Owning a home provides financial and lifestyle benefits for growing families. Whether financing is needed for a beachfront property or for a luxury condominium, a borrower will need to meet a variety of qualifications. Internet Loans Direct provides tips for a home buyer to get pre-approved for a mortgage loan.
Check Your Credit Report
Mortgage lenders will perform a check to determine if your recent credit experiences reflect timely payments.
Your payment history toward items, such as credit cards, auto loans, mortgage loans and other records from Experian, TransUnion and Equifax will be reviewed.
Ideally, your credit report should reflect no late payments during the past 12 to 24 months. Although, you might still be able to get pre-approved for a mortgage loan through certain programs with a few minor credit delinquencies.
Checking your credit prior to contacting a mortgage lender enables you to ensure that your information is accurately reporting to the major credit bureaus.
You can check your credit report online via the Annual Credit Report website.
For any information that is erroneous, you can contact the specific bureau to dispute a variety of items, such as a wrong address, items that you are not aware of and about removing or modifying inaccurate accounts.
Lenders will also check your credit score before issuing a mortgage pre-approval.
Credit scores can range between 300 and 850 points.
Typically, a minimum credit score of 620 points is required to obtain consideration for government-backed loan programs through the Federal Housing Administration and the U.S. Department of Veterans Affairs.
Many conventional loan programs also require mortgage loan applicants to have a 620-credit score or higher.
A borrower might be pre-approved for a mortgage loan with a lower credit score than the aforementioned scores. However, higher credit scores generally provide more favorable terms.
Gather Recent Income Documents
Mortgage lenders aim to make affordable home loans.
To meet a lender’s underwriting requirements for income stability, a borrower is typically required to submit pay stubs to cover the most recent month of earnings and W-2’s for the preceding two-year period.
Self-employed borrowers might be required to submit tax returns for the past two years or 12 months of bank statements to enable an underwriter to calculate a borrower’s average monthly income.
After an income calculation is performed and the borrower’s existing debt is considered, an underwriter will be able to determine if a pre-approval for a mortgage loan is possible.
If an affordable lending opportunity exists, an underwriter will be able to issue a mortgage pre-approval.
Compile Financial Records
Make a folder that is ready to submit toward a mortgage application.
Some loan programs might require a borrower to have two months of financial reserves.
Taking the time to organize recent bank statements, retirement account information, stocks, bonds or other liquid assets might be useful toward getting pre-approved for a mortgage loan.
Internet Loans Direct offers reliable support for mortgage loan applicants who want to buy a home or to refinance an existing loan.
Contact us today for more information about qualifying for a mortgage loan.
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