What could be more comforting than the peace of mind that goes with knowing your mortgage is fully approved?
You will have a greatly improved negotiating position when you are pre-approved for a mortgage. Sellers are more apt to negotiate with someone who already has
mortgage approval in hand. The pre-approval letter lets the seller know they are working with a serious buyer and that your offer is solid. A pre-approved buyer
can also close on a property more quickly– another consideration for a motivated seller. In today’s market, it is not unusual for multiple offers to be made on a
property and a pre-approved mortgage is almost essential in that situation.
Pre-qualification is not a commitment by a lender to loan you money, it’s merely an indication of what you can probably afford to pay. A pre-qualification
includes analysis of your income, monthly debt, employment and available cash for down payment to determine the best loan for you and the amount you might
qualify for.
Pre-approval takes this process another step further and uses basic information as well as electronic credit reporting. When you are pre-approved, you actually
have a lender’s written mortgage commitment. It is true a mortgage commitment to financing your home and an indication of the total mortgage amount available
to you.
About you
• Name and Social Security number of each applicant
• Address of landlord or address of mortgage company and mortgage account (re-finance note, deed & current loan amount)
• Name of insurance agent and phone number
Assets
• Source(s) of down payment and closing costs
• Bank aggress, account number and approximate balance (last 3 months bank statements)
• Value of assets (stocks, bonds, mutual funds, 401k’s, etc.)
Debts
• Confirmation of credit cards and installment loans
• Information on any other properties owned (rental, investment, second homes)
• Alimony/child support payments (if applicable)
Income
• Monthly salary and sources of income (last 2 years W-2’s)
• Information on employment (last 30 days of pay stubs)
Don’t buy or lease an auto. The lender looks carefully at the debt-to-income ratio and a large payment such as a car lease or purchase can greatly impact those
ratios and prevent you from qualifying for a home loan.
Don’t move assets from one bank account to another. These transfers show up as new accounts and complicate the application process, as you must then
disclose and document the source of the funds for each new account. The lender can verify each account as it stands. You can consolidate your accounts later.
Don’t change jobs. A new job may involve a probation period which must be satisfied before income from the new job can be considered for qualifying purposes.
Don’t buy new furniture or major appliances for your “new” home. If the new purchase increases your debt load, it can disqualify you from the loan or
deplete your funds to close.
Don’t run a credit report on yourself. This will show as an inquiry on your lender’s credit report. Inquiries must be explained.
Don’t attempt to consolidate bills before talking to your lender. The lender can advise you if this needs to be done.
Don’t pack up or ship information needed for the loan application. Important paperwork such as W-2 forms, divorce decrees, Form DD214, bankruptcy
papers and tax returns should not be sent with your household goods. Duplicate copies can take weeks to obtain.
Closing Costs
Closing costs are an accumulation of separate charges paid to different entities for the professional services associated with the buying and selling of real estate. If
you are purchasing with a loan, the lender will disclose a good faith estimate of what the closings will be, although not all items will be included in that estimate,
such as inspection fees or Home Owner Association fees. An estimate of fees will also be provided for you at the time a purchase agreement is prepared for a
property, so that you will have an estimate for a specific property. Other than the earnest money which is provided when a purchase agreement is prepared, and
initial loan application and inspection fees, the balance of funds is required at the time of closing. Some of the items associated with the closing costs are:
Down Payment: The cash portion paid by a buyer from his own funds, which in addition to that portion which is borrowed, equal the purchase price.
Loan Fees: Fees charged by a lender in connection with the processing of a new loan. These may include: initial application fee, loan origination fee, discount
points, credit report, processing fee, appraisal fee.
Escrow Fee: Charged by the escrow company for services in preparing documents necessary to the real estate transaction, handling funds, and facilitating the
closing.
Title Insurance: Required by the lender to protect its lien position. This is in addition to the title insurance policy provided by the seller for the buyer’s coverage.
Hazard Insurance: you will need to pay for an entire year’s hazard insurance premium up front. Also the lender may require you to place an amount into a
reserve (impound) account to be held by the lender for future payments on your behalf.
Prepaid Interest: Interest on the loan from the date of funding to the end of the month you close.
Inspection Fee: Fees charged for various inspections as requested per the purchase agreement, such as home inspection or termite inspection.
Document Preparation and Recording: To cover the preparation of the final legal papers, including the note and deed of trust, and charges paid to county to
record the document.
Miscellaneous Fees: Document Processing Fee, HOA dues and transfer fees, express mail or wire fees.
The Arcara Turney Team