What to do first for having a mortgage loan approved?

Your first step is to conduct a meeting that can also be termed as an initial interview. In this meeting the possible home buyer and the mortgage lender meets for the purpose to discuss about the potential loan. You have to take with you the necessary information that could verify your income and long-term debts.

Mostly people consider it the most important step to held meeting with the mortgage lender before applying for loans because it helps to determine in advance what price range they can in fact afford and how much mortgage amount they can qualify. This is called a pre-qualification step and it saves you much time and trouble by making particular that is that what you are looking for and in the correct price range.

The documents that you need to take with you at your first meeting with mortgage lender:

1. A purchase contract to purchase the house (if you have one)
2. All your bank account numbers, the addresses of your bank branch and the bank statements for the last 2-3 months.
3. Proofs of employment and documents for income verification, pay stubs, W-2 withholding forms, tax returns for the last two years, divorce settlement papers (if applicable).
4. Documents that provide the information for other debs such as credit card bills for the last few billing periods, those checks which were drawn for rent or utility bill payments but canceled later, in order to show payment history and amount of revolving debt; and information on other debt, such as car loans, furniture loans, and student loans
5. If you are a self-employed person then you have to present the balance sheets and tax returns also.
6. In order to pay your down payment and/or closing costs if you are using a gift letters from your parents, relative or any other organizations, then you have to present those gift letters also. A gift letter simply states that the money that you are utilizing is in fact a gift and you won’t have to repay them.

If you have got all these documents with you when you visit the mortgage lender’s office then it will accelerate the application process. After you have successfully negotiated on a home and discussed all the terms and conditions with the mortgage lender and your offer has been accepted by the seller then you have to pay an application fee and the appraisal fee at the time when you submit the mortgage application. Usually, there is no fee for pre-qualification.

After having an initial meeting with the lender, you should now have a general idea that whether you would qualify for the size and type of loan you want. The lender should let you know that whether you qualify for the loan or not and in case that you do not qualify for the home loan, the lender must have to explain the reasons. If this thing happens, the lender will usually discuss any other possibilities with you. The application will take almost 1-6 weeks to process.

What is the next step after applying for a mortgage loan?

A lender usually takes between 1-6 weeks to complete the evaluation of your application. Once the application has been submitted the mortgage lender may ask you for to provide more information. The less time you take to provide the information, the faster your application will be processed. Once all the verification has been made for the information you provided, the lender will call you to inform you about the result of your application. If the loan is approved, a closing date is set up and the lender will take into consideration the closing process with you. And after the closing process is completed, you are not allowed to pack your bags move into your new home.

What is the difference between pre-qualifying and pre-approval?

By pre-qualification you can have an idea that how much you might be able to borrow. This Pre-qualification process can also be done over the phone with no paperwork or any formal meetings. You just make a call to a lender give him information about your income, your long-term debts, and the maximum limit of down payment you can afford. Without any obligation, this helps you figure out the amount you may have available to spend on your new house.  If the likelihood of approval is high, then you will receive a pre-qualification letter from the lender which you can show to the estate agent.

Pre-approval is something totally different from pre-qualifying. In pre-approval a lender is actually having a commitment with you that he will lend you. This process involves assembling your financial records and verifying the information you provide to him, going through a preliminary approval process. Pre-approval let you to have a definite idea of what you can afford and proves sellers that you are serious about buying. This process fastens you with the loan.

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