WHAT'S THE DEAL WITH PRE-APPROVALS?
All serious home buyer's should start their process with a lender, not an open house.
A pre-approval is an evaluation of your qualifications for a loan and it is extremely important for several reasons.
Most importantly, it will let you know how much home you can afford based on your income and ideal monthly mortgage payment. If there are issues with your credit, this is where you'll find it. It's far better to get that information now than when you're already down the road of home ownership.
Secondly, all seller's expect to see that their buyer's are pre-approved. If you're not, they'll most likely not even consider your offer.
BUT WON'T IT HURT MY CREDIT?
Not really.
credit.com has a fantastic article explaining this process in detail. Here is a quick explanation of how it influences your credit score.
Granting a lender permission to pull your scores – and, yes, they do need your permission – constitutes what’s known as a “hard inquiry.” To be clear, a hard inquiry can ding your credit.
But if there is a hit, it’s typically just a handful of points. Hard inquiries on your credit can be a troublesome sign. But the major credit bureaus also see the value of comparison shopping – and that’s why they cut homebuyers some slack.
Essentially, the reason for the credit pull plays a huge role in how these "hard pulls" are viewed. The credit bureaus have come to expect rate shopping. Most formulas treat all of the similar inquiries within a certain time period as one, singular credit pull. That time frame depends on the scoring formula that is used. It's important to ask your lender what scoring model they'll be using.
I recommend having a chat with a lender prior to getting a pre-approval. That step can come later, but it's important to find someone that you (and your realtor) trust. This relationship is vital to making your home-buying process smooth and pain-free.
My trusted lender is Mark Rome with Cornerstone Home Lending
WHAT'S THE PROCESS LIKE?
All lenders will be different, but this is what you can expect from Mark with Cornerstone:
The first step in the loan approval process is a Pre-Approval. This is a very simple step and includes the following:
• Social Security Numbers and Birthdate for all Borrowers
• Estimated Monthly Income of all Borrowers
• Estimated Monthly Liabilities
• Addresses of All Property Currently Owned
• Estimated Amount of Assets
• Authorization for Credit Report
To get the process started with The Rome Team, visit their website at www.TheRomeTeam.com and click on Pre-Qualify. Once you have applied one of our team members will call you to go over the details and discuss your pre-approval amount. With a pre-approval letter in hand, you may begin shopping for a home with your realtor. However, since a pre-approval is simply a snapshot of your financials, there are still steps to take to ensure your funding is fully approved.
After your pre-approval we will set up a time for your One-on-One Consultation. For this approximately one-hour long meeting you will need to bring the following:
• Copies of your past 2 years W-2’s
• 2012 & 2013 Full tax returns
• Copies of your two most recent pay stubs, at least the past 30 days
• Copies of your past 2 months official bank statements
• Most recent statement for all asset accounts
• Copy of driver’s license
• Potentially additional items needed for your specific situation
At this time we will review all the loan options to find the plan that meets your financial goals as well as answer any questions you may have.
After your meeting, all your information will be sent to our underwriter and reviewed. We may need additional items during this review process but most often these items can be faxed, emailed or FedEx'ed to us. Once the underwriter receives, review and approves everything they have requested they will grant a full approval.
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Have any questions? Please feel free to contact me!