A big part of buying a house is the loan which you will have to get in order to pay for your new abode. But that does not come as easy as one would imagine. There is quite a lot of paperwork involved before you are even allowed to think about making moving checklists and researching moving companies. The word ‘allowed’ itself should ring loudly in your head as you are fighting to get the mortgage money and secure for relocation your dream house which you want to make into a home for your family.
What is a loan pre-approval?
Basically, if you are pre-approved, then the one who lend you the money (a.k.a. the lender) is certain in your ability to return the loan and successfully make the mortgage payments. Only by presenting a pre-approval letter will you be taken seriously by any home seller and real estate company, otherwise you will not be considered a viable candidate for the purchase of a house.
How to get a pre-approval?
In order to even think about pre-approval, first you need to be pre-qualified. This does not require any papers, and it is not an official process. All you need to do is sit down with a mortgage professional who will introduce you to the price ranges you will be facing come the mortgage loan. This will give you an idea how much money you will be able to get and how much you will need. The pre-qualification is mostly for yourself so that you can determine yourself if you will be able to pay for the house and the loan.
Starting with the pre-approval process, the lender will go through the following documents: your employment history, your income, and your credit report, and will only then show you what sum you will be allowed to borrow and will offer you the rates to return the loan. But, ultimately, the pre-approval for the loan will come from an automated underwriter to which you will have to submit your W-2s, your tax returns for the last two years, any recent pay stubs, a signed authorisation for the credit report, and bank account statements from your bank. Once all this is submitted, the pre-approval letter will be promptly sent out.
Before you receive the letter, you should know that your lender will bind you to a mortgage commitment. With verified credibility and compliance to repay the loan, the lender will ultimately submit the application to the underwriter, who then will answer with one of four options: you will be either approved, approved with conditions (specified by the underwriter), suspended (no decision currently and you will have to provide more documentation) or denied.
Applying for the loan is a simple process – you just need documentation and you need to submit it. But the hard part is collecting all the documentation, waiting for your turn, the interviews with the lender and mortgage expert and so on. Equip yourself with patience as it is all ultimately worth it – you will finally be able to buy that dream house. So get the loan and start looking for movers, because the time for moving house is fast approaching.