Pre-qualifying for a mortgage is often the first step towards owning a home. If you've never done this before, though, you might not know where to start. Here's some information that can help you to figure out how and when to apply for a loan this year:
Pay Attention to Falling Rates
One of the best ways to figure out when to apply for home loans is to keep track of the interest rates set by the Federal Reserve. These interest rates set the floor on lending for lenders, so borrowing when there is a downward trend is always a good idea. If the trend has had the rates plateau for a bit, though, you may want to move faster—this could be a sign that the rates are going to go back up.
Look at Loan Types
Another good way to figure out how to apply for a loan is to look at the types of loans that are out there. If you are a first-time homebuyer who meets certain credit and income qualifications, you could look at an FHA loan to get a lower down payment. Other borrowers might be better served by VA loans or even conventional loans. Doing some research will help you to figure out for which programs you should apply and what kind of documentation you'll need going forward.
Look at Your Timetable
One of the most important ways to figure out when you should apply for a loan is to think about your timetable. It's usually a good idea to start applying to get pre-approved for a loan around the same time you get serious about looking at houses, though there's not really a wrong time to start preparing your paperwork. Note that getting pre-approved too early can be an issue as you might have to resubmit paperwork, but applying ahead of time is usually recommended.
Talk to a Lender
When you're ready to seriously start thinking about loans, you'll definitely want to talk to a lender. While you can actually submit much of your pre-approval paperwork online, you'll eventually need to talk to a lender to discuss the products that work best for you. Try to get quotes from several different lenders to find an interest rate and loan product that works for your needs.
The best time to apply for a loan involves looking at rates, but it also requires knowing when you're looking to buy. When you're ready, start shopping for a good loan product that's going to meet your financial requirements. Getting a mortgage can sound scary, but getting through the process is easier now than it has ever been.
Meghan Belnap is a freelance writer who enjoys spending time with her family. She finds happiness in researching new topics that help expand her horizons. For more information on applying for a home loan, please visit Home Financing Center.