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Understanding the Mortgage Pre Approval Process

Whether you are a first-time home buyer, looking to buy a second home or an investment property, the first step is to understand the mortgage pre approval process so that you can get a pre approval letter.

What is a pre-approval?

The mortgage pre-approval process is where a lender reviews your income, employment, credit, and assets. After reviewing the credit qualifications, the lender will issue a pre-approval letter mentioning how much home loan you might qualify for.

Why should I get pre-approved?

There are several reasons:

1. You will know how much loan you qualify for.

2. You will know how much your estimated payments would be. Sometimes, even if you qualify for more, you would like to keep your payments lower because of other obligations.

3. Most real estate agents (especially the good ones like Raegen and Sarah) will not show your properties till they are sure you are pre-approved for a mortgage.

4. Sellers won’t consider your offer to buy, till a pre-approval letter is attached to the offer.

5. If there are any red flags, it gives you time to work on them and correct them before you buy a house.

Where do I start?

You can start by completing a loan application. Pretty much every lender can have you complete this online through your computer, phone, or tablet, by providing you a link like the one here: Do your best to complete all the fields, leave the ones blank that you can’t. It should take you 15 minutes or less to complete.

What documents do you need for mortgage pre approval?

If you are a wage earner

· 2 Most recent Pay Stubs and most recent W2s

· One Month Bank Statements

If you are self-employed or some part of your income/loss comes from a business you own:

· 2 Most recent federal tax returns (Personal and Company)

In some cases, other documents may be required to complete the pre-approval process.

How long does it take to get a pre-approval?

Depending on how quickly we can get the loan application back from you and the initial documentation, a pre-approval can usually be issued the same day. If some additional questions arise or more documentation is needed it may take a day or two longer.

How long is the pre-approval good for?

A Pre-approval letter is usually good for 60-90 days. However, we at Progress Lending understand that it’s not always possible to find a house and get your offer accepted in 3 months. We do not make you go through the entire process again after 90 days. If nothing has changed with your credit qualification, we will simply renew your letter and issue you a new one. Absolutely no hassle at your end.

Will it impact my credit score?

Yes, it can potentially impact your credit score. The amount of impact is dependent on your credit profile, the stronger the credit – the lesser the impact. However, we typically try do a soft pull of your credit, unlike other lenders, which has no negative impact. While we can’t use a soft pull credit report for the final file and call it a true pre-approval, it still allows us to see your scores and all debt being reported.

Can the pre-approved amount change in the future?

Yes, the amount can change for various reasons. Any change in your income, assets, or debts can increase or decrease the amount of loan you were pre-approved for. Also, an increase in mortgage rates would mean you qualify for a lower loan amount now and vice-a-versa. We use an average rate to work the numbers for qualification. This helps avoid any surpriese or major changes in the initial pre-approval offering.

I am pre-approved, now what?

Once we have finished our complete phone consultation with you and issued a pre-approval, you should have a very good understanding of what your loan options are, including down payment and estimated monthly payments, and purchasing power. From here we hand you back over to Raegen and Sarah to begin your house hunt. Happy hunting!


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