Getting pre-approved for a
mortgage will give you the edge when making an offer on your
dream home. If the seller and agent see that you have your
finances in order, the whole process will go much more
smoothly.
Here's how to get pre-approved:
 Find a lender or home mortgage broker through a
referral from friends, relatives, co-workers, or a real
estate broker.
 Be prepared to disclose information such as gross
monthly income and total monthly payments, including car
payments, credit card minimums, child support, and anything
else you pay each month. You will also have to submit the
last two years of federal tax returns, last three months of
bank statements on every account you own, and a loan
application.
 Calculate your total debt-to-income ratio – you
can ask your lender to help you do this if needed. The
percentage has to be under 36 to receive an ideal interest
rate. The lower the number, the better off you'll be in the
eyes of the lender.
 Authorize the lender to cull information from your
credit report. Make sure your credit report includes your
FICO score, as this is what lenders use most often to
determine your financial dependability. Your credit score
takes many factors into account – how long you've been
employed at your current job, occupation type, how long you
have resided at your current address, balance and credit
line ratios, homeowner status, recent inquiries into your
credit, age, how many credit lines you have access to,
number of years with a credit card, bankruptcy, collections
against you, foreclosures, and slow pays. 680 or higher is
an excellent score, and is seen as an A+. A score in this
range should land you a very good interest rate.
 Ask your lender to write a letter of pre-approval
so that you can present it to home sellers as proof of your
pre-approved status. It should mention that important
financial records have been taken into consideration and
everything appears sound.
 When you have the lender write a letter of
pre-approval, make sure it only states the amount you need
for the specific home you want to purchase. You don't want
the seller to think you can afford to pay more.
 The process may be more difficult or
time-consuming if you are self-employed or have been working
for less than two years. In this case, the lender may
require more information from you.
 In the end, shop around for the best rate if your
lender doesn't come up with the best offer. |
