Get Pre-Approved for a Mortgage
This is vital! Getting pre-approved for a mortgage is a critical step in purchasing a home. An offer cannot be made without verification that you, in fact, can gain financing to purchase the home.
Most Realtors won’t show you property until they know you are, in fact, capable to finance the homes you are looking at. Your Realtor should have some very solid relationships with lenders that are respected in the market and have a history of getting transactions closed on time. This is all extremely important.
The initial pre-approval does not take long…minutes really. However it gives the lender, Realtors, and the sellers information they need to get a transaction completed. Dana Hakes of Uptown Funding explains what the loan process looks like for a residential buyer.
The Pre-Approval Process
Like your Realtor relationship, the lender relationship will be very important during the transaction. They will be going through your finances and ask you things that are personal and may make you uncomfortable. Understand this is required and they will not ask you for anything they do not need.
- Pay stubs
- Tax Returns
- Employment status
- Bank Statements
Under Contract…Now What?
The mortgage industry is very regulated. Since 2008 many laws and regulations have been put into place to protect the consumer. Once you are under contract the real mortgage work begins. Because of the regulations lenders must ask you for certain information…sometimes multiple times…to ensure legitimate loans are being made. Some of these things are:
- Paper trail for all cash deposits into your bank accounts (no mattress money)
- Tax returns for 2-4 years depending on the work that you do
- Explanations of assets
- Employment records and paystubs
- A variety of other items of documentation depending on your specific situation. No two are alike.
The key to an easy loan process and getting the mortgage that you want it terms of rate, length of loan, and other terms. During this time do not spend any money out of the ordinary…no buying appliances, furniture, or cars. And do not change jobs! All of these things can compromise your ability to purchase the home.