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Want to improve your odds of buying a home? 7 steps to a mortgage loan pre-approval

15 Jul

If you are considering buying a home and are not paying cash as many investors or foreign buyers are doing lately, it helps to level the playing field. Nowadays, sellers are deciding quickly on which offers to consider. If you have a pre-approval attached to your offer, it is much more likely to be considered. Follow these 6 steps to improve your chances of buying your dream home.

  1. Begin by preparing your information. Gather statements of current income, including last 2 months of paystubs, last personal federal tax return, W2’s, 2 months bank statements for all borrowers and assets information. Also gather your employment history, usually last 2 years of consistent employment. If self-employed, be prepared to prove your income and projected income sustainability.
  2. Do you know your credit score? Maybe you think you do by accessing your free annual credit report, but those reports are not the same as reports accessed by banks & lenders. For now, I suggest requesting each borrowers free annual credit report, as it is better to know any credit score and potential derogatory information. Begin resolving issues ASAP & look at my blog post How to save $100’s to $1,000’s: 11 tips to manage your credit score.
  3. Research many lenders, click here for my blog post. Do you know the loan program you need? Did you know there are many down-payment assistance programs to help 1st time homebuyers? Cities and states also offer down-payment and assistance programs. Do these lenders have experience with these programs? Find a lender that has the program that best fits your needs. I suggest asking an impartial person, such as the Mortgage Fee Coach, if the lender is right for you. This is one of the areas I bring the most value.
  4. After finding the right lenders, request rate and fee quotes from each of them. You will be surprised at home much their rates and fees differ. If using the Mortgage Fee Coach services, rates and fees will be compared for you in an plain format, so the least expensive option is clear. The Mortgage Fee Coach will clearly save you money in this area.
  5. After finding the best lender, complete an application, provide copies of the required documentation, and keep the originals. Ask how long they require for pre-approval?

    Be aware, due to the new government regulations, you will have to prove beyond a reasonable doubt that you have the ability to repay the loan. The underwriter will review all the information, including verifying current income and historical income from two years of consistent past employment.

  6. Keep in contact with the lender every 3-4 days, until your loan is approved. The Loan Officer should help you feel at ease and the process is moving forward timely. They may also need additional information. Provide it as quickly as possible.
  7. Become pre-approved for the mortgage loan. Know the maximum loan amount for which you qualify. Pre-approvals may be valid up to 120 days, but the lender may ask for updated paystubs and other information after 60-90 days.

Finally, take the time to build a quality relationship with your lender as early in the process as possible. The earlier you start the loan approval process, build the down payment and cash reserves, resolve credit issues and document required income, the sooner you will be able to buy your home and live the American Dream.

 

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