How to Get a Conventional Mortgage Loan
- 1). Check your credit score before applying. Good credit scores are essential to obtaining bank financing. A score of 620 is the minimum score to get approved but will get poor interest rates. The best rates are offered only to those with a score above 760. If you know a few months ahead of time that you are going to be seeking a bank loan, try to raise your score.
- 2). Get your documentation in order. You will need to verify your income and assets if you want a conventional mortgage loan. Be prepared to put down at least 20 percent of the value of the house or to pay Private Mortgage Insurance (PMI). PMI is required by lenders due to the risk of default. Documents you will be asked to produce include W-2 tax forms, your most recent pay stubs, an employment history and bank account statements.
- 3). Apply to several lenders. Terms can vary across lenders, and you might find that the bank where you do your day-to-day business is not the best choice. Also, check out credit unions that often offer better rates to their members.
- 4). Try online lenders. Websites like LendingTree.com can offer multiple bids from lenders to try to get your business. This can lead to price competition and help you find a good deal. They also offer online tools that can help you figure out what type and size of loan you qualify for before you even apply.
- 5). Supply additional documentation when requested. Due to the number of house defaults, lenders are scrutinizing mortgage loan requests much more carefully. If you are self-employed, be prepared to submit copies of your last two years' tax returns. Due to massive layoffs, lenders can require that you have between three and 12 months of cash reserves after you buy the home, along with proof of that in the form of bank statements. Be prepared to supply whatever documentation is requested to get the loan approved.
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