5 Necessities For Texas Mortgage Pre-Approval
While there may be some excitement in looking for a home to buy, anyone who really wants to buy will delay the open house visit and start at the lender’s office. Pre-approval letters are expected by most sellers, and a buyer having one will show an ability to get financing, giving them a better chance of negotiation.
There are five things that buyers need – employment verification, good credit, proof of income and assets, and some important documents for a mortgage pre-approval.
Pre-approval vs. Pre-qualification
A pre-approval has more value than a mortgage pre-qualification, but pre-qualifications have their use in showing the amount a buyer can afford to spend. Under the pre-approval, both documentation has been verified and the buyer’s credit has been check by the lender. Positive checks will result in a loan amount being approved for 60 to 90 days.
Talking with a lender and getting a letter of pre-approval gives many benefits to potential buyers. Budgeting and loan options can be discussed with the lender after pre-approval. Any problems with the buyer’s credit will be found when the lender checks for them. The price range will also be set and the home buyer will figure out their maximum borrow amount.
After an appraisal is done for the buyer and property has a loan applied to it, the final loan approval will be done.
Good credit, employment verification, proof of income and assets, and more documents are needed by a lender in order to get mortgage pre-approval. Here you’ll find more information about how to obtain the necessary things to be pre-approved for mortgages:
1. Proof of Income
Year to date income and recent pay stubs indicating income, W-2 wage statements given through the most recent two years, bonuses or alimony, and tax returns from the most recent two years are needed by buyers to prove their income.
2. Proof of Assets
In order to show that they have down payment money, cash reserves, and money for closing costs, the borrower will have to provide investment account statements and bank statements.
Depending on the loan, the down payment, which is a percentage determined by the selling price, can be different. Unless 20% of the home’s purchase price is being put down, the buyer will have to either pay a funding fee or mortgage insurance premium or pay for PMI or private mortgage insurance, as required by the loan. Depending on the loan that is being pursued, other factors, such as the FICO credit score of the buyer and DTI or debt-to-income ratio, will be needed along with the down payment for pre-approval.
Loans conform to enterprise guidelines that are government-sponsored, with one exception in the form of jumbo loans. First-time buyers and buyers with low or moderate-income are perfect for Home Possible and HomeReady loans, which are provided by Freddie Mac and Fannie Mae respectively.
U.S. veterans, spouses that aren’t remarried, and service members can get VA or Veterans Affairs loans. No money down is required with these loans. In order to prove that certain funds aren’t loans, a gift letter may be needed if a buyer obtains assistance money for the down payment from a relative or friend.
You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.