When is an approval really an approval? When is
an approval only a conditional approval? Below are the different levels of
“loan approval” you can get for a mortgage:
This is done before you make an offer on a home.
This is only a loan officer analysis, and supporting financial documents are
not required. This is a review of the applicant’s income and debts using
standard methods of determining housing and debt ratios to indicate the maximum
loan amount for which an applicant would qualify, subject to the satisfactory
appraisal, further verifications of income, employment and credit history. This is the lowest form of analysis you can
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When you’re ready to buy a new home, one of the first things you have to do is take steps to get your financing in place. Mortgage approval is based in part on an automated underwriting process. Unless you plan to pay in cash, you need to secure a mortgage loan. It is beneficial to get a pre-approval letter from a mortgage lender before you even make an offer. Having your loan pre-approved can show a seller you are a serious buyer with adequate funds. You can also reduce the risk of the contract falling through.
Lenders typically use one of two underwriting processes for mortgage loans: automated and manual. Understanding the basics of how these types of loan approval work can give you confidence when applying for your mortgage. Read the rest of this entry »
Today’s real estate market can be competitive for everyone, no matter what price point you’re shopping at. That’s why it’s important to understand the ins and outs of the home buying process before you hit the market. Let’s talk about what getting a mortgage pre-approval letter involves, how you can do so, and why it’s a good idea for anyone heading into the market for a new home. Read the rest of this entry »
Homeownership is a major component of the American dream as it provides you with your own piece of property to put down roots and live your life. You might think the process starts when you first go out hunting for houses or condominiums, but it often begins long before the initial meeting with a realtor when you contact a lender for pre-approval. Homes are major purchases, and it’s understandable that you have to meet certain qualifications before the transaction goes through. Here are a few reasons why the seller and realtor might want you to get pre-approved, as well as an overview of the entire process. Read the rest of this entry »
When you’re beginning the home-buying process, figuring out what you need to get your mortgage loan can seem complicated. You may even be tempted to find your dream home first before you apply for a mortgage. However, going through the pre-qualification and pre-approval processes at the start of your search can make the entire experience go more smoothly.
Before you meet with a lender or mortgage broker, you should have a good understanding of how the loan process works and what you’ll need to provide in your application. This guide covers the basics of loan application, qualification, and approval. Read the rest of this entry »
Deciding on how much mortgage you can afford is very complicated with several things to consider. Before you plan to spend the maximum amount you’ve been approved for, consider what you feel comfortable with. And before you treat your home purchase like a zero-sum game consider spending a sufficient amount to buy enough house to keep you happy for a longer period of time, due to the hefty transaction costs of real estate. Read the rest of this entry »
I have discussed this topic before, but it bears mention again. Homebuyers almost always wait until the last second to get pre-approved. Why? If you know you are interested in buying a home, and if you are in fact actively looking, why wait? Homebuyers seem to think the pre-approval process is instantaneous, but it is not. It is not even quick and it certainly is not easy. Read the rest of this entry »
Most humans I know wait to do things, and wait as long as they can. I did it as a child when it came to cleaning up my room, I did it in college when it came to studying for an exam, and I do it as an adult when it comes to going to see the dentist. The only things that I do not procrastinate on are things that are really important, like getting pre-approved for a mortgage. Now that is important! That should be done right away. Read the rest of this entry »
It has been a while since I wrote about pre-qualification. It seems I need to write about this more often. Lenders hand out pre-qualifications like candy, with little analysis, little required documentation, and then homebuyers go out into the marketplace making representations they cannot meet. And then they lose money. How? Read on. Read the rest of this entry »
It seems many home buyers feel they already have a “good enough” idea of what amount of mortgage they qualify for, so they don’t feel the need to consult a mortgage professional in advance of their home search. Or they use some quickie online tool that helps tell them what they are qualified for, which are really not thorough enough and don’t take into account all the complicated new rules.
And some people have champagne taste and are on a beer budget, and need to be careful in determining how much they can afford to spend on a home.
I can’t say this loudly enough, DON’T WASTE YOUR TIME OR YOUR REALTOR’S TIME looking at a single home until you have had your finances thoroughly analyzed by a seasoned mortgage professional. And here is why: Read the rest of this entry »