What Comes After Pre Approval Mortgage

You Wait While Your Mortgage Application Is Reviewed

In the underwriting stage of your application, the underwriter will get into the nitty-gritty of your finances and credit history, meticulously analyzing them.

You may have questions during this time, but the underwriter may not take your call, respond to that DM and certainly wont accept your friend request. If your underwriter has any questions or concerns theyll often relay them to your loan officer, and your loan officer will relay them to you.

What Happens After A Home Loan Preapproval

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Acquiring mortgage loan pre-approval is the first step a borrower takes at the beginning of the home-buying or refinance process. Not to be confused with mortgage pre-qualification, it entails more than simply telling the lender what you earn, your credit situation and how much money you have. Pre-approval entitles the borrower to a loan with that lender for a specified amount and loan program if the property and borrower meet all other underwriting guidelines.

Here Is Everything You Need To Know About Mortgage Preapproval

Getting a preapproval letter is one of the first steps you should take in the homebuying process.

Luke Daugherty

Luke Daugherty is a freelance writer, editor and former operations manager. His work covers operations, marketing, sustainable business and personal finance, as well as many of his personal passions, including coffee, music and social issues.

One of the first and most important steps of buying a home is getting mortgage preapproval. Getting mortgage preapproval gives you an idea of how much you’ll be able to borrow for a home loan, and shows that you’ve lined up the financing you need to close on a home. Without a preapproval letter, most sellers aren’t going to take your offer seriously, especially in today’s competitive housing market.

Here is everything you need to know about what it means to be preapproved, how to get mortgage preapproval, and why it’s a critical part of the homebuying process.

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Gather The Appropriate Documents

Lenders will want to verify your identity, credit history, employment history, income and financial assets to issue a preapproval. Theyll likely ask you to fill out a uniform residential loan application .

The 1003 application asks for your personal information, financial information and loan information, including

• Bank accounts, retirement and other accounts
• Any other assets you have
• Property you own
• Employer contact information
• Debts you owe or other liabilities

Your lender will also likely do a hard credit check, and may require additional documents based on your individual situation, such as pay stubs, tax returns or bank statements.

How Long Does It Take To Get Pre

As long as you have all your documents ready, you should be able to get a mortgage pre-approval on the same day you visit your lender.

However, lots of debt, a history of previous foreclosures, and a low credit score can slow down the process. If any of these apply to you, the pre-approval process can be much longeranywhere from a few days to several monthsdepending on the complexity of your finances.

The only way to speed up the process is to give your lender all the documents listed above. Dont forget anything!

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What Do I Need To Do To Get Mortgage Pre

You will need to have a valid proof of income, assets, employment, and other documents the lender may require. This can include bank statements and your latest tax assessment. Youralso plays a significant role in determining your eligibility. If you do not have agood credit score, lenders can refuse to approve your mortgageâthe required credit score for a mortgage approval ranges between 300 to 900, but theminimum credit scorerequired by most major banks in Canada is 600 to 700.

Why Should I Get Preapproved

If a preapproval doesnt get you a loan right away, why get one? Preapprovals have several benefits:

• Its easier to shop: Many real estate agents require you to get preapproved before you shop for a home. Preapprovals make the house hunting process easier for you and your real estate agent.
• It makes your offer stronger: If youre shopping in a competitive housing market, a preapproval can be crucial to getting your offer accepted. Sellers arent just looking for the highest offer. Theyre also looking for offers that arent likely to fall through. A preapproval tells buyers you can get financed for the amount youve offered.
• It gives you time to sort out issues: There are reasons both buyers and sellers may need to get to closing fast. Getting preapproved means youre getting the bulk of the mortgage process done upfront. That way, once youve had an offer accepted, you can just focus on getting ready for your move.

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What Happens After Underwriting

Achieving final approval from the mortgage underwriter is a big deal but its not quite time to celebrate.

Youll go through a few more steps before you get the keys to your new place.

The lender has to double-check your income and employment. And you still have to sign final documents and pay closing costs.

Learn exactly what needs to happen after final approval to put your home sale over the finish line.

In this article

Understand How Long Preapproval Lasts

Preapproval doesn’t last forever. Check your expiration date and keep it in mind as you look at homes. Though it varies from lender to lender, preapproval is typically valid for 60 90 days. If you haven’t settled on a house, you can request a renewal by giving your lender your most up-to-date financial and credit information.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

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Tip : Dont Open A New Credit Account

No, its not déjà vu all over again! Yes, we discussed using a credit card during the mortgage process, but opening a new line of credit can open up a new can of worms. Same goes for taking out a personal loan.

Even if youve met all the conditions of the mortgage loan and expect to get final approval from the underwriter, you could worry them by taking on new debt out of the blue and so late in the game. This could delay closing on your home or cause your mortgage interest rate to go up.

Not All Properties Are Ok For The Lender

Did you know that the banks dont accept some properties as security for a home loan? So even if you get pre-approval, and you decide to buy a certain property type, your loan may be declined.

This is because a pre-approval is always subject to the lender accepting the property that you buy as security. Where you have concerns, its best to check with us before making any offers.

As a general rule, the property youre planning to buy must meet these criteria:

There is a full list of the types of properties that are considered to be non standard on our page.

We recommend that once you find a property you like, please email your mortgage broker with a link to the listing for the property in Domain or Realestate.com.au.

We can then inform you if there appears to be any aspects of the property that may be an issue for some lenders.

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Can I Get Mortgage Pre

Its unlikely. Initial qualification without a full credit check may be possible with some lenders at that point, they may be interested simply in whether you have both the income to pay back a mortgage and no credit red flags. But to get full-scale pre-approval will likely require a credit check.

Its important to know how long pre-qualification and pre-approval will be in effect. Different lenders assign different times for which their letters of pre-qualification or pre-approval are good, from 30 to as many as 120 days.

Remember that multiple checks for credit history can negatively affect your credit rating, so you dont want to have them repeated often. For the same reason, you shouldnt apply for it until youre ready to start seriously home shopping. Many lenders and real estate agents can help you get a range of what you can afford in a general sense, so that you can avoid going through the pre-qualification or pre-approval process only to learn that theres nothing in your market that you can realistically afford or want.

Mistakes To Avoid After Mortgage Preapproval

While it may seem obvious that you need to keep paying your bills during the period between a mortgage pre approval and your settlement date, some would-be borrowers neglect their finances in the excitement of shopping for a home.

Getting preapproved for a mortgage is no easy task, so the last thing you want to do is lose sight of your finances after you have been preapproved.

Here are nine mistake to avoid after you have been preapproved:

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How Long Does It Take To Buy A House On Average

The good news is, depending on your location and finances, you could be in a new home in 5 6 months. Itll take less time if youre buying a home with cash. It might take a little longer if youre buying while selling your current home.

Better news still you can take steps ahead of time to shorten that period. Best news yet you can do most of the work from your couch.

Lets take a closer look at the steps to buying a house. But first, heres what you should do before you even start looking to ensure a streamlined and efficient process.

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You Sign A Purchase Agreement And Apply For The Mortgage

Once you get an offer accepted on a house, you notify your lender, and they immediately move your file into the mortgage application process.

Some of the information you provided when you got preapproved will be used during this phase. But heads up! The loan officer who helped you through preapproval will often ask for more documents, making sure to cross the ts and dot the is before sending your application to the underwriter.

You may think you applied at the preapproval stage, but your application is considered complete once you have a purchase agreement in place for a property.

MoneyTerm

The Underwriter

Sounds spooky, right? An underwriter works for a lender to approve or deny loans after assessing a mortgage applicants financial picture.

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Should I Negotiate The Final Mortgage Rate

If a lender agrees to loan you a mortgage, you are allowed to negotiate the terms and conditions which include the interest rate along with the amount and the term. You are more likely to be able to negotiate the rate if you have an excellent application that consists of a great credit score, a biggerdown-payment, lower monthly debt, or other things that may appeal to the lender. Many mortgage brokers are willing to buy-down the rate that they get from their lenders, giving you a discount on your interest rate. We suggest that you take the time to shop for rates offered by different lenders and decide what is best for you. Remember, the interest rate isn’t everything the other terms and conditions in a mortgage can make a big difference as well.

What To Bring To Your In

We want you to be ready for the pre-approval process and being prepared will help. For your meeting, you should plan to bring the following:

• Current address
• Previous address
• Current employment information
• Previous employment information
• If self-employed, the last 2 years Notice of Assessments from your Income Tax return
• Value of properties, automobiles, investments, and savings

• Most recent statements for mortgages, loans and lines of credit
• Most recent credit card statements
• Estimated value of your home
• Housing expenses
• Financial information for your co-borrower, if applicable
• Social Insurance Number

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Consider Other Associated Costs

As you go through the mortgage process, it’s important to think about the true cost of owning a home. Besides the costs required at closing and regular mortgage payments, there are other recurring costs such as property tax, home insurance, heating costs, condo fees and more. Even though pre-approval specifies an amount you may be approved for, consider a lower principal amount to reduce regular expenses while leaving money for other unforeseen expenses.

What Does It Mean To Get A Pre

A pre-qualification letter only provides a number that a lender would be likely to lend to you, but a pre-approval actually outlines the terms of a hypothetical offer. Details like your allowable purchase price, interest rate, and lending fees are baked into the letter to give you a realistic look at what a home purchase means for your finances.

A pre-approval letter is the traditional gold standard for buyers. Your pre-approval letter is a prerequisite for being able to shop for houses with a real estate agent. Its simply not in the best interest of an agent to work with someone who doesnt show up with this letter in hand because you could be wasting their time if your finances dont match your desires.

Your pre-approval letter is a document from a lender laying out the loan amount theyd tentatively lend to you for your home purchase. Its also your dress rehearsal for actually getting approved. Your lender will go through a similar process for approving an actual loan.

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Find A Home And Make An Offer

Now that youve been pre-approved, its time for the fun part: house hunting.

After visiting properties with your agent and picking out the home you want, its time to make an offer.

Your real estate agent will know the ins and outs of how to structure the offer. It should include contingencies that must be satisfied before the deal is complete.

When you make your offer, youll generally also submit your earnest money deposit.

The earnest money is a cash deposit made to secure your offer on the house and show youre serious about buying. It can be as little as $500 or as much as 5 percent of the purchase price or higher, depending on local custom.

Speak with your real estate agent ahead of time about how large the earnest money deposit is likely to be, and be ready to write a check or make a wire transfer when you have an offer accepted especially if youre buying in a competitive market.

Document Review: Le Vs Cd

You may remember that when you applied for a mortgage, the lender provided a Loan Estimate form which outlined your mortgage terms and provided an estimate of your costs.

Now, at least three business days before your closing day, you will receive a Closing Disclosure form.

Whats the difference between these two documents?

• Loan Estimate form: This document shows an estimate of your loan terms and loan costs which can vary based on type of loan, mortgage rate, and loan amount
• Closing Disclosure form: This document shows what youre actually scheduled to pay, both on your closing day and for your monthly payments

There shouldnt be a huge difference between your LE and CD, but its up to you to compare the documents to make sure.

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How Can A Mortgage Pre

Whenmaking a conditional offer on a house, a common term is the financing clause. Offering to buy a home without a financing clause can make your request stand out. However, if you end up not being able to finance the purchase, the seller will keep your deposit and can sue you for damages associated with the termination of the offer.

You may have to pay for any differences in price if the seller has to sell for a lower amount than your initial offer! Having a mortgage pre-approval can give you the confidence to waive the financing condition, but remember that mortgage pre-approvals are not guaranteed, and you should make sure not to exceed your maximum limit.

Dry Versus Wet Settlements

When everything checks out on your Closing Disclosure, youre ready for closing day.

There is one final task, and its what the entire home buying process has been leading up to: The lender must fund the transaction by providing the cash to pay for your new home.

You might have a wet settlement, where the lenders money is disbursed at closing. This is also called table funding.

Some lenders prefer a dry settlement, which means the money is paid a few days after closing.

Ask the closing agent or your mortgage broker how lender funding will be handled. A payment delay may make sellers cranky if not worse.

As the buyer, you will almost always have to bring money to closing to cover your down payment and closing costs.

Its OK to use a cashiers check, certified check, or to wire the money. You cannot bring cash to most title offices.

Be sure to check with the closing agent if you wire money. Confirm that the wiring instructions are correct, especially the recipient account number.

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Mortgage Processing And Underwriting

Once your full loan application has been submitted, the mortgage processing stage begins. For you, the buyer, this is mostly a waiting period.

But if youre curious, heres what happens behind the scenes:

First, the Loan Processor prepares your file for underwriting.

At this time, all necessary credit reports are ordered, as well as your title search and tax transcripts.

The information on the application, such as bank deposits and payment histories, are verified.

Respond ASAP to any requests during this period to make sure underwriting goes as smoothly and quickly as possible.

Any credit issues, such as late payments, collections, and/or judgments, require a written explanation.

Once the processor has put together a complete package with all verifications and documentation, the file is sent to the underwriter.

During this time, the underwriter will review your information in detail. Its their job to nitpick the information youve provided looking for missing items and red flags.

Theyll primarily focus on the three Cs of mortgage underwriting:

• Capacity: Will your income and current debt load allow you to make the loans payments each month?
• : Does your credit history show that you pay debts on time?
• Collateral: Is the value of the property youre buying sufficient collateral for the loan?

During the underwriting process, your loan officer may come back with questions. You should respond as quickly as possible to ensure a smooth underwriting process.