Strength of pre-approval versus pre-qualification
If you go to my website at www.gustancho.com and click on the APPLY NOW icon on the top RIGHT section and submit the questionairre, you have started the pre-qualification process. Once you submit the APPLY NOW, I will contact you and go over what your goals are, whether it is a purchase or refinance, and go over the basic income and expense of you, the borrower, as well as the co-borrower. We will be going over your credit situation and assets as well as liabilities. I will then tell you what you qualify for and the basic terms and rates. You will know whether you qualify for a mortgage with a prior bankruptcy or foreclosure or whether you might have to wait. If your credit is bad, I can advise you on how to repair your credit and boost up your credit scores. If you have a judgment, I can tell you on how to negotiate the judgment or make payment arrangements in order for you to qualify for a mortgage. If you have errors in your credit report, I can help you with writing a letter to all three credit bureaus to have the derogatory items deleted from your report.
Waiting period after bankruptcy and foreclosure
There is a waiting period of 2 years for folks who filed bankruptcy. If you just filed bankruptcy, contact me so we can start strategizing on rebuilding your credit and have you ready to purchase your home after 2 years. If you were a victim of a foreclosure, short sale, or deed in lieu of foreclosure, there is a waiting period of 3 years from the the date the deed of the foreclosed home was transferred out of your name to the bank’s name or the date of the sheriff’s sale. The deed transfer date is extremely important. Just because you turned your keys in and got a receipt by your home mortgage lender does not mean that is the date of the foreclosure and the clock starts ticking. The 3 year clock starts ticking from the date of official transfer of the deed out of your name and to the name of the new lender or the new owner of the property. There are so many cases where the homeowner turns in keys and their home is foreclosed but the bank is in no hurry to transfer the deed to their name. It might be five years before the bank transfers the deed from your name to their name. The 3 year waiting clock starts ticking at the 5 year mark. Make sure you are on top of it and if you need to consult an attorney, do so, or you may file a complaint with the regulatory agencies as well.
Once you are prequalified for a loan, the next step is to get preapproved if you are planning on purchasing a home. A preapproval is as close to an approval you will come to. The final step of the closing on your home is an approval, which means a clear to close. To get a preapproval, you need to fill out our online mortgage application at www.gustancho.com which is on the top left section next to Fast Quotes. It is the secured 1003 mortgage application and is several pages. Please fill out all of the information asked for you and your coborrower. Once you have filled out the application, submit it. Once you submit your application, I will be alerted and will contact you to verify all the information in the application is correct, especially you income and expense information, and your asset and liabilities. I will then pull credit and submit it to our Fannie Mae Automated Underwriting System for approval. Once we get an approval by our automated underwriting system, I will issue you a preapproval letter so you can start house shopping. Once you have signed a real estate purchase contract, submit the contract to me and I will send you your mortgage application to sign along the Good Faith Estimate, Truth in Lending Statement, and Fees Worksheet as well as other forms along with a list of documents that I need from you like Tax Returns, W2s, paycheck stubs, bank statements, and other documents needed to start the loan underwriting process. I can close most residential loans in 30 days or less once I have received your signed applications and documents that were requested.
WHAT IS A PRE-APPROVAL & WHAT IS THE DIFFERENCE FROM PRE-QUALIFICATION
With a constant stream of new lending guidelines, volatile mortgage rates and tightening regulation from Washington, very few real estate agents will show new homes to a potential home buyer without at least a pre-approval letter.
A Pre-Approval Letter will help you in three ways:
- It states the loan amount and rates and terms the borrower is qualified for.
- It gives you an estimate of what your total monthly housing payment will be, which includes taxes, insurance, and homeowner association dues if any.
- Submitting a strong “Pre-Approval” letter with a purchase offer will let the seller know you are a serious and strong buyer and will take your offer seriously and start the negotiation process.
As stated earlier, you can get preapproved for a mortgage by applying online at www.gustancho.com and clicking on the APPLY NOW icon on the top left section next to Fast Quote. If you apply early in the day, I can get you preapproved within 2 hours of you submitting your completed online mortgage application and issue you a preapproval letter the same day.
Common Loan Pre-Approval Documents:
Income / Assets for Wage Earner:
- Last 2 year W2s and Tax Returns
- 2 most recent Pay Stubs
- 2 most recent Bank Statements, 401(K), Liquid Assets, Investment Accounts.
Income / Assets for Self-Employed:
- Last 2 year Tax Returns – Business and Personal
- Last Quarter P&L Statement
Letter of Explanation For:
- Employment Gap or New Line of Work.
- Late Payments / Judgments / Bankruptcy on Credit Report.
Other Documents Needed:
- Bankruptcy Discharge is it applies to the borrower.
- Foreclosure paperwork if it applies to the borrower.
- Child Support Documentation if it applies to the borrower.
- Lease Agreements if you have investment rental income.
- Mortgage Payment Statements if you own other residential or investment properties.
Ask a lot of questions and make sure your loan officer is available at all times
You need to feel comfortable with communicating with your loan officer. You should ask your loan officer as many questions as possible. Your loan officer should be available 7 days a week and should always promptly return all of your calls. Loan officers are extensively regulated and the majority of licensed mortgage loan originators will act on the client’s best interest. If you are looking to obtain a home purchase loan or a refinance loan in Florida or Illinois, feel free to contact me at 262-716-8151 or email me at firstname.lastname@example.org. I am available 7 days a week.
Gustan L. Cho NMLS ID 873293
Residential and Commercial Lender