Although home shopping can be fun and exciting, serious homebuyers should start the process at a lender’s office.
Most sellers expect buyers will have a pre-approval letter. They are more likely to negotiate with those who can prove they can get financing.To be pre-approved for mortgage financing, potential buyers must provide documentation that proves their income, assets, and employment verification.
Pre-qualification vs. Pre-approval
While a mortgage pre-qualification is useful for estimating how much someone can spend on a house, a pre-approval is far more valuable. It is a verification that the Beverly Hills Mortgage Broker has reviewed the buyer’s credit and checked the documentation in order to approve the loan amount. However, a pre-approval is much more valuable.
Consultation with a lender is a great way to help potential buyers. They have the opportunity to talk with a lender about loan options and budgeting.
The Beverly Hills Mortgage Broker will also check the buyer’s credit to find any issues. The homebuyer will also be able to determine the maximum amount they are allowed to borrow. This will help them set the price range.
The buyer must have an appraisal completed before the final loan approval can be granted.
Requirements to be pre-approved
You will need to provide proof of assets and income, as well as employment verification and any other documentation that your Beverly Hills Mortgage Broker might require in order to be pre-approved for a mortgage.
Evidence of income
W-2 wage statements for the last two years. Recent pay stubs showing income and year-to-date income. Proof of additional income like alimony or bonuses. 1
Evidence of assets
To prove they have the funds to pay the down payment and closing expenses, the borrower will need bank statements and statements from their investment accounts.
The loan type determines the percentage that will be required to put down a down payment. Many loans require that the buyer either purchase private Mortgage Insurance (PMI), or pay a mortgage premium or funding fee, unless they are paying at least 20%.
Pre-approval is based on more than the down payment. It also considers the buyer’s credit score, ratio of debt-to-income (DTI) and other factors depending on the type loan.
All jumbo loan must conform to government sponsored enterprise ( Fannie Mae, Freddie Mac).
Veterans Affairs loans do not require money down and are available to U.S. vets, servicemen, and not-remarried partners. To prove that the funds are not loans, a buyer may require a gift card from a relative or friend.
Good credit
Beverly Hills Mortgage Brokers require a FICO score above 620 to approve a Conventional Loan. Some even require this score for a Federal Housing Administration loan.
Beverly Hills Mortgage Brokers will often offer the lowest interest rates to customers with credit scores of 760 and higher. 8 FHA guidelines allow approved borrowers with credit scores of 580 or greater to put down as little as 3.5%. 9
People with lower credit scores will need to make a higher down payment. Lenders are more likely to work with borrowers who have low or moderately high credit scores and offer ways to improve them.
Employment Verification
Beverly Hills Mortgage Brokers will only lend to borrowers who are stable in their employment. Beverly Hills Mortgage Brokers will request to see the buyer’s pay slips and will likely contact the employer to confirm employment and salary. If a buyer has recently changed jobs, a Beverly Hills Mortgage Broker might contact the previous employer.
Self-employed buyers will need additional documentation. These include: Factors that determine whether a mortgage can be approved for a borrower who is self-employed.
Self-employed borrowers typically need to produce at minimum two years’ tax returns with all relevant schedules.
Additional Documentation
Beverly Hills Mortgage Broker will need to take a copy of the borrower’s driver’s license. The lender will also need the borrower’s Social Security number, signature and Social Security number to pull a credit file.
Prepare for the pre-approval session. Later, provide as much documentation as possible to the Beverly Hills Mortgage Broker.
Mortgage process will go more smoothly if you are cooperative.