If you are considering the purchase of a new home in St. Louis, most likely you’ll need to get a home loan. If you’re like most people, the process can seem overwhelming, especially if you haven’t obtained a loan in a long time. As a first time home buyer, the process can seem even more mysterious. The lending process doesn’t need to be a burden, however, and by preparing ahead of time, you can streamline the home loan process and be comfortable that you’ve found the best loan possible for your needs.
Prepare
Before you meet with lenders, gather the information you’ll need to show them. Generally, you will need to have bank and investment statements, current pay stubs, W2S and tax returns. If you have been divorced or have child support obligations, bring any final declarations. The lender might ask for other items, but this list should be able to get the lender started.
Choose the Right Lender
The first step is to interview a few lenders. You might start with your personal bank or credit union. Another great source is your agent or family and friends. The right lender should have access to a wide variety of loan programs as well as government-backed loans such as VA and FHA programs. Ask questions and make sure you’re completely satisfied with the responses.
Loan Limits
Depending on the loan program you decide to use, the amount of money you can borrow will vary. Typically, you’ll be able to borrow up to 31% of your total gross monthly income. The lender will also evaluate your ability to manage your debt and look for no more than 36% of your total monthly income to be used for all recurring payments, including the new mortgage. Be prepared to disclose all your debt, even if it does not appear on your credit report. Your loan officer is your advocate and there to help you succeed.
At this point your lender will provide you with a pre-approval letter and you can be comfortable writing offers.
Once You’ve Applied
Once you’ve found the right home, the lender will need all the real estate paperwork and start the process. They will order an appraisal of the property to assess its true market value and submit for final loan approval. By preparing in advance, this portion should be simple and easy. During this time, it’s important that you not make any change to your credit. Postpone any large purchases and do not apply for new credit of any kind. Most importantly, do not change or quit your job. If you have any questions, ask your lender before you do anything.
Getting a home loan is not as difficult as it was a few years ago, but it’s important to plan early and do the right things. Once you make the decision to buy a home in the Greater St. Louis area, speak to a lender immediately and then follow their advice and you’ll find the loan process simple to manage.
