Wednesday, July 8, 2020

What You Need to Know About Getting Pre-Approved for a Mortgage

If you've decided that you want to own a house, then you're likely going to need a mortgage. At first, these may seem like a complex financial obstacle. However, learning more about what you need to get pre-approved for a mortgage can assist in easing your feelings regarding the subject.

Your Credit Score Makes All The Difference

When it comes to getting pre-approved for a mortgage, your credit score is the deciding factor. It will determine if you get approved and what your interest rate will be. For credit scores below the 650s, you're going to have trouble getting approved. 

You may need to apply for a special program such as an FHA mortgage where lower credit scores are accepted. On average, a 720 credit score will qualify you for some of the best mortgage rates out there.

They're Going To Need Documentation

It's a good idea to round up your documentation ahead of time so you can submit it to the mortgage lender right away. In the pre-approval process as well as the homebuying process, gathering documentation tends to take the longest part. 

By having your documents gathered, you can easily submit it to get your mortgage loans approved quickly. Some example documents you'll need are your last two pay stubs, past two years tax returns, and last two years of W2s.

You'll Need Steady Employment

Lenders want to ensure that they're putting their money into a great mortgage investment. They know that part of what makes a great investment is lending money to people who have steady employment. 

Most lenders look for people who have been employed at the same business for at least two full years. This shows them that the person is bringing home a reliable paycheck to pay their monthly mortgage payment.

Pre-Approval Isn't A Guarantee

It's important to note that a pre-approval doesn't mean that you'll definitely be given the loan. It simply means that the lender has briefly looked at your file and knows that you meet the minimum qualification standards that they require. Once you get a house under contract, the lender may choose to not fund the purchase for a variety of reasons.

When it comes to getting pre-approved for a mortgage, there's a lot that goes into it. Understanding what you'll need prior to applying can help ensure that you don't get turned down for unavoidable reasons. The above are four of the major components that you should understand before ever applying for a mortgage loan.

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