- 1). Check your credit for your FICO score, any negative reporting or errors. "You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies -- Equifax, Experian and TransUnion" says Annual Credit Report. You can obtain the report through the Annual Credit Report website, by phone or by mail.
- 2). Gather your cash and liquid reserves. You must provide proof of funds to close, including a down payment of at least 3.5 percent for a mortgage insured by the Federal Housing Administration (FHA) and 5 to 20 percent for conventional financing, according to the Homebuying Institute. You must also show proof of closing cost funds, which are generally 2 to 7 percent of the sales price and pay for various escrow-, title- and loan-related fees, according to Closing.com.
- 3). Gather income information for all individuals who plan to be on the loan. You'll need your most recent two months' worth of pay stubs, commission checks and bonuses, as well as the past two years' tax returns and W-2s.
- 4). Obtain the Fannie Mae Uniform Residential Loan Application (Form 1003) from a real estate agent, loan officer or Fannie Mae's website. Complete and sign or initial all pages of the application, honestly and thoroughly. Lenders will base their approval upon this application and the items in Steps 1 through 3.
- 5). Contact two to three mortgage lenders to find the best mortgage to suit your needs, recommends Smart Money. Give them your "financial biography," the term used by Smart Money to describe the items listed in Steps 1 through 4. The lenders may need to pull your credit report again.
- 6). Review and sign the lender's disclosures and forms required to submit the application. Provide any supplementary or updated documentation they request. The lender will submit the loan package to its underwriting division for pre-approval and will provide you with an approximate turnaround time for a response.
- 7). Ask the lenders to supply you with copies of the pre-approval letters once they receive them. Compare terms of approval from each lender to help you determine which service you'd like to use. Also, have the lenders send copies to your real estate agent for his file.
previous post