first time, it can feel very overwhelming. However, here’s a quick guide on the steps you need to take to find a home loan and help you find a great lender, too.
- Take the time to do some research
When it’s time to make any serious decision, the first step is always to do some in-depth research. For instance, if you’re looking for a home loan in Singapore, you’re not going to research mortgage rates in America. Whether you spend some time searching on the web and taking notes, making phone calls, asking family or friends, heading to a local bank, even listening to a podcast, it’s crucial to be prepared and have the necessary knowledge to approach the problem logically.
- Shape up your credit score
Ahh, the credit score—one of the most stressful parts of life. However, if you’re going to be looking for a home loan, your credit score is a huge determining factor for negotiating a fair rate. In fact, the higher your credit score is, the more leverage you’ll have. Try to spend time getting negative items taken care of and making sound financial decisions to avoid your score lowering.
- Compare rates from top lenders
It’s crucial to shop around and compare rates when attempting to find the best one. Approach finding a home loan the same way you would any other significant investment. Shop around for the best price and do your homework on different lenders, their rates and required down payment, etc. This way, you can be sure you’re getting the best possible rate for your home.
- Decide which lender you want to use
Another critical factor is deciding what type of home lender you want to use. When you have basic information on the different types of lenders and what perks they offer, it’s easier to decide what’s best for you. Some of the most common home lenders include:
- Mutual savings banks
- Correspondent lenders
- Mortgage bankers
- Savings and loans
- Credit unions
- Gather pertinent information and documents
Another essential part of applying for a home loan is having the right information, particularly if you’re trying to get pre-approved. Some of the documents you’ll need include:
- Two years of tax returns: W-2’s and 1099s
- Social security numbers
- Complete banking information
- Any information concerning outstanding debts
- Employment and salary information
- Information regarding your ability to make a down payment
With this information, it’s much easier to be prepared for any application process. Bringing all the correct information and documents when meeting with lenders shows that you’re serious about looking for a home loan, which gives you a better chance of getting approved.
Find a Home Loan
While it might seem a little daunting at first to find a fair rate for a home loan, first-time homebuyers shouldn’t be deterred from looking. That’s why it’s so crucial to do the proper research on different lenders and compare rates. When you’re prepared and have the right information, it’s much easier to make a sound decision that will be financially smart and allow you to move into the home you’ve always wanted.