How to Apply for a Mortgage Loan

What Do You Need to Apply for a Mortgage?

When applying for a mortgage, you'll need to present various documents and paperwork so lenders can verify your ability to repay it. While your potential lenders will specify what documentation they require, you should expect to provide the following.

• Credit report: Lenders will ask for permission to check your credit history. The better your credit report, the more likely you will get approved for a loan and a reasonable interest rate. Mortgage lenders look for discrepancies in your credit report that may indicate an inability to repay. You may need to provide additional documentation for extenuating circumstances.
• Proof of income: You'll likely need to provide several documents verifying your income and confirming your ability to afford mortgage payments. This documentation may include federal tax returns, W-2s, 1099s, child support orders and proof of employment.
• Proof of assets: Lenders typically also want to verify your assets, so you may need to provide savings and checking account statements, statements from investment or retirement accounts or documents from any recently sold assets. You may also need documentation for any outstanding student or auto loans.

Gathering any necessary documents before applying for a mortgage ensures you can provide paperwork quickly, which helps the lenders verify your information sooner. As they review your information, they may ask for supplemental documentation. Having your paperwork ready allows you to get back to them and continue the process with minimal delay.

How to Apply for a Mortgage

Applying for a mortgage is mostly preparation to ensure you can get approval. Here are several steps you should follow.

Strengthen Credit

Your credit score is a significant consideration lenders use to approve you for a mortgage. A high credit score indicates you can responsibly manage debt and will qualify you for better loan rates and terms. Many lenders will still approve you for a loan if you have lower credit, though you may have a higher interest rate.

Before applying for a mortgage, improve your credit as much as possible. Get updated on all your bills and make payments on time. The longer your history shows timely payments, the better your score will be. Increasing your credit score doesn't happen overnight, so start making changes now.

Set a Budget

Acknowledge what you can reasonably afford for a monthly mortgage payment and set a budget around that number. Purchasing an affordable house is much more practical than buying something with all the bells and whistles. You'll avoid biting off more than you can chew while still having some flexibility to make upgrades and enjoy your lifestyle.

Build Savings

Most lenders will require a down payment when financing a house. As you prepare to apply for a mortgage, build your savings up as much as possible to have a substantial down payment. Don't drain your entire account — keep a buffer of a few months worth of mortgage payments to fall back on in unexpected circumstances. You'll also need funds for the closing costs and fees.

Compare Loans and Rates

With this preparation in place, you can begin comparing loans and rates to find a mortgage. For example, depending on your situation, you may weigh conventional loans and government loans like FHA or USDA. Consider factors like fixed versus adjustable rates, associated fees, term lengths and how much you could finance. Rates and terms can vary significantly between lenders, so comparing allows you to find the best option for your financial situation.

Find a Lender

As you compare loans, spend time researching and reviewing different lenders. Your choice can make a significant difference in your homebuying process. While you should consider interest rates and loan options, you should also base your decision on their communication and customer service. You'll rely heavily on your lender throughout the process.

Apply for Preapproval

Once you find a lender you want to use, you should get preapproved for a mortgage with them. The lender will review your documents and finances to determine your eligibility and how much they'll lend you. Preapproval doesn't guarantee anything, though it gives you a good indication of how much money you're working with. Plus, many sellers won't take potential buyers seriously without preapproval.

Submit an Offer on a House

At this point, you can start house hunting in earnest. Carefully consider price and features when viewing homes. Know what you're looking for and stay within your budget. Once you find a house that meets your needs, submit an offer to the real estate agent or seller. If they accept your offer, you must submit your official mortgage loan application with your chosen lender.

Waiting for the loan to process and clear takes some time, so be ready to answer any questions from the lender or provide additional documentation as needed. The underwriting process also typically includes a property appraisal and title search before approval.

Close on the House

Once the loan clears, you'll close on your house. This process involves reviewing and signing paperwork and paying the closing fees. Then, you'll be a homeowner.

Apply for a Mortgage at Global Credit Union Bank

Are you ready to make an offer and purchase your next home? Consider applying for a mortgage with us at Global Credit Union Bank. We offer competitive rates and work closely with you to make the mortgage process smooth. We'll help you get preapproved or prequalified so you can jump-start your homebuying process. If you're ready to apply, you need your Social Security number, two years of employment and residential history and estimates of your income, assets and liabilities to get started.

Once you submit your application, we'll contact you to discuss our financing programs and rates. If you have any questions or want more information, reach out to us or schedule an appointment with one of our bankers.