When choosing your first home, you need to consider every aspect of your life, both today and your plans for tomorrow. You will want room for a family and to entertain, maybe even work from home. The same is true of your first home loan. Just as you choose the home that is perfect for you, you must also choose the home loan that is perfect for you. It needs to be flexible enough to take into account your children, holidays and all the adventures your future holds.

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There are many different types of mortgage terms available to fit everyone's needs. The most common loan type is the fixed rate loan. Fixed rate mortgage is when your interest rate and monthly payments will remain the same for the entire life of your loan.

Fixed rate mortgages are offered in a variety of terms: 30 and 15 years being the most common. The 15 year term usually has an interest rate of about 1/2 point lower than the 30 year term. There are also a few variations of the traditional fixed rate mortgage such as a graduated payment mortgage. Graduated payment loans allow you to pay less at the beginning of the loan and then increase your payments as the loan matures.

To search many lenders and find the best current mortgage rate, you may contact a mortgage broker who can perform a search of hundreds of lenders for you.

Loan Pre-Qualification

You will hear these two terms used interchangeably; however, there are very significant differences between being pre-qualified for a mortgage and pre-approved for a mortgage. This distinction can make the difference between knowing your contract is solid at the beginning of the transaction or having it fall apart in the middle.

Being pre-qualified for a mortgage essentially means the buyer has spoken to a loan officer or has made online application for pre-qualification. Generally speaking, the buyer has provided their income, their debts, their assets and, usually, their social security number for a credit check. The lender then runs the credit check, computes the debt to income ratios based on the information provided and gives a nod to pre-qualification. This pre-qualification is subject to all information being verified and found satisfactory to the lender. This is where potential difficulty is possible. For instance, if the buyer provided information about their income that seemed right to them, but the lender calculates the income a different way (usually in the case of self-employed or commissioned individuals), the income will not hold up and the loan can possibly be rejected. Or if a buyer provides an asset amount to be used for down payment and closing costs and it is later discovered that the buyer is borrowing the money from his father. The buyer thought the money would simply be counted as his, but the lender doesn’t accept this source of funds. The loan could ultimately be rejected. Pre-qualification is a step in the right direction, but it is only a step.

How to apply for a Loan

The first step in getting the money you need to buy your next home is pre-qualifying for a mortgage loan. By pre-qualifying, you will have an approximation of how much lenders may be willing to lend you, based on the preliminary information you will provide.

Having this information can help narrow your home search to homes that you are most likely to be able to afford.

qualification for loan is needed

Verification about Income

for salaried person:

one month of most recent pay stubs
atleast two years W2's

for self-employed:

person should be two years tax returns
Year-to-Date Profit and Loss or evidence of year-to-date earnings

Down Payment & Closing Cost Verification

1) Atleast from two months most recent bank statements
2) atleast two months most recent stock statements
3) months history on other asset accounts
Copy of your purchase agreement if you have chosen a house
Money for appraisal and credit report