Get Pre-Approved using these 6 Tips!
Corpus Christi Home Loans Explained
Below are six tips to prepare for a pre-approval for Corpus Christi Home Loans. Remember, this is a process. It is important that you know the steps!
Tip #1 Understand the Pre-Approval Process
To be approved for a home loan, your lender must verify various aspects of your finances and of the home you choose to purchase. Typically, this process begins with a pre-approval.
To get a pre-approval, your lender will check your credit score and create a loan application with your information including income, history employment, assets, etc. Your lender will analyze this information and issue a decision on whether or not you are eligible for a loan. If you are qualified, the lender will issue a pre-approval that states your qualification subject to verification of the information you provided and the purchase property.
A loan commitment takes pre-approval a step further by verifying all of your financial information. A loan commitment provides information about the loan your lender has agreed to offer you. It will indicate the amount of money the loan is for, the interest rate you are qualified for, type of loan. They will also provide you with a term limit, that is to say, how long your loan will be.
Shopping for a home with a pre-approval is better than shopping without it. A loan commitment gives homebuyers a consistent head start against other buyers.
Tip #2 Gather Your Paperwork
After you receive your pre-approval letter, your lender will ask for various documents that support the information you provided regarding employment, assets, finances, etc. To keep your loan application process moving forward in a timely manner, it’s a good idea to have these documents located and ready to go for your lender to finish compiling your loan application. The Documents needed include:
Previous two years W-2’s as well as your federal tax returns
Pay stubs for the last 30 days
Two-month bank statement history for all financial accounts (investments included)
Loan payment information
Two-year residency history
Tip #3 Know Your Credit Circumstance
The majority of home buyers, 95 percent, know that credit is important when purchasing a home. This is according to an Experian survey. Furthermore, people who know their credit scores feel significantly more prepared to buy a home than those who don’t know their credit score (70% vs. 54%).
You can check your own credit report once a year with each of the three major credit bureaus, TransUnion, Experian, and Equifax. Keep aware of your ever changing credit report. (though it won’t contain your credit score) It can help you look out for errors, collections, etc. If you have recently applied for any credit in which the creditor or lender ran your credit score, you can ask to see your report.
Be wary of online credit score checks. They often only contain one of your credit scores from the three major credit bureaus. This can misguide you to believe your score is higher or lower than it actually is.
Tip #4 Keep Your Finances As-Is
Let’s say you get a copy of your credit report and find that you had an old, forgotten account sent to collections. While immediately paying that collection off may seem like the responsible thing to do. However, it may not remove that negative credit mark.
It’s important to leave the timing of credit decisions, like paying off collections, to your mortgage lender. Wait until your pre-approval to discuss options going forward in regards to paying off accounts in collections or opening up new lines of credit.
Tip #5 Avoid Making Large Credit Purchases
A large purchase on a credit line can drop your credit score significantly as it ties up your available credit. A drop in score can dictate your eligibility for a home loan.
A major purchase can also affect your debt-to-income ratio. This is taken into account when determining if and how much a lender can pre-approve to you. Avoid making any large purchases before and during the loan application process. That is to say, unless you have consulted with your mortgage banker first.
Tip #6 Document Cash Deposits
Maybe you just got married and deposited gift checks into your account or did some freelance work and got paid in cash; regardless, keep track of personal check and cash deposits in your bank account. So, when your lender looks at your bank statements, they will need to verify and know the origin of the funds. Keeping receipts and records of these transactions will keep you from having to backtrack.
Corpus Christi Home Loans, Conclusion
So, these are some of the things you need to be aware of. The lending institution wants to have very clear cut understanding of your income. If you are a small business you may have to suffer a little bit to show the lender that your business makes an adequate amount of income to meet your future financial obligations. It’s all about the “paper trail.” Buying a home correctly means thinking “Long Term”
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Know the difference between being pre-approved vs pre-qualified?