Rachel Johnsen Real Estate Concierge Serving Golden, Arvada and Wheat Ridge Colorado Real Estate Search and Market Updates To Buy a Home or Sell Your Home
Buying A Home, Home Financing

Qualifying for a Home Loan – What do I need to qualify?

Before you start searching for your new home, the first step is to speak with a lender and determine your budget. This is being pre-qualified for a loan. Once you find the right home, then your lender will order an appraisal of the property and complete your financing. If this is your first home purchase, or if it’s been a while since you’ve purchased, understanding how to prepare for the qualifying process is the first step to success.

What do I need to qualify for a home loan?

When preparing for your meeting with the lender gather all the pertinent documentation and bring them with you. The lender will want to see 2 months of employment pay stubs and bank records as well the past 2 years of tax returns. After reviewing your income and savings, the lender will also order a credit report which shows all your recurring debt and payment history. This will be used to determine your ability to pay the proposed mortgage.

How does credit, down payment and income affect my ability to get a loan?

There are a variety of loan programs available. From 0% down VA loans to traditional 20% down loans, your lender will review all your options with you so you can determine the best program. Some government guaranteed loan programs, such as the VA or FHA, are more lenient with your credit score requirements as well as other qualifications, such as savings and income ratios.

Why working with a local lender matters?

Sellers and listing agents typically prefer when buyers use local lenders. They know the norms of our market. If you’re in a competitive situation, using a respected local lender may just tip the scales in your favor. A local lender’s underwriting and processing of the loan is also local. It is much easier for everyone when everything is local because they understand our market’s quirks. Large lenders have consolidated operations in a west coast team with no knowledge of the Denver market.

Qualifying for a home loan might feel overwhelming, but your lender can walk you through the process and requirements. We can refer you to some great local Denver lenders who can help you get started so you know your options and you can make the best financial decision for your new home loan. It is never too early to start working with a lender.

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