Know how and when to apply for a home loan in 2021
Pre-qualifying for a mortgage loan is often the first step towards home ownership. If you’ve never done this before, you may not know where to start. Here is some information that can help you determine how and when to apply for a loan this year:
Watch out for falling rates
One of the best ways to know when to apply for a home loan is to follow the interest rates set by the Federal Reserve. These interest rates set the lending floor for lenders, so borrowing when there is a downtrend is always a good idea. If the trend has capped rates a bit, you might want to go faster, it could be a sign that rates are going to come back up.
Another good way to know how to apply for a loan is to look at the types of loans that are out there. If you are a first-time home buyer and meet certain credit and income requirements, you may consider an FHA loan to get a lower down payment. Other borrowers might be better served by VA loans or even conventional loans. Doing research will help you determine which programs you should apply for and what kind of documentation you will need in the future.
Look at your schedule
One of the most important ways to determine when to apply for a loan is to think about your schedule. It’s usually a good idea to start applying for a loan pre-approval around the same time you’re seriously considering viewing homes, although there’s really no bad time to start preparing your documents. Note that getting pre-approved too early can be a hassle as you may need to resubmit documents, but it’s generally a good idea to apply in advance.
Talk to a lender
When you’re ready to start thinking about loans in earnest, you’ll definitely want to talk to a lender. While you can actually submit much of your pre-approval paperwork online, eventually you’ll need to speak with a lender to discuss which products are best for you. Try getting quotes from several different lenders to find an interest rate and loan product that suits your needs.
The best time to apply for a loan is to look 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 will meet your financial needs. Getting a mortgage may seem daunting, but going through the process is now easier than it has ever been.