How to Apply For a Mortgage
If you’re thinking of buying a home, the first step you’ll need to take is applying for a home loan. Since applying for a mortgage Las Vegas can be tedious, it’s a good idea to contact a loan officer to help out. A skilled loan officer can reduce the hassle and time associated with a mortgage application, which in turn means that you can potentially close on a home sooner. If you’re wondering what a mortgage application entails, here’s what you need to know.
Have the Right Documentation
Most mortgage applications require the same necessary financial information from applicants. Knowing what information lenders will ask for ahead of time helps you prepare your documentation beforehand for a smoother and faster closing. Generally, lenders ask for the following information:
- Your name
- Dependent information
- Address history
- Assets
- Employment and income
Your name should include your full legal name. If you have dependents, ask a loan officer Las Vegas to clarify whether or not others are considered dependents for your loan category. It would be best if you were prepared to provide at least two years’ worth of your address history. A lender will also want to see your total assets, including your 401(k) and retirement funds. You’ll likely need to provide W-2 information for the past two years and verify your current employment. The lender may also request documentation to show any credit issues or additional non-traditional income. Divorce decrees, child support, bankruptcy information, past-due taxes, business and personal taxes, and consigned loans are a few supplemental documents that a lender may request.
Basic Loan Requirements
Once you have your documentation in order, it’s time to learn more about the guidelines and basic requirements that lenders request. These requirements are based on underwriting principles, which are credit reputation, capacity, and collateral. These requirements essentially translate to your credit score, assets, and debt-to-income ratio.
Your debt-to-income ratio is determined by dividing your debt by pretaxed income. The DTI determines the likelihood of you repaying your loan. An acceptable DTI ratio to take out a mortgage is usually 43 percent or less. Your credit score should be about 740 or more to get the lowest possible interest rate. However, you may qualify for certain types of mortgages, such as an FHA loan Las Vegas, with a lower credit score.
You can still qualify for a loan with a credit score as low as 500 with a minimum down payment in some cases. Maintaining a low credit balance and paying bills on time can improve your credit score. When evaluating your assets, lenders will check to see how much you can afford for an initial payment, including closing costs and down payment. Lenders may want to know how much extra cash you have available for successive mortgage payments, and they’ll want to see that there is a legitimate paper trail for sizeable cash deposits for security purposes.
Choose a Mortgage – Apply For Mortgage Loan
Once you’ve had a loan officer Las Vegas look at your mortgage application to ensure it meets basic requirements, you can move on to selecting the type of loan that you want to get. Some of the most common types are 30-year and 15-year fixed loans. These loans are ideal for first-time homebuyers, as they offer a predictable schedule of what you’ll need to pay each month. If you have a good credit score, consider getting a conventional loan, which you are generally eligible for with a credit score of 620 or more. Depending on the lender and loan structure, you may be able to make a down payment of less than five percent if you’re considered to be a low-risk applicant. If you don’t have a superb credit score, on the other hand, you may qualify for an FHA loan Las Vegas. This government-backed loan is suitable for applicants with lower credit scores of 580 and sometimes even less. You’ll likely have to make a 10 percent down payment with this loan arrangement and pay a monthly premium mortgage insurance to protect the lender if you default on the loan. VA loans are available to veterans who want to buy homes with a low down payment and no credit minimum. USDA loans are offered for individuals buying homes in rural areas, and they usually don’t require a down payment.
Choose a Lender
Shopping around for the right lender is just as important as finding a mortgage that fits your needs. Experts suggest contacting at least three lenders before you settle on one. Some of the most common types of lenders are mortgage bankers, institutional banks, and mortgage brokers. Mortgage bankers offer several programs and handle the process in-house. They are ideal for working with homeowners who may have unique situations. Mortgage brokers usually turn to banks for application approvals. They work with a variety of lenders and may offer more loan options than a bank. Institutional banks may provide you with a loan offer with lower rates than you might get with another type of lender, provided you meet specific requirements.
If you’re applying for a home loan, be sure to contact us for assistance. We can help you navigate through securing a loan and help you move towards buying your dream home even faster. Contact us for more information about loan applications today. (Read more on the benefits of retiring in Las Vegas.)
