As the U.S. economy continues to rebuild slowly from the recession, many people are looking to buy and build homes after years of renting or staying put in a previous home. As a result, the real estate market is competitive in many parts of the country, requiring buyers to put in aggressive offers and, in some places, compete with cash investors.
What this means is that — now more than ever — you need to be qualified for a mortgage before you shop for real estate.
The Housing Market
Before the housing crisis of 2008-09, it seemed that anybody with a pulse could get a mortgage (or two or three). Certain lenders pushed “sub-prime” loans on people with poor credit knowing the entire time that the applicants couldn't afford the payments and would eventually default.
These lending habits were obviously unsustainable, and we know the rest of the story. The banks got bailouts while millions of homeowners either lost their homes or got stuck underwater, owning much more on their mortgage than their home is worth.
Even as the real estate market continues to recover, the mortgage crisis has left its mark. Mortgage underwriting — the criteria banks use to determine whether to make a loan — is more stringent. That’s not to say that young couples or other first-time home buyers will have a difficult time getting a mortgage. But it’s more important than ever to be prepared to prove to the bank that you’re financially prepared to take on a mortgage payment.
What it takes to get pre-approved for a mortgage
1. Complete an online application - this takes 10 minutes and will allow me to review your credit and get the ball rolling.
2. Gather documentation - everyone has a different situation, but here are few items that are required for everyone: 2 most recent years of tax returns, 60 days of bank statements, recent 401k or retirement statement, copy of your driver's license, and 30 days pay stubs (if you are W2 employee)
3. Meeting - You will let me know your schedule and we will work out a time for you to come in. We will review all of documents, go over your credit report, discuss your goals, and I will find the best possible loan option for you.
4. Pre- Approval Letter - this is a document that I do not just hand out unlike some loan officers. When I put this letter in your hand, you will know that buying a home is going to be a smooth process. That being said I take 24-48 hours to issue the letter. With the help of a Jr. Underwriter on my staff, we review your application in great detail. I issue the letter, and let you know exactly what to expect once you go under contract on your new home.
If you have any mortgage question, do not hesitate to text/email/call me at any time.
Nick Smith
801-661-4749
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