Getting your first mortgage but haven't yet shopped for one? Your first step will be to get a mortgage pre-approval, which helps inform you about how much money a lender will give you for an actual mortgage. Here are some questions you likely have about the process.
How Detailed Is The Pre-Approval Process?
Different lenders are going to handle the mortgage pre-approval process in their own ways. Some are going to perform a detailed look into your finances by asking for proof of income and bank statements, which others will simply only ask you a few simple questions. In general, you will want a mortgage pre-approval that asks for more information rather than less. By having a clearer picture of your finances and employment, you'll get a more accurate response as to how much of a loan you'll be qualified for.
How Is Income Verified?
A mortgage pre-approval should require detailed information about your employment. It is not enough to simply look at how much you made in a given year; they'll need to review how you made that income. Was it all from one employer? Do you get bonuses that change from year to year? Are you an hourly or salary employee? How many hours do you get if you're hourly? These things can all impact how much money you'll be pre-approved for.
Does The Down Payment Matter During The Pre-Approval?
Having information about how much you can provide for the down payment is definitely going to influence your mortgage pre-approval. If you are able to verify that you have the cash on hand for a 20% down payment, you'll be able to prove that you are responsible with money and be more likely to be approved. If you will be getting part of the down payment as a gift, then you will need to show where that money is coming from. The lender may not even care about being gifted a down payment if it is not already deposited in your account.
How Good Are Mortgage Pre-Approvals Good For?
You'll get a letter from your lender stating how much you are pre-approved for and how long that pre-approval is good for. This is because there can be changes in employment and additional debts that you take on, which can alter aspects of your pre-approval. The lender will want to verify your financial information again after a specific period of time before issuing you a new pre-approval. To learn more, contact a company like AJM Mortgage Inc.
Share27 July 2021
When I began my first business selling sports equipment locally, I knew the sports-world well, and I knew how to run a business. One thing I did not know a lot about was the financial world. I had never applied for a loan in my life other than when I financed my car with the dealership in-house financing. My first application at a large bank was denied. I began looking into my other options, and I found that there were more lenders for new businesses than I realized. I applied at local credit unions, local banks, and other business lending services. I was able to secure more funding than I even expected, and my credit is just average. I created this blog to help other new business owners realize that there is funding out there. You just have to find it and apply! Don't give up on your dream.