If you are a first-time homebuyer, then getting a Pre-approval mortgage is vital to smoothen up the process. However, pre-approval mortgage can save your time and money both. Make sure to start the process in the lender`s office, not in an open house.
If you are a potential buyer, then you need five essential things like credit score, proof of asset and income, employment verification and other documentation. Here in this article, we are going to discuss these five things before getting a pre-approval mortgage in Richmond hill.
1. Proof of an income.
You have to must submit your W-2 wage statements and recent pay stubs. However, it will show the history of your income as well as year to date income. Moreover, you also have to submit the proof of your income like alimony or bonuses.
2. Proof of assets.
You have to submit your bank statements and investment statements. However, the down payment varies by the loan type and is a percentage of your selling price.
Most of the loan comes with some requirements. Additionally, pre-approval also depends on the buyer`s FICO credit score, DTI and some other factors depending on the type of the loan.
3. Good credit
Most of the lenders need 620 scores of FICO to approve a Federal housing administration loan and a conventional loan. However, if you score greater, then you have to pay a larger down payment. So lenders will work with borrowers with low credit score to improve their score.
4. Employment verification
Make sure that lenders will lend only to the borrowers having stable employment. However, a lender will call the borrower to clear the salary and want to see the buyer`s pay stub. If a buyer changes the job, then the lender may have to contact the previous employer.
5. Other documentations
The borrower`s driving license and social security number will allow the lender to pull out the credit report. So you have to be ready for any additional paperwork at the pre-approval session.
If you are cooperative with the lender, then the pre-approval process will be smooth.
What do you mean by a pre-approval process?
Mortgage pre-approval is not a guarantee that you will get the loan. It is only a process in which a loan officer will look at your finances such as income history, debt, credit score and assets. However, a loan officer will finalise how much money can you borrow and what your interest will be.
Moreover, he will also consider how much you have to pay per month. You will get a letter after getting pre-approved for a mortgage from the lender. The pre-approval shows that the lender is ready to work with you and give a seller peace of mind because it is an approval that they are not wasting their time.
Why is it vital to get a pre-approval mortgage in Richmond hill?
While getting pre-approved for a mortgage from a lender has several advantages. Here we are going to show you three reasons why you want a pre-approval mortgage before buying your dream house.
1. It gives you confidence.
Getting a pre-approval will help you to understand how much mortgage you can afford. As a result, it will allow you to look for the houses that are in your budget.
Therefore, you don’t have to reject any deal that you can’t afford.
2. It increases the process of closing.
A pre-approval will help to enhance the closing process.
3. Establishes your credibility
A mortgage pre-approval will show the home seller that you have checked your finances and establishes your credibility. If the seller decides to sell their house, then they won’t deny the mortgage.
Difference between pre-qualification and pre-approval process.
A pre-qualification process is helpful to understand how much you can afford to buy a house. On the other hand, pre-approval is more valuable than pre-qualification and means that the lender officer will verify all your finances such as documentation, credit and income history.
A potential buyer can gain several benefits by obtaining a pre-approval letter and have an opportunity to discuss loan options. Moreover, it will help you to do some budgeting with the lender. A pre-approval will allow a homebuyer to set the price range.
We can say that obtaining a pre-approval mortgage in Richmond hill before buying your dream house will say your lot of time and money. So collect all your documents before the pre-approval appointment and before hunting for the home.