In the contemporary world, a lot of people are willing to have their own house and a mortgage is one of the most common ways to reach this aim. Nevertheless, the process of getting a mortgage loan is difficult to understand, especially for first-time buyers. To make the process easier, think about getting a mortgage pre approval before you start your search for a house. We trust that this article will shed light on the mortgage pre approval process. Professional help may be needed, but the tips given can help you understand the process and know where to start.
Important things to do before getting pre-approved for a mortgage
Get pre approval. This is the first move in the mortgage process. This will let you know the loan amount you can be approved for, which will help you set a budget for the purchase of your house. Things to take into account are the amount of your income, your credit score, and the amount of your down payment. Mortgage pre approval not only gives you an idea of how much you can spend but also tells you the amount of money you have for your house purchase.
Review your credit report. Prior to seeking mortgage pre approval, review your credit report for any mistakes or late payments. A good credit score can speed up mortgage approval.
Gather necessary documents. Make sure you have all necessary documents prepared for pre approval. Usually, income verification, down payment equity, and identification are required for the purchase of a home. Get these documents ready for to quickest mortgage pre approvall process.
Seek professional assistance. Visit a respected lending bank or mortgage broker to obtain pre approval forms and assistance with the application process. An approval makes the loan easier to obtain.
Determine your affordable payment amount. Determine the amount of money you can spend before getting pre approval. Think about your current debts, income, and possible mortgage costs to determine the correct loan amount and pre approval type.
Sign a pre-contract. If you have already found the home you want, but have not yet received bank approval or even selected it, explain your situation to the seller and try to sign a pre-contract of sale – this way you will be convinced of the seriousness of the seller’s intentions and fix the price of the apartment. Usually, the pre-contract is signed after the loan is approved, but some sellers meet the buyer’s needs and formalize the agreement at this stage. We will tell you how to choose an apartment, get approval from the bank, and sign a pre-contract with the seller in the next lesson.
Selecting the suitable bank for the quickest mortgage pre approval
Pre-qualification is also a step in getting a mortgage loan. To accelerate the pre approval process, look for good banks. Begin by considering the mortgage market to determine the best bank for pre approval. Check terms, rates, and conditions on the websites of various banks. In addition to the financial health and reputation of the bank, personal preferences also need to be considered, for example, whether one prefers larger, more stable banks or smaller ones.
Additionally, consider the bank’s mortgage application conditions. Determine whether you can meet their demands and choose the bank that best suits you. Lastly, compare pre approval mortgage rates offered by different banks and pick the one with the most desirable features.
How a bank evaluates a borrower
It is important for a bank to grant a loan to a borrower who will pay without delay. On this basis, banks evaluate borrowers – scoring. Each bank has its own scoring criteria and secrets, and no one will ever reveal them. But here is what they usually look at:
- The level of income and its stability. If a person receives money irregularly and on an ad hoc basis, there is little chance that he will be able to repay the loan. If he has a regular salary, which he is paid twice a month, he is a more reliable borrower for the bank. Labor contracts are treated better by banks than by contracting or owning a business. It is believed that an employee is more reliable than a businessman;
- Age. From 21 years of age at the time of taking the loan to 65 years of age at the time of repayment. However, some banks give pre approval quicken loans to older borrowers – up to 75 years old at the time of repayment of the loan;
- Citizenship. Many banks require only Russian citizenship, although some are ready to give a loan to a foreigner;
- Marital status. Family people give credit more readily: it is believed that they are more interested in stability;
- Place of work. Banks prefer to lend to specialists and top and middle managers, and some spheres of activity are valued more than others, for example, IT, finance, and state corporations;
- Total length of service and length of service at your last job. The longer you work and the less often you change jobs, the more interesting you are to the bank. Usually, the bank requires that the borrower has worked at least 3-12 months at his last job;
- Credit history and personal credit rating. Credit history is a report that contains information about all your loans: how many of them, how were paid, whether there were delays, and how many applications for credit you submitted. Banks necessarily take into account the borrower’s credit history and information about existing loans. If you are paying on several loans at the same time and the total amount of payments exceeds 50% of your income, it will be more difficult to get approved for a mortgage.
Documenting for mortgage loan pre approval
In order to get pre approval for a mortgage loan, all documents should be prepared. This allows the bank to make a quicker decision and improves your chances of receiving fast pre approval. The following documents are typically required (depending on the state):
- Mortgage loan application;
- Earnings details from tax returns of the last few years;
- Recent months’ bank statements;
- Active loan and debt register;
- Evidence of hours and duration of employment;
- Marriage certificate, if applicable;
- Mortgage pre approval process comprehension.
A mortgage pre-approved for a home loan allows you to know what kind of home you can afford to buy. The best way to get pre approved is to contact a mortgage loan specialist at a bank or a mortgage lender. Submission of your income and financial information to the lender during the pre approval stage accelerates the loan approval process. The lender will evaluate your affordability and provide a pre approval.
Earnings have a substantial influence on pre approval, so be truthful about how much you make to allow the lender to assess your ability to repay. Add other sources of income, like rent or investments, if any. Keep in mind that pre approval of a mortgage does not mean that the loan will be approved.
Conclusion
We trust that this article has shed light on the mortgage pre approval process. Professional help may be needed, but the tips given can help you understand the process and know where to start.
