June 5th, 2015 7:43 AM by Jackie A. Graves
One of the
best things you can do to help ensure that you have the best possible shot at
getting the home you want to buy is to get pre-approved for a mortgage.
Pre-approval is basically a promise from the lender that you’re qualified to
borrow up to a certain amount of money at a specific interest rate, subject to
a property appraisal and other requirements.
there’s one step you should take before trying to get pre-approved for a home
loan: check your credit reports and credit scores. By taking care of this early
on, you’ll have an idea of what kinds of loans you may qualify for, and you’ll
have time to clear up any mistakes or problems you find on your reports before
you start home shopping.
get your free
annual credit reports once a year and your
free credit score, along with apersonalized action plan for your credit, at
pre-approval process, the lender looks closely at your credit and verifies your
income (as opposed to pre-qualification, for which your information is not
verified). The lender then gives you a pre-approval letter, which says that
your loan will be approved once you make a purchase offer on a home, and once
you submit the following documents – the purchase contract, the preliminary
title information, the appraisal, and your income and asset documentation. Keep
in mind, though, that pre-approval is not an absolute guarantee that your loan
will be approved.
means that the lender is confident that you can make the necessary down payment
and that your income is sufficient to cover the mortgage payments. At this
stage, only one concern remains. The lender needs to make certain that the
property’s value offers sufficient collateral in relation to the loan amount.
In other words, the home must be appraised for an amount more than, or equal
to, the purchase price.
you’re ready to make a purchase offer, both your real estate agent and the
seller will want to see a pre-approval letter. This proves that you’re likely
to be able to make the purchase and, therefore, you can be taken seriously. In a
competitive housing market, sellers prefer a pre-approved buyer to those who,
for all anyone knows, might be unable to close the deal.
roll up your sleeves and look into the details of getting pre-approved, you
should first understand all three basic stages of the mortgage application
process: pre-qualification, pre-approval, and mortgage commitment.
pre-qualified is an informal process in which you are interviewed by a mortgage
professional about your income and expenses. This gives you a general idea of
the price range you can afford. It really doesn’t bring you any closer to
securing a mortgage.
are pre-approved for a mortgage, it means that a lender has looked closely at
your credit report, your employment history and your income and has then
determined which loan programs you qualify for, the maximum amount that you can
borrow, and the interest rates you will be offered. Be aware, however, that
your loan representative is not the one who will ultimately approve your loan.
That is the underwriter’s role, and these days underwriting is automated. In
order for your loan representative to submit your application for pre-approval,
you must provide your last two years’ tax returns and W-2s, your most recent
pay stubs, bank account statements, and a signed authorization to order your
credit report. The automated underwriting system will deliver a pre-approval
letter within minutes, and will list any conditions that need to be met for
will issue a loan commitment after it has approved both you and the property
you intend to purchase. Having examined all of the necessary documentation to
verify your ability and willingness to repay the loan, your loan representative
will submit your complete application to the underwriter. The underwriter will
return one of four decisions: approval, approved with conditions, suspended
(which means they need more documentation from you before they can make a
decision), or denied.
process of getting pre-approved is actually quite simple. All you have to do is
provide your lender the documentation that they require. Be prepared to supply
your loan representative with pay stubs, bank account statements, tax returns
and W-2 forms from the previous 2 years, and documents to show other sources of
income (which could include a second job, overtime, commissions and bonuses,
interest and dividend income, Social Security payments, VA and retirement
benefits, alimony, and child support). Beyond that, the ball is in the
From the Home
Loan Experts at Credit.com – To view the original article click here