Going through the home loan application process can be overwhelming and strenuous. Luckily, it doesn’t have to be. If you understand all the steps involved from A to Z and you follow along with this helpful guide, the process can go much smoother.
Throughout this guide, you’ll learn how to apply for a home loan, how to avoid errors and bottlenecks, and what you can do to make the process run as smoothly and quickly as possible.
The first thing you’ll want to do when applying for a home loan is to gather all your paperwork and identification. Having everything accessible and accounted for is important because you’ll need a lot of information when you apply for the loan.
Here are some examples of what you’ll need:
Paperwork that verifies your identity is crucial, whether it’s a photo identification card, drivers license, or passport. You’ll need to have this to verify your citizenship as well to qualify for a number of home loan options.
You’ll have to provide verification of your income whether you work for someone or are self-employed. If you receive income from another source you’ll need to prove that as well. You’re expected to provide accurate and up-to-date proof of this income. That can include payslips, bank statements, rental income statements, or profit and loss statements.
Besides the amount of money you earn you’ll be expected to provide information about other expenses or assets you currently have. Those assets and obligations impact your debt-to-income ratio.
If you currently have a home loan on another property, you might want to get a home loan health check to determine if now would be the right time to consolidate the debt into one larger loan.
In addition to expenses, credit card debt, store credit, or any personal debts you have can also impact your eligibility for a loan. You’ll need to have clear and accurate proof of this on your home loan application.
When you apply for a home loan, it’s important that you understand the requirements ahead of time. In addition to paperwork, you should expect to educate yourself about the typical down payment requirements and credit score requirements to receive a pre-approval for a mortgage.
While there are no definitive requirements, it’s generally considered that a credit score of 500+ is average and would qualify you for a home loan. If you’re below that, you might have a harder time qualifying. You may have to save for a higher deposit or expect to pay more interest over the course of the loan.
Before you go and contact real estate agents and look at homes, you’ll want to get a home loan pre-approval.
This step provides you with conditional approval and gives you information on how much house you can afford. That way, you can go and shop around before securing your full approval.
You can apply for a pre-approval as soon as you’re ready to start looking for a house. This is when all the paperwork you’ve acquired will come in handy.
Your pre-approval will usually last for three months. If anything changes during that time, it may impact how much you’re able to receive for your loan.
Keep in mind that the pre-approval is only a snapshot and is not a commitment to lend you anything. Only at full approval will you receive an actual offer for a loan for your house.
If you completed the home loan application process and have your pre-approval, you can start looking for houses that you want to put an offer on.
Choosing a real estate agent is an important step. Be sure to ask for recommendations from other people who have purchased recently. Choose wisely, as they can offer you key insight on how to better secure the home you want.
Find the home that meets your needs, passes the right inspections, and fits within your budget. Once you’ve done that, you’re ready to put in an offer.
A full approval is when you’re officially qualified to receive the loan for your property. To reach full approval, the lender needs to come out and conduct a valuation of the property to determine what it’s worth. This valuation will determine whether or not you receive funding.
The lender simply wants to make sure that the property is worth what the seller is charging to ensure that giving you the money is worth it.
The full approval is also where all the income and debt information you included in your pre-approval becomes set in stone. If anything has changed since you received a pre-approval, we’ll also find that out at this point.
Once your home loan application is approved, we’ll send you a Letter of Offer and all the documents you’ll need to sign and agree to. Once you’ve done that, we’ll work to finalise the transaction and ultimately transfer the property to you.
Within a few days after receiving the Letter of Offer, you should have the keys in your hands for your new home.
Managing your home loan is an important part of the process. If you’re a first time home buyer, it can be intimidating to make a house payment for the first time.
The type of loan you have will determine how you make payments. Be sure to make your payments on time and keep track of them. We’ll help you along the way and walk you through everything.
Fox Finance Group is here to help you understand how to apply for a home loan and handle every step of the home loan application process.
We don’t stop there, either. We’re available anytime to answer any questions you may have during the course of your loan.
If you’re thinking of finally buying the house of your dreams, apply for a home loan today with Fox Finance Group!
Nathan joined Fox Finance Group in 2018 to help drive the strategic growth of the business and also help build on the solid foundations that have held strong in the business since 2006.