If you are looking for a home in Daly City, CA or already own a home in the area and are looking to refinance your mortgage or take out a home equity loan, getting pre-approval for the mortgage or loan is a good idea.
Pre-approval
Before you start shopping for homes, it is a good idea to know how much you can afford to pay. Having a pre-approval will give you the stamp from the bank for how much money they will lend you to buy a home, refinance or take out home equity. If you are buying a home, this lets the sellers of homes know that you are serious about purchasing their home. You are much more likely to get the house you want if you can immediately bid on the house and provide the finances to take the home off their hands.
The Process
The pre-approval process involves providing documentation that proves you can pay for a mortgage. You have to first choose or have an idea of what type of mortgage you want before you go in for a pre-approval. The most common choice is between fixed and adjustable rate mortgages. Fixed rate mortgages have a higher interest rate, but are locked in for the term of the mortgage. Adjustable rate mortgages boast a lower interest rate, but the interest rate is adjusted throughout the term of the mortgage according to the lender’s index and the interest market. The mortgage market has expanded far beyond these two common types of mortgages, so if neither of these will work for you, talk to your lender to discuss other available options.
After you have spoken to the lender, you will have to give them some paperwork that proves you can afford the mortgage or loan. This will include submitting your federal tax returns for the last two years so the lender can determine your median household income. The lender will also ask to see a steady work history, which can be established by submitting your W-2 forms for the last two years.
If you are self employed, you can submit your 1099 forms to the lender. You will also have to show the lender your previous bank statements, pay stubs and rent or mortgage checks that have been paid for the last two months. At this time, your lender will run a credit check with the credit bureau and let you know the outcome.
Refinancing
If you already have a home in Daly City, CA and a mortgage, you may want to look at a refinance loan. Essentially, you will be applying for a new mortgage for your home. You will get a new mortgage, a new rate and a new term. At this point, you will also have to decide if you want to cash out the equity you have in your home or not. This is a nice option to have, especially if you have large bills to pay or want to renovate your home. You will most likely have to resubmit similar paperwork as you did for the primary mortgage and re-qualify for a new mortgage.
Home Equity Loans
A home equity loan is the basic idea of cashing out the equity that you have built in your home without having to refinance you whole mortgage. The equity in your home equals the market value of your home minus the amount of money you owe on your mortgage. You can get the money in a large lump sum or as a revolving line of credit. With a lump sum home equity loan, you will make monthly payments to pay back the total. With a revolving line of credit, you only have to pay back the interest each month.
Regardless of the type of mortgage, refinance or home equity loan you are looking for in Daly City, CA, we can help you. Please take a moment to fill out the form below and one of our qualified lenders will contact you to discuss your options.
