Applying For Mortgage In Texas? Here Are The Pre-approval Requirements

5 Necessities For Texas Mortgage Pre-Approval

Part 2

3. Good Credit

For Conventional Loans and some Federal Housing Administration loans, a 620 or more FICO score is needed by most lenders before approval can begin. 760 or higher credit scores will usually result in customers getting lower interest rates from lenders. According to FHA guidelines, a borrower can pay as low as 3.5% down if their score is 580 or more.

new San Antonio home bought with an FHA mortgage loan moderate incomeA larger down payment is required of borrowers with lower scores. Borrowers with low scores can often get assistance from lenders and can get score improvement suggestions.

A payment of $1,288 each month would be required for a $250,000 loan and a FICO score in the range of 620-639. $1,062 would be paid by a homeowner who has a score in the range of 760–850. The difference between these two each year is $2,712. The rates that are offered today would give a buyer a score in the range of 620-639 an interest payment of $213,857 and $132,216 for the 760-860 range buyer. This presents an $81,000 difference.

4. Verification of Employment

Borrowers will need to be able to show lenders that they have a stable job before they can be approved. The buyer’s employer will likely be called to verify that they actually work for them and provide them with a salary. Previous employers may be contacted if any job changes were done recently.

When a buyer is self-employed, there is a lot more paperwork needed to verify the income and business of the buyer. Stability of the income of the borrower, the nature and location of the business the borrower has, any demand for the business’ services or products, the business’ financial strength, and the business’ ability to generate income are all factors that will be considered when self-employed borrowers try to get approval for a loan.

Recent tax returns from the past two years and the right schedules will need to be provided by self-employed borrowers.

5. Other Documentation

A credit report must be allowed by the lender for mortgages, along with the signature and Social Security number of the borrower and a copy of the driver’s license of the borrower. Additional paperwork may be needed by the lender, and you will need to have these documents ready to provide them to the lender.

The mortgage process will be easier if you can cooperate.

You will have an easier time buying a home if you talk to a lender before making any decisions. Before you head for a pre-approval appointment, get your paperwork ready and don’t hunt for houses until you get pre-approved.

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 first article in this series.

Applying For Mortgage In Texas? Here Are The Pre-approval Requirements

5 Necessities For Texas Mortgage Pre-Approval

Part 1

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.

Pre-approval Requirements

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.