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48 Meriden Rd, Suite 1, Middlefield, CT 06455

What is the mortgage process when buying a home?

Many home buyers are new to the process of buying a home and we put together a guide of what to expect when applying for a mortgage.

 

Do I need a pre-approval?

A pre-approval is the first step when buying a home. You may find a home online that you would like to view, and most real estate agents require their clients to first get a pre-approval letter before they do any showings. This pre-approval letter contains information that will help you and your real estate agent when making an offer.

 

What is a mortgage pre-approval and why is it important?
A mortgage pre-approval is done by a licensed loan officer. They review your mortgage application, income, assets, debts, and full credit history to determine if a mortgage would be approved or not. During this review, they calculate many things to ensure the loan would be in compliance with key metrics such as debt-to-income ratio  – most of the time, that determines how much of a loan you can qualify for, and what type of loan you qualify for.

 

This pre-approval is an official letter from the loan officer stating that they have conducted a thorough review and believe the borrower will get approved for the stated mortgage amount and type – as long as they maintain good standing with their finances until they close.

 

Tips for the pre-approval process:
Prior to applying for a mortgage, be sure to take a look at your whole financial picture and have all your documents prepared.
– Don’t apply for any new credit cards before, during, or after the pre-approval process. Not until after you close on the home. This can impact your credit score and affect your approval.
– Be sure that on your credit report all active disputes are either removed or resolved. A mortgage application cannot move forward if there are disputes.
– Have all paperwork in order such as bank statements, pay stubs, and W2’s.
– Don’t make any large cash or unverifiable deposits into your bank accounts. Loan officers, lenders, and underwriters need to verify that the deposits are sourced, otherwise those assets cannot be used to qualify.
– Understand that your loan officer has a lot of variables to account for in a loan application and they have specific rules to follow. These rules don’t change with different banks, loan officers, or brokers. They may ask you for more documentation or particular questions in order to come up with solutions.

 

What happens after I get a pre-approval letter?
You can shop for homes and put in offers. When your offer gets accepted, your loan officer will receive a copy of the purchase agreement and officially submit your loan for underwriting. This is where the final approval process starts. Once all conditions from the underwriter are met, you will receive a final approval and be able to close on your new home.

 

Peter Kania

Loan Officer

NMLS# 1953693

Apply with Peter