Getting Pre-Approved | Types of Mortgages | How Much Can You Afford?
A pre-approval from a lender indicates to the seller that you are a safe bet. In fact, in a market with a lot of buyers and little inventory, I suggest the buyer goes through the underwriting process if possible, so you are equipped to close very quickly.
It’s smart to ask your lender to pre-approve, rather than pre-qualify, you for a mortgage. Pre- qualification only tells home much you can afford. Pre-approval goes a step further. Your lender will thoroughly evaluate your application—including verifying employment information and financial disposition—then clear you for a loan of a determined amount. Having your loan pre-approved gives you a sizeable advantage when making an offer.
The lender will give you a letter indicating that you are pre-approved and for what amount. This document is like gold and we will be sure to include it in the offer.
But just because you have this document in hand, don’t think that it gives you a free pass with your money! Here are some things to make sure you do and don’t when you are in this pre-approval phase and before your transaction is totally closed:
Mortgage Dos and Don’ts:
- Do understand that the lender will ask you for a number of things. Be prompt in providing documentation requested by your lender.
- Do keep your paperwork readily available including bank statements and paystubs.
- Do make sure that you can account for any deposited funds other than from your paycheck within 60 days of loan application.
- Do know that any down payment assistance from others must be documented as a gift and with a Gift Letter Affidavit.
- Do make sure all your payments are on-time.
- Don’t stop making any monthly payments unless instructed to do so by the lender.
- Don’t apply for any new credit or consolidate bills unless instructed to do so by the lender.
- Don’t move assets between accounts.
- Don’t change or quit your job.
- Don’t make any large purchases.
- Don’t allow any other entity check your credit.
