Getting pre-approved for a home loan is essential to buying a home.
A home loan pre-approval gets the ball rolling on your mortgage application and gives you a tool to use when bidding on a home. Having a preapproved home loan shows sellers you’re serious about buying and can qualify for a mortgage. That gives you an advantage when bidding against buyers who are not preapproved.
It also lets you know how much you can borrow, which helps identify the price range of homes you qualify for.
A mortgage loan pre-approval is a more advanced step than merely pre-qualifying for a mortgage. In pre-qualifying, you provide Nortex Mortgage with basic information about your finances and credit, and we estimate how much you can borrow.
With a home loan pre-approval, you provide more detailed information that allows a lender to verify that you can be approved for a mortgage. Once you’re preapproved, Nortex Mortgage gives you a letter that states you’ve been preapproved for a mortgage up to a certain dollar amount and can be shown to home sellers as evidence of your ability to buy
Where do I get preapproved for a home loan?
At Nortex Mortgage, we provide a seamless and convenient pre-approval process for your mortgage needs. Are you wondering where you can get pre-approved for a home loan? Look no further than Nortex Mortgage. We understand the value of your time, so we offer online mortgage pre-approval services.
An online mortgage pre-approval allows you to complete your application and submit your documentation electronically without traveling to the bank or a lending office. Often, the only part you have to do in person is conduct the actual closing of the loan in the office of an attorney or title agency.
You shouldn’t have to pay fees to start the home loan pre-approval process or obtain a pre-approval letter. At the same time, there are always exceptions. In most cases, you should only pay fees once the mortgage loan is closed.
How to get pre-approved for a mortgage loan
The first step in the mortgage pre-approval process is to find a lender. Shop around, seek rate quotes from several lenders, and when you’ve found the one you like, seek a loan pre-approval from them.
The home loan pre-approval process is like applying for a mortgage itself. You go through most of the same steps short of signing on the dotted line. You fill out a mortgage application, provide documentation of your income, assets, and debt load, and the lender pulls your credit score.
You can often provide this information electronically or authorize Nortex Mortage to obtain it, reducing the physical documents you need to provide. If seeking a mortgage pre-approval online, you’ll likely want to submit your documents electronically anyway, though you can also mail paper copies if you choose.
Here’s a rundown of the basic documentation lenders want to see. You only need to provide the information that applies to you. So if you don’t have any investment income, you don’t need to document that.
You’ll need your proof of income, which will generally include whichever of the following apply in your case:
- Last 30 days of pay stubs
- W-2 or I-9 forms from the past two years
- Previous two years of tax return
- Records of commissions and bonuses paid over the past two years
- Child support payments
- Investment Income
- Rental income
- Pension or retirement income
Requirements for business owners or self-employed individuals are more complicated. For example, they may be asked to provide a profit-and-loss statement, balance sheet, or other documents.
You’ll also need to document your financial assets, including proof of your ability to afford the down payment you plan to make.
These would include:
- Two month’s bank account statements (checking and saving) for the past two months
- Two months of statements for investment accounts, CDs, IRAs, stocks, bonds, mutual funds, etc.
- List of real estate holdings, including address and value. If mortgaged, need lender name, outstanding balance, and monthly payment.
- Other valuable assets like gold, collectible art, and items that can be quickly converted to cash.
Next, you’ll need a list of all your debts, including the outstanding balance and the minimum you must pay each month for each. These include:
- Credit cards
- Auto loans
- Student loans
- Alimony payments
- Child support
- Any other long-term debt paid in installments
Only include ongoing costs for debt services, like monthly fees for Internet, cable/satellite TV, utilities, etc.
Finally, your lender will want to pull your credit score. You don’t have to provide this; you authorize your lender to obtain it. However, it’s a good idea to check it beforehand to know where you stand going into the process.
Many credit card companies and banks now provide their customers with their updated FICO credit scores free of charge as part of their services. If yours do not do that, you may need to order it directly from one of the three credit reporting agencies – Equifax, Experian, or Transunion. While you’re legally entitled to a free copy of your credit report from each of these once a year, you may have to pay to get your actual FICO credit score, the one NORTEX mortgage generally uses.
Next steps in the home loan pre-approval process
Once preapproved, you’re given conditional approval to borrow up to a certain amount of money and a letter stating that fact. The conditional approval is generally suitable for 60-90 days.
Once you find a home you like and complete a sales contract, you provide a copy to your lender and signal them to proceed with processing the loan application.
Although you’ve filled out a mortgage application, a home loan pre-approval doesn’t commit you to taking out a mortgage. That only happens once you have a signed sales agreement and authorize a Nortex Mortgage Loan Officer to process the application.
Likewise, a pre-approval doesn’t guarantee getting approved for a home loan. For example, you could still be turned down if the home you chose needs to appraise for a higher value or if problems are discovered with your application during the formal approval process, known as underwriting.
Most of the time, this doesn’t mean your application has been flat-out rejected but that you’ll be asked to provide some additional documentation or perhaps a larger down payment for a low appraisal.
Though they aren’t mandatory, pre-qualifying and pre-approval are essential in qualifying for a mortgage and buying a home. So, both should be part of your plans for buying a home.