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A mortgage Pre-Approval is an important first step in getting a mortgage for 2 reasons:
- The pre-approval gives you a good idea of what mortgage size you can afford.
- The pre-approval can lock in your interest rate, protecting you from any sudden rate increases.
- FREE and require no obligation
- Fast and Easy – the process usually takes about 10 minutes to complete
Your final pre-approval will be based on the information given and any supporting documentation required by you from our trusted local lenders. Please be honest and up front when you are completing the application. We will then work together to get you approved at the best rate and terms.
The five factors that count the most when lenders are deciding whether you qualify for a mortgage loan are:
- Your income
- Your debts
- Your employment history
- Your credit history
- Your identity
When you understand how a lender will judge your loan application, it is easier to see your own strengths and weaknesses as a loan applicant. A strong loan application will have these features:
- The home buyer has steady income
- The home buyer has good credit (bills have been paid on time)
- The house is worth the price the buyer is paying
One of the first questions our lender will consider is how much of your total income you’ll be spending on housing. This information helps the lender evaluate whether you can afford a home. If the house payment represents a large portion of your income, you’re more likely to have trouble making these house payments because of your other potential expenses (such as car, furniture etc.). On the other hand, if the house payment is a small portion of your income, chances are better that you can truly afford the house.
When you’re applying for a loan, the lender will look at your ‘gross income’ which is all the money you earn before taxes, including overtime, commissions, dividends and any other sources. You must be able to show a steady history for these sources. Many lenders will also count income from a part-time or seasonal job as long as you can show that you’ve had the job for at least two years.
One important thing your lender will do is compare your current housing expenses to the expense you’ll have if you buy a home. The smaller the increase, the stronger your application looks.
In addition to your income, a lender will look at all of your debts. Generally your debts include your house payment as well as payments on all loans, charge cards, child support, etc. that you are responsible for each month.
Your Employment History
We help many people buy homes that otherwise thought they would never qualify, but most importantly, a history of steady employment in any occupation helps. Lenders are more likely to lend money to people who have worked for several years at the same job, or at the same type of job. However, if you’ve only been in your current job a short while, this won’t necessarily stop you from getting the loan, as long as you’ve had regular income over the last year.
The lender will check your employment, usually by asking you for a letter from your employer which is signed and states how long you have been on the job and how much money you earn. If you’re self-employed, or if you’ve been at your job less than two years, the lender may ask you for additional information (such as federal income tax statements) concerning your income and work history.
These are just a few of the questions our lender considers when reviewing your loan application:
- Have you been at the same job for at least two years?
- Have you been in the same occupation for at least two years?
- Have you had gaps in your income over the last two years?
- How long do you expect to stay in your current job?
- Is the co-borrower (if any) employed?
- If either you or the co-borrower lost your job, how long would you be able to make your mortgage payments?
Your Credit History
Good credit is very important in qualifying for a loan. In addition to your ability to pay (as indicated by your debts and income), our lenders will look at your ability to pay. This will be judged by your credit record and how well you’ve paid your loans and other debts in the past.
When you apply for a loan, the lender will order a credit report for you. It will show your record of payments on loans, charge cards and other similar debts. If you’ve never had a loan or a charge card, you can show that you have a good record of payment on your utility bills and rent. Even if you have a few glitches on your credit report, our lenders can advise you on a successful strategy to remove the negative items or what can be done to counter act them with positive additions!
Identity theft is a growing problem for both individuals and for lenders. To make sure no one is falsely using your identity to borrow money for a home, we will ask to see photo identification at the time the full application is taken. We may also ask you some questions about your credit history to confirm the information that’s on record at the credit bureaus.
Ready to get started?
Complete this quick form we will match you with one of our trusted local lenders to start the pre-approval process.