Is There Anything Better Than A Mortgage Pre
With this competitive housing market, mortgage pre-approval letters have unfortunately started losing their authority. Most buyers have them, and in a multiple-offer situation, they just dont have what it takes to make you stand out.
Fortunately for you, theres something better!
If you want a true competitive advantage, Churchill Mortgages Certified Homebuyer program is a great option. When you become a certified homebuyer, you have all the advantages of a pre-approval like credibility as a homebuyer, confidence in your search, and an accelerated closing process.
But unlike with pre-approved mortgages that only involve a loan officer, your certified homebuyer application is reviewed by a mortgage underwriterwhich is a huge advantage when you start shopping for houses! Youll be able to close faster and have a leg up on other buyers who will probably have to wait for an underwriter to review their application.
Dont sell yourself short with a standard pre-approval. Take your home-buying credentials to the next level today and get in touch with a Churchill Mortgage expert!
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What Does Conditionally Approved Mean
A conditional loan approval means that the Underwriter has signed-off on the parameters of the loan and most of the documentation, but still needs a few more items before fully approving the borrower for the loan.
The Loan Coordinator contacts you to review the conditional approval mortgage and discuss any additional required items, as well as any ancillary documents that are needed to finalize the loan. This documentation can include:
- The completed appraisal
- Additional verifications
- Standard in-house items required for closing
Once all conditions have been obtained, the Loan Coordinator will send the file back to the underwriter for a final review and approval.
Next step: Once the loan is approved, a Mortgage Professional will schedule the closing.
Do You Qualify For A Mortgage Loan
Bank statements are just one of many factors lenders look at when you apply for a mortgage.
Almost all areas of your personal finances will be under scrutiny including your credit score and report, your existing debts, and any source of income youll use to qualify for the loan.
These factors help determine how large of a loan you qualify for, as well as your interest rate. The cleaner your finances look across the board, the better deal youre likely to get on your new home loan or refinance.
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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.
Save For A Bigger Down Payment
A larger down payment reduces the amount your lender needs to loan you. This makes your loan less risky for the lender because they lose less money if you default. Saving for a larger down payment can help you become a more appealing candidate for a loan and can even convince a lender to cut you some slack in other application areas. Use these tips to increase your down payment fund:
- Budget for savings. Take a look at your monthly budget and decide how much you can afford to save each month. Hold your down payment fund in a separate savings account and resist the temptation to spend any of it.
- Pick up a side hustle. In the on-demand “gig” economy, it’s never been easier to earn extra cash outside of your job. Drive for a ridesharing service, deliver food for local businesses or pick up a few spare tasks on a site like TaskRabbit.
- Sell some of your things. Sites like eBay, Poshmark and ThredUp make it simple to sell old things you no longer use. Search around your home for things you think you can sell and list them.
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Why You Can Trust Bankrate
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more so you can feel confident when you make decisions as a homebuyer and a homeowner.
Initial Credit Check For Preapproval
In the first phase of acquiring a loan, pre-qualification, youll self-report financial information. Lenders want to know details such as your , social security number, marital status, history of your residence, employment and income, account balances, debt payments and balances, confirmation of any foreclosures or bankruptcies in the last seven years and sourcing of a down payment. This is only a portion of the total information needed for your mortgage application.
Once youre ready to get pre-approved for a loan, lenders will verify your financial information. During this phase, lenders require documentation to confirm the information in your application and pull your credit history for the first time. You may be required to submit a letter of explanation for each credit inquiry in recent years, such as opening a new credit card, and for any derogatory information in your history, like a missed payment.
Once you find a home within budget and make an offer, additional or updated documentation may be required. Underwriters then analyze the risk of offering you a loan based on the information in your application, credit history, and the propertys value.
Looking to buy a home?
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What Factors Are Considered For Preapproval
In addition to considering your credit score, lenders will want to verify your employment and income. Theyll also be considering your debt-to-income ratio , which is a calculation of your total monthly debts, divided by your monthly income. This ratio, expressed as a percentage, helps lenders make sure you have enough income to reasonably cover your debts.
The exact DTI needed for mortgage approval varies by loan type. But generally speaking, youll want your debt-to-income ratio to be 50% or lower.
Do Lenders Look At Bank Statements Before Closing
Lenders typically will not recheck your bank statements right before closing. Theyre only required when you initially apply and go through underwriting.
However, there are a few things your lender will recheck before closing, including:
- Employment and income
You should avoid financing any large purchases or opening new credit lines between mortgage approval and closing.
New debts can affect your credit score as well as your debttoincome ratio , and could seriously affect your loan approval and interest rate.
In addition, if anything changes with your income or employment prior to closing, let your lender know immediately so it can decide whether this will impact your loan approval and help you understand how to proceed.
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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
Why Choose The Richards Mortgage Group
Our goal is to provide you with the support that you need to achieve your goals!
At Richards Mortgage Group we believe that knowledge is power and that an informed client is an empowered one. Thats why we keep communication, education, and accessibility as the pillars of our brand. Our mortgage approval process is best suited to clients with a busy, on the go lifestyle who value accurate and efficient advice and service, the convenience of technology, and the personal touch of a family-run business.
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Learn More About Home Loans
We think it’s important for you to understand how we make money. It’s pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.
Compensation may factor into how and where products appear on our platform . But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That’s why we provide features like your Approval Odds and savings estimates.
Of course, the offers on our platform don’t represent all financial products out there, but our goal is to show you as many great options as we can.
What Are Underwriters Looking At When They Are Approving A Mortgage
Once you have finished turning in all of your paperwork, the underwriters will look at your credit report, income, and current debt obligations to determine whether you have the means to pay back the loan. They will also examine the home appraisal and requested loan value, comparing the loan to the value of the home to ensure that the LTV ratio is acceptable. If your loan is worth more than 80% of the home’s value, you’ll likely have to pay for mortgage insurance. All of these factors will influence your final loan terms and interest rate.
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What Is Mortgage Underwriting
You may have heard the term before, but what does underwriting mean exactly? Mortgage underwriting is what happens behind the scenes once you submit your application. Its the process a lender uses to take an in-depth look at your credit and financial background to determine if youre eligible for a loan.
Here are the steps in the mortgage underwriting process and what you can expect.
Your Choice Of A Lender
The next step in the underwriting process can vary a great deal depending on your loan officer and lender. The mortgage lender you choose, the type of loan you need, and the level of detail you’ve put into your documents will play large parts in determining your level of underwriting discomfort.
Your file will be passed on to a corporate mortgage processor in a central location that is often nowhere near you, at least if you are with a large bank or lender. These processors may be overworked and underpaid, so expect a longer time frame. Lenders try to maximize the number of loan files that everyone has to process and underwrite. It’s a quantity-over-quality approach.
Smaller lenders and independent mortgage brokers usually staff in-house teams, which results in more efficient operations when everyone is under one roof.
Even so, there are many good reasons to use a big bank. The giants can afford to take more chances than the little guy, and that’s great if you find yourself in a gray zone for approval. They also often provide a wider variety of niche mortgage products for things such as renovation, but you’ll have to give up a little something in the way of efficiency in exchange.
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What Is A Mortgage Underwriter
You may be wondering, what is a mortgage underwriter? A mortgage underwriter is the person employed by the lender who takes a deeper look into your finances before approving a loan.
For many people, working with an underwriter may sound intimidating, especially if youre a first-time homebuyer. But underwriters are people, too! So, we’ve created this article to help you better understand underwriters by describing what they do and what they look for when reviewing your mortgage application.
Factors That Determine If You’ll Be Approved For A Mortgage
Many or all of the products here are from our partners that pay us a commission. Its how we make money. But our editorial integrity ensures our experts opinions arent influenced by compensation. Terms may apply to offers listed on this page.
If you think now is a good time to buy a home, chances are good you’ll need a mortgage. Mortgages can come from banks, credit unions, or other financial institutions — but any lender is going to want to make sure you meet some basic qualifying criteria before they give money to buy a house.
There’s variation in specific requirements from one lender to another, and also variation based on the type of mortgage you get. For example, the Veterans Administration and the Federal Housing Administration guarantee loans for eligible borrowers. This means the government insures the loan, so a lender won’t face financial loss and is more willing to lend to risky borrowers.
In general, however, you’ll typically have to meet certain criteria for any mortgage lender before you can get approved for a loan. Here are some of the key factors that determine whether a lender will give you a mortgage.
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Learn More About The Benefits Of Prequalification And Preapproval
As you look for a home, you may be asked to get prequalified or preapproved. Before you start, its important to understand the difference.
When you want to talk to a lender to establish a general range of home prices, you can get prequalified, which is simply a lenders estimate of what you could potentially borrow.
This can be completed easily and conveniently online, in person, or over the phone in just a few minutes with basic information like your income and expected down payment.
When you want to give yourself a competitive edge over other buyers in the market, you can get preapproved. Having a preapproval lets sellers know that you already qualify for the home financing which greatly increases your chance of having your offer selected.
Unlike prequalification, preapproval is a more specific estimate of what you could borrow from your lender and requires documents such as your W2, recent pay stubs, bank statements and tax returns.
The lender will then use these documents to determine exactly how much you can be preapproved to borrow.
Once youre preapproved, youll have 90 days to find a home you love. Then you can lock your rate and complete your application.
Whether you choose to get prequalified or preapproved, you will have a better sense of whats in your price range and can hunt for a house with confidence.
Why Your Credit Score Is Important
The lender will have to check your credit score and review your existing debt. A good score is considered to be 680 or above. With a score above 680 you will qualify for A level lenders such as a major bank, and therefore have access to the best interest rates offered.
If your credit score is below 680 and above 600, lenders may have a way to work around it so that youll still be able to qualify for an A level lender. Theyll determine this by looking at other details of your finances, but otherwise you will qualify for a B level lender.
A mortgage pre-approval is extremely helpful, because it gives you the time and knowledge to improve your credit score if it is weak.
Some ways to improve your credit score are paying your bills on time, keeping debt loads to a minimum/under control, paying your bills regularly, and making sure you arent consistently maxing out your credit card by having it more than 80% of your limit .
If youre unsure of your credit score, you might want to try to pull your credit. You can go to www.Equifax.ca and pull your credit once a year without it deducting points or hurting your score.
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Why Do Mortgage Lenders Need Bank Statements
Bank statements are monthly or quarterly financial documents that summarize your banking activity. Your statements can be sent to you through the mail, electronically or both. Banks issue statements to help you keep track of your money and report inaccuracies faster. Lets say you have a checking and savings account activity from both of your accounts will probably be included on a single statement.
Your bank statement will also be able to summarize how much money you have in your account and will also show you a list of all activity throughout a particular period, including deposits and withdrawals.
Proof Of Income For A Mortgage
Income verification is a basic part of applying for a home loan. But there’s more to providing proof of income than just handing over a couple of paystubs. You need to be able to show your earnings are stable. When making a down payment, you may have to be able to show the source of that money as well.
If you’re a recent graduate who’s landed a well-paying job, someone who recently switched careers or just started a business, you could have trouble qualifying for a conventional mortgage no matter how much you’re earning, unless you can show your earnings are stable.
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