Deciding on whether to go buy a house or not is the first step in a successful home buying process. Everything that follows depends on whether you can prepare your documents on time, make reasonable offers and other things your realtor can help you with. Now you’re on the third step which is the pre-approval process.
If you’re wondering about how this aspect should go, here’s a glance of a pre-approval timeline:
Have a conversation with a loan officer
The mortgage pre-approval process includes you sitting down with the loan officer. During this step, the lender should know enough about you and how you manage your credits, income, and debts. Tell the officer about yourself, the basic things about you that are relevant to this affair. It’s basically the getting-to-know-you part. No sweat.
The crucial part of this conversation only begins when finding out if you got all supporting documents ready. Since you’re here, researching about this home buying step, then most likely, you’ll get this part right.
Present relevant documents
After telling the loan officer about important financial information about you, you then have to present proper documentation. These are the papers that help substantiate everything you say during the conversation.
You have to show proof of income. Ready your W-2 statements from the last two years with your recent pay stubs that show your income and year-to-date income. You should also have proof of other sources of income like alimony or bonuses. Bring in recent tax returns for the last two years, too. Ready these basic documents ahead of time to save weeks for your pre-approval process.
You should also include in your mortgage pre-approval checklist preparing a proof of assets. Show records of your investment account and bank account statements. They should be enough to prove you have enough funds. Your lender must confirm that you can afford to pay off at least the down payment that amounts to 5 – 20% of the total home cost (there are zero – 3.5% down programs too).
Having a good credit score also helps. If you have good ones, you can avail lower monthly mortgage rates. Your credit score does impact your ability to get approved. Work with your loan officer to see where you stand and what you might need to do in order to improve it if it is low.
Employment verification is also a need during the pre-approval process. The loan officer will likely call your employer and see if you’re still in the company. They need to see if you’ve got a stable job. If you just recently transferred to another job, the loan officer might reach out to your previous employer.
Other types of documentation you need include your driver’s license and your Social Security number (SSN). The lender also needs a copy of your signature to allow them to pull a credit report.
If you have all of them prepared (about two months’ worth of it), you’re going be in good shape. It will abbreviate your timeline down to a few minutes. If you don’t have all the important documents ready ahead of time, then your pre-approval timeline could stretch for days and even weeks.
What happens after going through the pre-approval process?
You wait. Yes, you should for that call that confirms you’ve got mortgage pre-qualification and pre-approved before going house hunting. The best thing you could do to get through this process as swiftly as possible is you print out necessary documents and gather important papers before meeting with your lender.
What happens if you don’t get pre-approved?
You can still try other lenders. As good credit scores are important for pre-approval, there are people who can’t make the cut like first time home buyers.
If you’re a first time home buyer and have lower credit scores, you can avail loans tailored to cater to home buyers like you. There’s the Federal Housing Administration (FHA) Home Loans and USDA Home Loans. You can also check out VA Mortgages for those with military experiences. Know more about these home loan options and see if they fit your situation.
What happens after getting pre-approved?
Once you get pre-approved, you can then start searching homes for sale online. It’s the most exciting and confusing part of the whole home buying process. You’ll encounter lots of great options, and that’s why you need a reliable realtor. Getting pre-approved could only take a couple of weeks. Take the process lightly. Focus on getting documents ready first, trying again when you don’t get pre-approved, and just keep finding ways every time.
What’s the role of a real estate agent during the pre-approval process?
Your realtor® is essentially there to guide you throughout the whole home buying process. The moment a buyer hires an agent, the agent will then give the buyer a heads up about the documents to prepare, and how to prepare them efficiently. While the buyer still needs to do some research, having an agent on the side helps to ease the tension. It pays to know you’re on the right track when you’re not sure what to do next and if you can do it right.
Save yourself some time and get a good local real estate agent. Have a smooth pre-approval timeline.
Do I Need to Be Pre-Approved For A Mortgage to Make an Offer on a Home? – by Karen Highland
Documents Needed For Mortgage Preapproval For Each Type of Loan – by Bill Gassett
Top 5 Reasons A Mortgage Is Denied After Pre-Approval – by Kyle Hiscock
4 Mortgage Mistakes to Avoid – by Debbie Drummond