One of the most important steps in the home buying process is getting Pre-Approved as early as possible. The Pre-Approval process involves you speaking with a Mortgage Lender about your financial situation, what you'd like to accomplish, and any concerns you have. Armed with that information, a Mortgage Lender can obtain an approval from a lender up to a specified loan amount and provide you with monthly payment information and closing cost information. There are many benefits to getting Pre-Approved. First, Realtors will spend more time assisting you with your home search if they are confident youll be able to obtain financing once youve located a home youre interested in purchasing. Second, Sellers will take your offer more seriously since they know you will be approved for a mortgage -- and they wont risk taking their home off the market only to find out the deal is going to fall through 30 days later. Finally, since you know youve been approved and much of the paperwork has already been processed, youre in for a much less stressful experience. Why is it important to do this as early as possible? Many loan officers report that over 50% of the credit reports they see have inaccurate information listed. This inaccurate information could be the difference between you getting a loan or not getting a loan - getting a rate of 5% or getting a rate of 7.0%. The earlier these errors are found, the sooner they can be corrected. So, what do you need for the Pre-Approval Process? Here a list of documents your Mortgage Lender will want to initially see copies of: *W2's from the last 2 years *Tax Returns from the last 2 years *Pay stubs from the last 30 days *Bank & Brokerage Statements from the last 3 months Additional documentation will be required depending on your specific situation and as the process progresses. Your Mortgage Lender will go through a loan application with you, which covers questions related to your current residence, employment status, marital status, etc. There will be a series of disclosures you'll have to sign as well - some required by the State or Federal Government informing you of your rights in the process. With the application and disclosures signed, the supporting documentation you provided, and an understanding of what you are hoping to accomplish, the Mortgage Lender is ready to submit your "loan" through what's called "Automated Underwriting". Within minutes, unless your situation requires an underwriter to personally review your file, you will have an answer to your loan application. Now that you have an approval, your Mortgage Lender will issue a Pre-Approval letter outlining the terms of your approval. Your Realtor will request a copy of this letter (typically before they begin showing you homes) and will include a copy with any offer you make on a property. Now its time for the fun part looking for homes! |
