How long until you’ll be in your new home? Is prequalification worth it? What, in your history, may cause you to be denied a home loan? Buying a home is a complex process, the more information you have before embarking on your home buying journey, the better off you’ll be. Preferred Lending Solutions has your back, let’s look at these 5 FAQs about the home buying process.
- How long does the home mortgage process take?
Every home loan situation is different, so it’s hard to estimate how long your specific home mortgage process will take. Some of the factors that affect the timeline include the type and terms of the home loan you’re requesting, the types of documentation required in order to secure the loan, and the amount of time it takes to provide your lender with those documents.
- Should I get prequalified or preapproved?
A prequalification is a good way to get an estimate of how much home you can afford, and a preapproval takes it one step further by verifying the financial information you submit to get a more accurate amount.
Inquiries for pre-approved offers do not affect your credit score unless you follow through and apply for the credit. If you read the fine print on the offer, you’ll find it’s not really “pre-approved.” Anyone who receives an offer still must fill out an application before being granted credit.
- Why would a home loan be denied?
Most often, loans are declined because of poor credit, insufficient income, or an excessive debt-to-income ratio. The way you’ve handled your finances in the past can help predict how you may do so in the future, so lenders will consider your credit rating when you apply for a mortgage or other loan. A higher credit score may help you qualify for a better mortgage interest rate, and some lenders may lower their down payment requirement for a new home loan if you have a high credit score.
- What is the next step after being approved for a home loan?
Order a home inspection. After your offer is accepted, the next step in the mortgage process is typically a home inspection. A thorough home inspection gives you important details about the home beyond what you may be able to see on the surface
- What are fixed-rate mortgages (FRMs) and adjustable-rate mortgages (ARMs)?
The interest rate for a fixed-rate mortgage is set in place over the life of the loan. On the other hand, an adjustable-rate mortgage can have its interest rate rise or fall during specified adjustment periods.
Fixed-rate mortgages make sense for buyers when the current mortgage rate is low. This allows you to lock in the current rate and be protected from increases that are likely to take place over the next 30 years. If the current rate is high, an adjustable-rate mortgage may be better because rates can drop. It is good to remember that you will have the option to refinance in the future to take advantage of rate changes as well.
There is, of course, more to the home buying process; Preferred Lending Solutions is here to help. Contact us today and we’ll walk you through the process of buying a new home step by step.