Poli Mortgage Answers Three Questions About New Home Purchases and Mortgages

1) I want to buy a new home. At what point should I contact a mortgage lender or Loan Officer?

If you’re looking to buy a new home, one of the most important pieces of information that you will need is an idea of how large a loan you will be able to secure. Not only will this guide your house hunt by targeting properties that you can afford to purchase, but it can give you a sense of security if you take the time to obtain pre-approval for a mortgage loan. By contacting a mortgage lender up front as you and your real estate agent begin your home search, you can work with the licensed Loan Officer to determine the type and amount of loan for which you will likely be approved.

A Loan Officer can help explain your loan options and determine your eligibility for a conventional, FHA, or VA loan, and can also counsel you about current interest rates and whether a fixed- or adjustable-rate mortgage is right for you.

2) What will I need to do in order to obtain pre-approval for a mortgage loan?

You will need to provide detailed financial information to your mortgage lender so that he or she can form a clear picture of your financial situation. Getting pre-approved for a mortgage differs from simply pre-qualifying. The difference between a pre-qualification and a pre-approval is the level of commitment from a lender. While pre-qualification is merely an educated estimate of how much of a mortgage payment you will be able to afford, a pre-approval is a much firmer commitment from a lender.

For pre-qualification, you must provide income and financial details, but this information is informally provided. To obtain pre-approval, you will need to submit to a credit check and provide documentation that will verify your income and financial holdings. Pre-approval is based on the same information and is run through the same underwriting process as a final approval, except for a title search and appraisal.

Some of the documents you will need to provide for pre-approval include pay stubs, W-2 forms or tax returns, and bank and investment account statements. There may be additional documentation required based on your specific situation. Your lender will also run a credit check on you with the three major credit reporting agencies.

3) If I have a pre-approval letter for a mortgage loan, am I certain to secure financing once I have made an offer on a new home? 

Your being pre-approved will prove attractive to a seller. Pre-approval usually suggests final approval. However, in order to extend a loan, your lender will need to see a home appraisal, verify the property’s title, and likely run your credit again and verify documentation to make certain that your financial circumstances have not changed since you were pre-approved.

Generally speaking, pre-approval is a big step toward being approved for a mortgage loan. Your Loan Officer can guide you in the process and get you started on a path to home ownership.