Defining the mortgage pre-approval process
A mortgage pre-approval is a written loan commitment from a lender that a borrower would qualify for a particular loan amount based on income and credit information.
InterFirst Lending will issue a free pre-approval letter, which you can present to sellers or your Realtor as proof of your ability to buy. This is a key thing to have for two reasons:
- It determines the types of homes you should look at. With your mortgage pre-approval letter in hand, you won’t waste time looking at homes that are well out of your price range.
- It tells sellers you’re serious about buying. If a seller receives competing offers, the offer backed by a pre-approval letter may be a more attractive option because the seller knows that the buyer is approved for the purchase. In fact, a pre-approval letter is sometimes necessary to make an offer.
Your mortgage pre-approval also saves time. Working through the approval itself takes a little time, so if you don’t have to wait for the paperwork to be processed after the offer is made, you may be able to close faster. This can also make you a very attractive buyer.
Most pre-approval letters are good for 90 days.
Why you should I get pre-approved?
There are many reasons why you should get pre-approved. The most important reason you should get pre-approved early in the process of purchasing a home is that you will get an accurate idea of how much you can afford. This will ensure that you only look at houses that are truly in your price range. A pre-approval letter is also essential in a competitive real estate market. If you make an offer on a house without a pre-approval, your offer will not be taken as seriously as an offer from another person with a pre-approval and you could lose out on purchasing the house of your dreams.
How do I get started with Pre-approval process?
You can get started on a mortgage pre-approval with InterFirst Lending in just minutes. Call 1-408-418-3259 to speak with a Mortgage Advisor and find out more about the pre-approval process. Once you’ve got your pre-approval letter, it’s time to start searching for your next house.
Understanding mortgage pre-approval requirements
To get the mortgage pre-approval process started, contact a your InterFirst Lending Mortgage Advisor, and ask about our mortgage pre-approval requirements. In general, you’ll have to produce:
- Your W2 from the past two years
- Your paystubs for the past three months
- Your tax returns from the past two years
- Your checking or savings bank statements for the past three months (this will likely have your down payment funds in them as well)
- Your statements for all your other assets (stocks, bonds, retirement accounts) for the last two months
- The name and phone number of your landlord (if you are renting) or your current mortgage documents
- Your divorcee decree, if applicable
- If you are self-employed: Your business tax returns for the past two years in addition to your year-to-date profit and loss statement and year-to-date balance sheet
Credit Report and Credit Score
InterFirst Lending will pull your credit report and score for you and your co-borrower (if you have one.) We charge an upfront fee of around $22 to do this.
Your Mortgage Advisor will analyze your credit report for any red flags such as late or missed payments or charged off debt. Your credit score will affect your ability to qualify for a loan and determine how low of a rate you can get. Generally a score above 720 will get you the most favorable mortgage rates. Your overall debt (minimum credit card payments, student loan payments, car payments, etc.) will be analyzed to calculate your overall debt-to-income ratio. You will also need to provide any alimony or child support payments you are required to pay.
What if you can’t get pre-approved?
There are three primary areas you will need to work on if you are not able to get pre-approved from InterFirst Lending:
- Correcting any errors on your credit report and raising your credit score
- Decreasing your overall debt and improving your debt-to-income ratio
- Increasing your down payment amount in order to qualify for the price of the house you want
Be sure to ask your Mortgage Advisors for suggestions on how you can improve your financial picture for qualifying for a home loan.