Mortgage Pre-Approval

One of the most confusing processes when buying a home is the mortgage pre-approval. This process is used to qualify borrowers that are looking to buy a home. The process can help determine up front whether you are able to buy or should wait.

The Process

Step 1. In the mortgage pre-approval process you will have the lender pull your credit. What they will look at is your credit history. They will usually want to see a minimum of 2-3 trade lines.  Tradelines are credit cards, car loans, student loans, and etc.  They will want to see them being open for 1-2 years.  As well, lenders will want to see that debts have been paid on time. lenders will also look for any bad credit that could hurt your chances of being approved.

Step 2. Your lender will want current paystubs as well as w-2’s and tax returns.  Lenders view this to verify what income can be used to qualify you for your loan. They will also check for any losses on tax returns.

Step 3. Assets will be looked at to make sure there is enough for a down payment.  You can use gifted funds from a relative.  In addition, any down payment will need to be sourced and seasoned.  Essentially, lenders want to see two months of banking history of the down payment.

Step 4. Underwriting begins once steps 1-3 are completed.  This will produce an approval that will allow the company to give you a Pre-Approval. They will be able to tell you how much you are able to borrow.  As well, they will advise on what price ranges you should be looking in.

In conclusion, you will then share this pre-approval with your realtor and home sellers.  This lets them know you have been vetted buy a mortgage company and are qualified to buy the home.

Contact me today for a free consultation.

Craig Thibeau
Senior Loan Officer
North East Financial Middletown, CT
Ph 860-334-1354
NMLS  398576 Company NMLS 117273
craig@northeast-mortgage.com
www.northeast-mortgage.com