You’re thinking that you’re ready to start the process of looking to buy a home and you need to get pre-approved for a home loan. First, let me explain why this needs to be done up front. It may seem obvious to you, but for a lot of people, it’s simply not. You start looking around online and you find some homes that interest you. You contact a real estate agent and if you’re speaking to an experienced agent, one of the questions they will undoubtedly ask you in your first conversation will be whether you’ve been pre-approved for a mortgage.
There are a number of reasons why this is important today, the main one being that we don’t want you to be out looking at homes that you may not be able to purchase. Secondarily, you cannot make an offer on a home without a pre-approval letter for a home loan in today’s market. A seller’s agent or the seller themselves will ask for your offer to include a pre-approval letter.
I’ve recently seen a significant number of requests for same day pre-approvals because the clients have a home they’d like to make an offer on today. While I appreciate that, it’s sometimes not a cut and dry process to obtain a pre-approval and, I don’t want you to miss out on something you really want because you didn’t have your financing in place prior to looking at homes. It’s important that I note that a pre-qualification vs. a pre-approval are two completely different things and a pre-qualification can be completed very quickly, without concern.
At Cornerstone Mortgage and The Guarrero Team, we strive to make the process of obtaining a home loan as seamless as possible to you. The only way we can provide that level of service is if we lay the foundation correctly and set appropriate expectations up front. Knowing that an actual pre-approval is what you need to write an offer on a home, I will focus on that step in the process.
There are a number of ways to start the process of getting a pre-approval today and, more importantly, selecting a loan program that meets your needs. This process involves collecting all of your personal financial information online (you can complete our online pre-qualification here), over the phone (Call me at 952-808-2810) or in person, (My office is located in Burnsville) and then you providing documentation to support your request for a mortgage pre-approval.
Ready to start the process and want to be prepared? Here are the documents we will be requesting from you to support the information you provide in your online application, over the phone or in person:
- Most recent 2 Years Federal Tax Returns – 3 if you’re a first time home buyer
- W2 and|or 1099 Forms to accompany tax returns provided
- Most recent 30 days of paycheck stubs for all employers
- Most recent 60 days of bank statements – all numbered pages
- Copy of your government issued photo identification
Additional documents based on unique circumstances. The above list is not comprehensive and once we receive the above documentation, and obtain a credit report, we will likely require additional documentation to support your pre-approval. If we are missing verification of any key information for your pre-approval, Minnesota law requires that we disclose that information on our pre-approval letter. Additionally, if we are missing that information, as much as we’d love to trust that what you say is true, often times, what’s in black and white brings forth additional questions that require us to verify additional information or could cause issues down the road in gaining a full mortgage approval. Here are a few common additional circumstances:
If you are receiving or paying child support, alimony or separate maintenance:
- Divorce Decree if you’ve been divorced
- Child Support order if you pay or receive child support
- Proof of current payment amount if you pay support and the court ordered amount is different than the amount you pay.
- Minimum 3 month history of payments received, sometimes 12 are required. Canceled checks, bank statements or printout from your county case worker.
If you’re applying for a VA Loan:
- Most recent LES if still active in the guard or reserves.
- Your DD214 if you have been discharged from service.
- Your Certificate of Eligibility if you have received one. If not, we will help you obtain one.
If you receive Social Security, Disability or Pension Income:
- Most recent annual Award Letter or initial if no annual letter received for all pension, social security or disability income
- 3 Months of bank statements to show receipt of income or copies of checks if not auto-deposited.
- Disability: Proof that the disability income will continue. i.e. Initial letter stating the disability is permanent. If income is not going to continue for at least 3 years, we cannot use it in qualifying.
If you’ve had a prior credit issue; bankruptcy, foreclosure, or short sale:
- Bankruptcy Paperwork if you’ve had a prior bankruptcy
- Foreclosure Information and/or Paperwork if you’ve had a prior foreclosure
- HUD-1 Settlement Statement if you’ve had a prior short-sale
- Letter of explanation surrounding the negative credit. Doesn’t need to be anything fancy, simply what happened and what you’ve done to stabilize your financial situation so that it won’t recur.
If you own multiple properties:
- Most recent mortgage statements if you own other properties
- If your taxes and insurance aren’t escrowed in your current mortgage payments, provide tax and insurance information.
- If you own rental properties, provide current leases for your rentals.
You can see by the above list that not everyone’s situation is the same. In fact, one of the things I love about my career is exactly that statement. Every client’s situation is different and it requires a level of expertise and care to gain each pre-approval and analyze each individual’s financial circumstance and offer the loan products that meet their individual needs. It’s not always a quick process and you do yourself an injustice if you try to make it so in today’s mortgage lending a real estate market.
While there are a select few for which the process is a quite simple and can be completed with only the first list of documentation and a brief visit by phone, more often than not, if you want a real pre-approval that you know will stick, it may take a couple of days and a couple of conversations with us before and after we receive your documentation. Without question, this is the right way to go about getting a pre-approval for a home loan. Rushing head-long into a home purchase without knowing the specific details of how you will finance it and knowing without question that your pre-approval is solid is a sure fire recipe for problems down the road.
Get your pre-approval first! You can start the pre-approval process online with us here. Once we receive your application, we will request documents specific to your application and schedule a time to discuss your loan options over the phone or in person and address any other potential items needed to complete your pre-approval.
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