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Home Loan Guide

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As soon as you decide on buying a home, it’s time to get your finances in better shape. This guide will take you through all the steps you need to take to obtain the money you need to buy your dream home.

  1. Get pre-approved for a loan

    Pre-approval is the process of having lenders evaluate your personal and financial documents in order to determine the specific amount that you can spend on a home.

    Early pre-approval gives home buyers advantages such as:

    • An opportunity to find out how much one can spend for a home without being required to actually borrow money right away
    • A better idea of the interest rate that their home loan might entail
    • A means to convince sellers of the buyer’s ability to pay for their property
    • An early warning in case the pre-approved amount falls short of expectations
  2. Prepare your documents

    To apply for a loan application, prepare a “green file” which includes the following documents:

    • 2 years of W-2 forms from your employer; 2 years of tax returns for the self-employed
    • Recent pay stubs
    • Bank statements for the last 3 months
    • Retirement, mutual fund, and brokerage account statements
    • Documents related to alimony, rentals, and other income sources
    • Student, auto, and other loans
    • Credit card statements
    • IDs like a driver’s license
    • A copy of your visa or green card, if not a US citizen

    It will also help to have an idea of your current credit scores. A score of around 620 is generally considered as “good credit.”

    A “premium” score – anything in the high 600s to the 700s – can help you secure better mortgage terms and lower interest rates.

    Visit AnnualCreditReport.com to request copy of your credit scores from credit reporting agencies Experian, Equifax, and TransUnion. If you are planning several months or up to a year ahead, you can work on improving your credit score ahead of your loan application by paying off your outstanding debt.

    At this stage in the home buying process, we recommend being mindful about sudden job changes or large purchases. Lenders favor stability, so stay the course until you are able to complete your home buy.

  3. Find the best lender

    If you want to interview lenders on your own, evaluate the following:

    • Can they explain things clearly and return phone calls and messages promptly?
    • Are their interest rates, costs, and fees competitive?
    • Do the loan programs they offer suit the kind of property you want?
  4. Choose the type of loan that suits you

    Buyers have the flexibility of choosing the best loan terms to suit their needs and financial capacity. These are three typical loan types used today:

    • Fixed rate mortgage – These loans are paid with a fixed monthly amount throughout the duration of the loan, which is usually applied in 15- or 30-year periods.
    • Adjustable-rate mortgage (ARM) – ARMs have lower interest rates during the early years of the loan period. This type of loan is ideal for buyers who plan to resell or refinance their home after only a few years.
    • Intermediate ARMs – Also known as hybrid loans, intermediate ARMs feature fixed interest rates for the first 3 to 10 years of the loan. Afterwards, the interest rates adjust based on market conditions.

Talk to the Stacy Esser Group for Assistance with Your Loan Application Needs

Here at the Stacy Esser Group, our comprehensive services include connecting our buying clients to reliable partner lending institutions. We will help you through all the steps and paperwork, providing constant communication and feedback to guarantee a straightforward process leading to a successful home buy.

For more real estate services covering the Tenafly, New Jersey and Bergen County neighborhoods, contact the Stacy Esser Group at (201) 894-8004 ext. 547 or email stacy(at)stacyesser(dotted)com.