Applying for a home loan in Raleigh: What you need to know
Applying for a loan is a big step in the home buying journey and is something that takes preparation and diligence. Whether you’re a first-time homebuyer or purchasing your third rental property, you need to know a few key factors when applying for a home loan in Raleigh. We will break it down for you today, giving you the scoop on exactly what you need to know for this process.
Before Applying For a Loan
In the months leading up to applying for a loan, and in some cases long before that, there are a few things that you want to keep in mind.
Hold off on opening/closing accounts:
You may want to open a new credit card to furnish your home or take advantage of a shiny offer, but increasing your debt at a time when your credit is being reviewed is not advised. It’s best to wait until the loan closes and you’re in your new home to make changes to your accounts. This goes for closing accounts as well. At the same time, it might feel like the right thing to do – to close out a credit card you paid off, for example – but closing an account can shorten your length of credit history. Any change like this will affect your credit, and when applying for a loan, you want to optimize your credit while keeping it steady.
Changing Employment:
We know the world can be unpredictable, and employment changes can come at unexpected times. However, switching jobs right before or during the loan application process can further complicate things, considering you’ll need to be able to prove steady income. While it’s not encouraged to change employment during this process, many variables and exceptions exist. Different lenders will have individual policies, and the loan review will consider varying types of occupations.
Keep Paying Bills On Time
Paying bills on time is imperative for a healthy credit score at all times, but even more so during the loan process. A missed payment can negatively impact your score for a while and, in turn, affect your ability to get a loan or give you a favorable interest rate. So keeping on top of payments before, during, and after your loan is applied for and secured is essential.
Do Your Research
It can be overwhelming with the number of lender options out there today. However, researching lender options for your specific scenario can help you feel ready when the time comes to choose. For instance, if you qualify for a first-time homebuyer or VA loan, this can bring up even more variables and options. In addition, there are income-driven eligibility grants and North Carolina-specific grants for those who qualify. So, before honing in on one lender, try to comb through all your options and find the one that suits you best.
Applying For The Loan
Congrats, you found a lender that works for you! The following steps involve a lot of formalities and paperwork, so the more organized you are, the easier this process will be for you. While you don’t have to stick with the lender who offers you a mortgage pre-approval, you’ll need the following items for everyone who will be on the loan to get started:
- Pay stubs from the last 30-60 days, not limited to freelance jobs, consulting funds, etc
- W-2 forms from your employer from the past two years
- Federal tax returns from the past two years
- Proof of funds for a down payment (this can change if you do an FHA or VA loan where no or very little down payment is required)
- A letter will need to be provided stating the money is a gift and not a loan if the down payment is coming from a beneficiary
- Statements from your checking, savings, and investment accounts from the past 60 days
- Contact info of your landlord (if you rented) from the past two years
- Real estate holding information, if applicable
This is just a standard checklist, and each lender may have additional items they need for the process – please check with the individual institution you are working with for a detailed list.
