When it comes to the mortgage approval process, there are several steps that one must go through. By making yourself familiar with it, you will better understand what is required of you and how you need to prepare. After all, the more knowledgeable you become the more comfortable and in control you’ll feel.
1. Organize Your Documents
In order to obtain a mortgage, your lender will require certain documentation from you to make sure that you will have the ability to repay the mortgage you take out. Such documentation includes proof of employment, tax returns, pay stubs, bank statements, divorce and child support statements if applicable, and any other information that the lending company feels might be necessary.
2. Get Pre-Qualified
Before you apply for a mortgage, getting qualified will help you establish how much you can borrow. When purchasing a home, there are two options one may choose from to qualify for a mortgage. The first option, pre-qualification, is a quick process that usually happens in a matter of minutes. While pre-qualification is helpful, your other option – pre-approval – is more beneficial and gives you better leverage when negotiating with the seller. Getting pre-approved also lets you focus on homes within your price range instead of wasting time looking at homes that you won’t be able to afford. Finally, when it comes time to close, the process will go rather quickly since your mortgage has already been approved.
3. Find the Right Mortgage
While searching for the right mortgage program, there are many things to take into consideration. For example, you might want to think about how long you plan on keeping the mortgage. To figure out what mortgage payment schedule is the best, one will need to compare different rates, fees and points. The whole process can be tedious and difficult at times, which is why a qualified loan officer can help you make the right decision. Remember one thing: the quicker you pay off your mortgage the less interest you pay.
4. Obtain Mortgage Approval
The process of obtaining loan approval involves the following steps:
- Review of loan application (be sure to fill it out completely).
- Verification of credit history, employment history, assets such as bank accounts and mutual funds, property value and any additional information that the lender might require.
- Mortgage broker receiving copy of the MLS listing and the Agreement of Purchase and Sale (this is information that I send once the offer is accepted).
There are also a few things that you can do to improve your chances of getting approval.
- For any requests of additional documents and information, respond promptly.
- Do not make any major purchases such as a car or new furniture until the mortgage is closed (this depends on your situation – talk to your Mortgage Broker for the best advice). Increasing your debt can have the opposite affect on your application.