Getting Pre-Approved Is First Step Of Home Buying Process In Illinois
This BLOG On Getting Pre-Approved For Mortgage Is First Step Of Home Buying Process In Illinois Was Updated On May 9th, 2017
The mortgage process should not be difficult nor stressful as most first time home buyers believe. As long as you get a proper mortgage pre-approval, the overall mortgage application and underwriting process should not be difficult. There is no reason why borrowers with solid pre-approval letters should not just close, but close their home loans on time. Once home buyers find that perfect home, they would want to make sure they are prepared to act quickly and make a reasonable offer that looks attractive to sellers. Getting a solid pre-approval is the most important part of the mortgage process.
- Sellers take you more seriously. Getting pre-approved on a home loan is a simple way to show sellers that you’re a serious, motivated buyer.
- If they have more than one offer on the table then it’s likely they’ll choose yours, since there’s a better chance that the deal will go through with a buyer who is pre-approved for a home loan than one who is not.
- You’ll have an easier time finding the right home loan. Once you’re pre-approved, you’ll have a base to begin “comparison shopping” between different lenders and types of home loan.
- When you’re buying something in the thousands (not to mention the millions!), even a one-point difference can make a big impact on your wallet.
Difference Between Getting Pre-Approved And Pre-Qualified?
Getting “pre-qualified” is when a lender reviews your financial situation and gives you an estimate of how much you can afford after briefly reviewing your credit scores and debt to income ratio. Keep in mind that the amount you can afford may be smaller than the amount the bank is willing to lend a home loan. Getting pre-qualified for a home loan can help you stick to your price range, rather than the maximum home loan amount.
The pre-approval process is more substantial, but you’ll end up with a pre-approval letter that states the actual size of the home loan– and it’s this letter that holds weight with sellers. If you’re serious about buying a home, getting pre-approved is a smart first step.
How Does Getting Pre-Approved For Home Loan Process Work?
First, you’ll be asked to fill out an application with a lender. The lender will gather a variety of background information regarding your income, employment status, and tax forms. Specific documents you may be asked to submit to a lender for pre-approval include:
- W-2 statements, or 1099s, for the last two years
- Copies of your most recent bank statements for all accounts including checking, savings, etc.
- Recent paystubs from your job and proof of any other income you may have
- Proof of assets such as IRAs, stocks, bonds, or mutual funds
- Some lenders require an application fee – be sure to ask!
You can apply online or via telephone. I can issue a borrower a pre-approval if the borrower apply here at www.gustancho.com and click on the APPLY NOW icon on the top left corner. The borrower and co-borrower, if there is a co-borrower, need to fill out the online application as detailed as possible and submit it. Once the borrower submits it, I get alerted via email that there is a pending application and review it with the borrower and make sure the application is complete. I then submit it to our automated underwriting system for an approval. Once approved, I certify a pre-approval letter to the borrower so they can start shopping for their dream home. Once the borrower finds a home, they forward me the real estate purchase contract and the formal application process starts. I can close most loans in 30 days or less as long as the borrowers work with me in getting me the documents necessary for the lender such as income tax returns, bank statements, letters of explanations, and other conditions as they come up.
Keep in mind that being pre-approved does not guarantee that a lender will give you the loan – it simply means than if nothing in your financial situation changes, you’re likely to get a loan. When the seller accepts your offer on a home, the lender that has pre-approved you will then formally approve your loan.