How to get
Have confidence in your purchase offer and your budget with a pre-approval.
Have confidence in your purchase offer and your budget with a pre-approval.
Pre-Approval is only the first step in the mortgage process, but it is no doubt one of the most important. You should consider getting a pre-approval letter even before you begin looking for a realtor or a home. A pre-approval is a signal to realtors and sellers that you are a serious buyer. It also gives you a better idea about how much home you can afford and makes the application process much easier down the line. A Pre-Approval also requires no extra cost.
To be pre-approved, you need to speak to a mortgage consultant. A pre-approval would typically happen within a Lender’s office, but nowadays it’s possible to be approved from the comfort of your couch. All you need to do is collect the necessary documents, and you can securely upload them within seconds. These days, the entire pre-approval process can happen entirely virtually. At On Q Financial, we make it easy to get pre-approved for a mortgage from anywhere with our Simplicity mobile application.
To begin with, a lender will require specific documentation, so don’t be alarmed if you’re asked for W2s, tax returns, bank statements, or social security number. A pre-approval is a serious commitment from a lender, and they need to verify some factors in order to commit to approving a mortgage loan. They will want to verify your income, identification, and assets. In most cases, your mortgage consultant will require two years of either W-2s or tax returns as well as your pay stubs.
The application will ask for some personal information as well, including your I.D. and Social Security number. This information will allow underwriting to request your credit score from the three big credit agencies. Finally, the lender will need around two months of bank statements in order to verify your assets. After they have gathered the necessary documents, a home loan pre-approval can take anywhere from 1-3 days.
A mortgage pre-approval is simply a conditional commitment to lend you money. After the lender has collected the information necessary to prove your eligibility for a loan, your documentation will be gathered in a file and reviewed by an underwriter. The underwriter will then make a decision and the loan application will either be approved, suspended, denied, or approved with conditions. Some of the conditions may include an appraisal, home inspection, or verification of employment.
An important part of the pre-approval process includes a hard credit check. This sort of credit inquiry allows your underwriter to review and confirm your credit history. While a hard credit check could potentially impact your score, it is not a permanent mark on your credit report. After two years, the hard credit inquiry will disappear from your credit history.
Ask your mortgage consultant for a pre-approval letter. It will give you an edge up against other buyers. Getting pre-approved for a mortgage will allow you to move fast when you find your dream home. When you make your offer, the seller will know that you’re serious because of the steps you took to be pre-approved. Don’t let someone else swoop in and grab your home while you’re waiting for loan approval!
It’s important to come prepared with a pre-approval letter because it’s a signal to your seller that you are serious about your bid. In essence, the letter is a reliable means of proving your conditional commitment. A mortgage pre-approval letter will allow you to step in front of any competing offers for the home.
The pre-approval letter will be mailed to your residence or delivered by your loan officer within a few days of your application. The pre-approval letter will be a conditional commitment in writing and will outline the loan terms that you qualify for, including the amount you’re eligible to borrow.
Once you have found a home you love, your offer was accepted, and you have signed all the necessary contracts, it will be time to move onto the next steps in the process.
Mortgage pre-approval shouldn’t be complicated or confusing. Thankfully, with On Q Financial, we make the process virtual with our Simplicity mobile app. Within seconds, you can upload documents and be pre-approved completely virtually. Plus, once your loan begins getting processed, you will be kept up to date with push notifications to your phone. The mortgage origination process has never been easier than it is with Simplicity.
Pre-qualification is when a bank or lender will ask you to provide them with a current snapshot of your financial health. This snapshot is going to include your credit score, debt, income, and assets. Once the lender can review your financial standing, they give you an estimate of the amount you can look forward to borrowing.
It’s pretty simple to get pre-qualified. For a pre-qualification, there is no cost involved. You can do it over the phone or online, and generally it takes between one to three days to get your pre-qualification letter.
A pre-qualification will require a soft credit check and will give you an idea about the type of loan you can afford. However, lenders base a pre-qualification decision on your word. Lenders do not use verified proof to issue a pre-qualification letter, so it doesn’t give you the same buying leverage. A pre-qualification letter might help you understand whether you will be approved, but it will not help you purchase a home or be any kind of guarantee. A pre-qualification is more of a tentative promise and based on the assumption that your answers were an accurate representation of your finances.
A pre-approval will carry a lot more weight for sellers. It also gives a clearer idea about your loan options. A pre-approval also requires a hard credit check, which will have more of an impact on your credit score, though.
If you are trying to gauge whether you are ready to purchase a home or have a chance of being approved, we recommend a pre-qualification. However, before you begin home shopping, we recommend you select a lender and ask for a pre-approval.
In order to improve the estimated loan amount, your lender can provide some suggested actions. These actions include increasing down payment, improving credit score, lowering your debt to income ratio, and also increasing your annual income. Depending on your situation, it might be best to apply after you’ve paid off some credit debt, saved for a larger down payment, or after your next job promotion.
Although a pre-approval is the first step towards having your loan funded. It does not mean that you have already secured funding. An underwriter will need to verify that a borrower has fulfilled several conditions before the lender will be able to release the funds. Seller and buyer will need to sign more contracts, including a transfer for deed, affidavits, and title documents. Once the loan is finally approved and all documents have been signed the funds will be released, and you will be able to move into your new home.
You can expect your pre-approval at the latest within a few days. With our simpler process though, most borrowers can expect a decision quickly. You should feel comfortable inquiring about the status of your application at any point. While you are waiting for a decision, you can take this opportunity to start investigating the market. Do some online research, or better yet go driving around a neighborhood. Don’t be shy! Ask about the area and do some fieldwork. It will pay off when it comes to making a decision on your dream home. Then when you get your pre-approval letter, you will be in a much better position to purchase.
A pre-approval letter is not legally binding. You will not be legally bound to any kind of contract. A pre-approval provides the assurance a borrower needs to be comfortable with a one of the biggest financial decisions most people will ever make. Thankfully with On Q Financial, you’ll be working with some of the most diligent and honest consultants in the industry. Contact us today to learn more!
Because a mortgage is such a serious commitment, they do a hard credit check on your profile. For most, the impact will be small. However, if your credit score is near the lowest credit requirement for a loan, any decrease in your score could be the difference between getting approved and getting denied. If you are uncertain about your score, talk to your On Q Financial Mortgage Consultant. We are always happy to help, so contact us today!