Mortgage Pre-Approval Process
What is the mortgage pre-approval process and why is it important to your path to your dream home? The decision has been made and you are going to buy a home! But now what? What is the next step? Those are usually questions that come to mind when someone has decided to make that next step to purchase a home.
The first step after talking to your real estate agent is to arrange your financing. Getting a mortgage pre-approval and securing financing saves you lots of time and aggravation by letting you focus on homes that are actually in your price range, and getting pre-approved will also make the process go much smoother. We have heard many stories of deals falling through, and buyers missing out on their dream home because they skipped this step.
The mortgage pre-approval process is a key step in the home buying process so we interviewed one of our favorite lenders, Justin Kelley from VanDyk Mortgage about the loan process so we could share all the details with you. So read on, or you can contact Justin directly at 727-239-5152 about the process. Or use the contact form to send Justin an Email.
To get pre-approved for your dream home.
Call Justin at 727-216-9223
or click the button below.
Step 1 – How do I Start?
The questions of “what in the next step?” or “what should I do now?” are great questions and are usually the most common. The very first step after talking to a realtor is to speak with a reputable loan officer/originator. If you don’t know a reputable loan officer/originator call The Rich And Cindy Team at 727-513-8075 or use our contact form, and we’ll be happy to refer you to some great lenders. How you contact the originator or how you find them is not as important but the key to a successful transaction is to have a loan originator that is experienced and knowledgeable in all the products and guidelines that are continuously changing in today’s world.
Step 2 – Information Needed for Mortgage Pre-approval
You now have a referral for an experienced loan originator but now what? Once you get a good referral for someone to speak with, it’s a good idea to call them right away. The quicker you work through the pre-approval process the better. There may or may not be things you need to do before purchasing a home to better your chances of getting loan approval. The loan originator is going to want to get all of your basic information like:
- Full legal name
- Social Security Number
- Date of Birth
- Information of where you have lived for the past 2 years (includes rent/mortgage history)
- Most recent two year history of employment including current income you make
- Asset information (checking, savings, money market funds, retirement, 401K, etc.)
- Any/all residential property info including mortgage payments, insurance costs, and property taxes costs
- Additional information (not limited to): pay/receive child support; pay/receive alimony; bankruptcy history; short sale or foreclosure history; current judgments open, etc.
Step 3 – Loan Origination to Complete Your Mortgage Pre-approval
Once the loan originator has received all of this information they are going to put it in their loan software to start working on your pre-approval for a mortgage. The first step is that they will pull a tri-merged credit report that includes all three bureaus: Equifax, Experian, and Transunion. This will give the originator the credit scores, current open debts (installment and revolving), any closed debt history, open/closed collection details, and judgment/bankruptcy information. Once they have received this they will import it into their software, add all income and asset information, and include anything else that is needed to complete the loan pre-approval for you. The loan originator determines what program is best fit for you based on (but not limited to) credit score, funds available to use for the purchase, prior mortgage/rent history, current/prior credit history, type of home wanting to be purchased, and many more. The last step the originator will do is run your loan scenario through an online automatic approval system, usually with a Fannie Mae or Freddie Mac program that will initial the pre-approval of your loan. This online approval is called “pre-approval findings” basically states that as long as you are able to verify all information that was input in the system with paperwork and documentation they will be able to complete the loan for you.
Once the loan originator has completed all this they will contact you to go over everything that they have worked up. They will explain what type of loan you are going to be using (and should explain why), compare different loan products in the event you qualify for more than one, go over your maximum that you qualify for, discuss current rates for that program (s), and much more. When they are done going over all this, you should walk away knowing what you are qualified for and why along with the different parameters of your qualifications.
Step 4 – Mortgage Pre-Approved/House Hunting Time!
Once you have been fully pre-approved for your mortgage the last step is to get in touch with the real estate agent you want to work with. The Rich and Cindy Team would be honored if you would contact us for that important job. You will want your loan officer and real estate agent to talk so the loan officer can relay the important information to your realtor about what type of financing you are doing and any other parameters that need to be in the contract for you to successfully close. For example, you may have a limited amount of funds to use so you may need to ask the seller to pay a certain amount of your closing costs for the transaction to work out. It will be critical that your real estate agent and mortgage loan origination stay in touch closely so they can work as a team to make sure everything is completed for you in a timely manner and close on time!
We hope you found this article on the Mortgage Pre-approval process informative and useful. If we can help you in any way with the home buying process, please give us a call at 727-513-8075 or use the Contact Form to send us an Email.
The Rich and Cindy Team