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How to Get a Home Loan: 4 Steps to Success

A happy couple receives the keys to their new home.

Summary: This guide outlines crucial steps to obtaining a home loan effectively:

  • Get Preapproved: Understand your budget limits and boost your loan approval chances.
  • Shop Around: Compare rates and terms among various lenders to save on costs. Prioritize local lenders with proven stability, responsiveness, a willingness to underwrite the file prior to contract, and a track record of success.
  • Maintain Financial Stability: Avoid significant financial changes during the home-buying process.
  • Find a Skilled Real Estate Agent: Use their expertise to navigate the home buying process.

As much as things change in the world of real estate, home loans are a constant. There’s no way around it — most people need a mortgage to buy the home of their dreams.

Even looking at all homeowners, including those who have owned their homes for decades, the percentage of owners without a mortgage is still a minority. Business Insider tells us that, in 2022, just under 40% of all homeowners were mortgage-free.

So, how can you get a house loan? And, more importantly, how can you find not just a mortgage, but the best mortgage for your needs?

This advice can help! Keep reading for tips on finding the right mortgage.

1. Understand the Importance — and Value — of Mortgage Preapproval

Mortgage preapproval makes it easier to find the upper limit of your house-buying budget. This process helps you understand what your limits are in terms of applying for a mortgage, boosting your chances of receiving approval on the loan.

A man completes a mortgage application on his laptop computer.

How to Get Preapproved for a Home Loan

Mortgage preapproval is an involved process that includes a hard credit check and a formal review of the information you share with your lender. The result is a conditional approval of a home loan based on your financial position staying the same.

Preapproval includes a letter drafted by the lender that you can share with a home seller. That document helps to show that you’re serious about buying a home.

2. Don’t Be Afraid to Shop Around for Better Loan Terms & Rates

There are a lot of mortgage lenders out there, and they compete with each other (at least to a degree) for your business. That means one lender may offer a loan with fewer fees or lower rates than another.

Our advice is to explore your options. Speak with several lenders about their rates and terms.

At the same time, not all lenders are equal. Nor will they all be seen as equal by sellers and their agents. You should focus on lenders with these qualities:

  • A long track record of success.
  • A strong, and strongly positive, reputation in Reston and the surrounding area.
  • The specifics of their underwriting process, especially whether the lender is willing and able to underwrite the file prior to contract.

Focusing on lenders that meet these qualifications makes it easy to narrow down the many potential options available. That helps streamline your search for a home loan, which is a big benefit.

Even more importantly, working with reputable, proven, and responsive lenders will give you an advantage in a multi-offer situation. Sellers want the reassurance that closing will be an efficient process and, above all else, they receive the money owed to them promptly.

It’s also important to understand the type of lender you choose to work with. There are:

  • Banks and credit unions, which lend directly to borrowers.
  • Brokers, which connect home buyers with third-party loans.
  • Correspondents, which have permission to underwrite for third-party lenders for improved efficiency.

Direct lenders can offer some additional flexibility in qualifying for a loan as compared to other options. Brokers have connections that can make it easier to access a wider variety of loans. Correspondents can provide that same variety and offer more support during the process.

Taking all of this advice into account, if what the lenders offer is favorable, consider going through their preapproval processes.

The time you invest in shopping around can mean paying less in terms of rates and fees. Over the course of a substantial, long-term loan like a mortgage, those savings can add up across many mortgage payments.

3. Don’t Make Financial Waves While Looking for a Home

Financial stability is a major positive if you’re wondering how to get approved for a home loan. To put it simply, lenders want to see that you have the ability to pay back your loan. Demonstrating a steady approach to your finances and employment helps them see that you’re a good candidate.

As you move toward buying a home, take this advice:

  • Don’t make big purchases.
  • Don’t close any credit cards.
  • Don’t make any major payments toward debt without first consulting your lender. Continue to make normal payments instead.
  • Don’t go through any process that requires a hard credit check.
  • Don’t change jobs.
  • Do listen to specific recommendations from your lender, such as paying off a specific debt.

Your recent financial situation can have a serious impact on loan preapproval and final approval, so don’t rock the boat.

4. Find an Exceptional Real Estate Agent

Your real estate agent won’t work directly with the lender in approving your home loan. However, they can help you better understand the lending process and potential loan options thanks to their specialized knowledge and experience.

A great agent will do more than only help you find a home. They’ll help you find the right home, balancing your budget with your wants and needs.

Nikki Lagouros is the No. 1 buyer’s agent in Northern Virginia. She’s here to help you find the right home for you and your family, providing guidance and support whenever needed.

Learn what makes Nikki a leader in Northern Virginia real estate. Contact Nikki today!

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