Getting a home loan can be one of the hardest parts of any real estate transaction, and for those who have been through the process they are very glad to see it come to an end. Those buyers who have been rejected for a housing loan know all too well the frustration and disappointment when finding out they have been turned down. To avoid this, getting pre-approved for a home loan is often the answer to purchasing one’s dream home.
Before starting, it’s a good idea to have copies of recent credit reports as well as being familiar with various mortgage and financial services. Calling lenders to compare their loan programs and rates is necessary to gain an understanding of what types of offers are available. Comparing and contrasting different programs can help potential buyers know what types of deals may work best for them, leading to a more efficient buying process. While comparing different loan programs, some things to take into consideration include how long the buyer plans on living in the home and if one’s personal income will be increasing during the coming years.
Once all the loan programs have been evaluated by the buyer, it’s time to pick some of the better ones and provide them with current information such as W-2 forms from the past two years, pay stubs from the most recent month and federal tax returns from the previous two years. Some other items that may be needed include a purchase agreement if it’s available, profit and loss statements for those who are self-employed and corporate returns for those who own a corporation.
Along with a completed loan application, potential buyers need to show their previous three months’ bank statements in order to prove they are capable of verifying down payment capability. For those
who have been through bankruptcy proceedings, all paperwork associated with that needs to be presented. When attempting to get pre-approved for a home loan, failing to disclose any of this information could result in being turned down for a loan that otherwise might have been approved.
After all the information has been collected and turned over to the lender along with the completed loan application, it’s time to play the waiting game. The entire process from initial inquiry to submitting paperwork to being approved usually takes anywhere from one to four weeks, depending on the complexity of the transaction and the guidelines of the lender.
One of the major advantages of having a pre-approved loan is being able to know the mortgage limit and monthly rate, allowing buyers to search for homes within their budget. However, once approved buyers need to be very proactive in their home search, because most pre-approved offers expire in 60-90 days. Pre-approved loans can be found at both traditional banks, credit unions, mortgage lenders and online lenders. More applicants are turning to online lenders today because of their convenience and flexible options they offer, such as being completely approved or approved with certain conditions applying to the situation rather than being rejected for a housing loan yet again.
Mortgage lenders offer pre-approved loans for both FHA and Veteran’s Administration loans, making them a convenient option for buyers using those loans. It’s also important to make sure whatever lender is chosen is reputable so as to avoid any unexpected surprises later on. If possible, having two or more offers to choose from is best to be able to compare key features of the loans. By taking time to gather all necessary documentation, getting pre-approved for a home loan can make the home buying process much easier.