Understanding The Process
You’ve made the decision to begin the journey of buying a home. This is such an exciting time and we know you are anxious to jump right in and start looking for that dream house! Before you get in contact with your Realtor however, and rush off to an open house, it is good to remember that the best place to start the process is in the lender’s office, not an open house.
Today we have broken the process down into 5 parts, to help you understand it better and prepare you for the various steps involved.
1. What Does “Pre-Approval” Mean?
Pre-approval means that the lender, you have chosen is satisfied with the knowledge, that you can make the necessary down payment and that your income is sufficient to cover the mortgage payments. Once this is established, the lender needs to make certain that the value of the home you are buying, appraises for as much or more than, the amount of money for which it is being sold.
2. Why is it Important to Get Pre-Approved?
When you are ready to place an offer, the seller and your real estate agent will need your pre-approval letter. This letter is proof that you will most likely be able to complete the purchase and are serious about the home. The housing market is competitive and sellers will often choose a pre-approved buyer, over someone that may be unable to purchase the home.
Being pre-approved for a mortgage, means that a lender has looked closely at your credit report, your employment history and your income and has determined which loan programs you qualify for, the maximum amount that you can borrow, and the interest rates you will be offered.
4. Mortgage Commitment
Your lender 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.
5. The Process of Getting Pre-Approved
Although it may sound overwhelming, the process of getting pre-approved is really 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 underwriter’s court.
If you have questions or need assistance, please reach out to us, here at Vic Green Realty!
Looking for a New Home?