What Steps Need to be Taken to Secure a Loan?

The first step in securing a loan is to complete a loan application.
To do so, you’ll need the following information.


Pay stubs for the past 2-3 months 
W-2 forms for the past 2 years 
Information on long-term debts 
Recent bank statements 
tax returns for the past 2 years 
Proof of any other income 
Address and description of the property you wish to buy 
Sales contract

During the application process, the lender will order a report on your
credit history and a professional appraisal of the property you want to
purchase. The application process typically takes between 1-6 weeks.

How do I choose the Right Lender for me?

Choose your lender carefully. Look for financial stability and a reputation
for customer satisfaction. Be sure to choose a company that gives helpful
advice and that makes you feel comfortable. A lender that has the authority
to approve and process your loan locally is preferable, since it will
be easier for you to monitor the status of your application and ask questions.
Plus, it’s beneficial when the lender knows home values and conditions
in the local area. Do research and ask family, friends, and your real
estate agent for recommendations.

How Are Pre-Qualifying and Pre-Approval Different?

Pre-qualification is an informal way to see how much you maybe able to
borrow. You can be ‘pre-qualified’ over the phone with no paperwork by
telling a lender your income, your long-term debts, and how large a down
payment you can afford. Without any obligation, this helps you arrive
at a ballpark figure of the amount you may have available to spend on
a house.

Pre-approval is a lender’s actual commitment to lend to you. It involves
assembling the financial records mentioned above (without the property
description and sales contract) and going through a preliminary approval
process. Pre-approval gives you a definite idea of what you can afford
and shows sellers that you are serious about buying.

How can I found Out Information About My Credit History?

There are three major credit reporting companies: Equifax, Experian,
and Trans Union. Obtaining your credit report is as easy as calling and
requesting one. Once you receive the report, it’s important to verify
its accuracy. Double check the “high credit limit,”’total loan,”
and ‘past due” columns. It’s a good idea to get copies from all three
companies to assure there are no mistakes since any of the three could
be providing a report to your lender. Fees, ranging from $5-$20, are usually
charged to issue credit reports but some states permit citizens to acquire
a free one. Contact the reporting companies at the numbers listed for
more information.

Credit Reporting Companies

Company Name Phone Number 
Experian 1-888-524-3666 
Equifax 1-800-685-1111 
Trans Union 1-800-916-8800

What if I find a Mistake in my Credit History?

Simple mistakes are easily corrected by writing to the reporting company,
pointing out the error, and providing proof of the mistake. You can also
request to have your own comments added to explain problems. For example,
if you made a payment late due to illness, explain that for the record.
Lenders are usually understanding about legitimate problems.

What is a Credit Bureau Score and How do I Use Them?

A credit bureau score is a number, based upon your credit history, that
represents the possibility that you will be unable to repay a loan. Lenders
use it to determine your ability to qualify for a mortgage loan. The better
the score, the better your chances are of getting a loan. Ask your lender
for details.

How Can I Improve My Score?

There are no easy ways to improve your credit score, but you can work
to keep it acceptable by maintaining a good credit history. This means
paying your bills on time and not overextending yourself by buying more
than you can afford.

Provided courtesy of the US
Department of Housing and Urban Development
http://www.hud.gov