REGION – Are you among the myriad of potential homebuyers who will be jumping off the sidelines and getting into the homebuying game if rates drop? Go into your home search prepared by getting approved for a mortgage before you house hunt.
Not only can a mortgage approval help you understand what you can spend on a home, but you will also receive a mortgage approval letter to prove to sellers that you have been approved for your home loan. Approval means an underwriter has reviewed your application and has verified all necessary forms of income, assets, and credit. All loans are subject to final credit approval and acceptable property. Conditions and restrictions may apply.
To get approved for a mortgage, you will need to provide all of your monthly debts compared to your pretax monthly income, also known as your debt-to-income ratio (DTI); the loan amount divided by the appraised value of the home, or loan-to-value ratio (LTV); your credit history, to see how you have repaid debts (credit card debt, auto loans, etc.) in the past; your credit score, which estimates the likelihood you will repay the money you borrow; two years’ worth of W-2s, 1099s, child support, alimony, Social Security, or other sources that prove your income; and documentation that can prove at least two years’ worth of your employment history.
Depending on your situation, there may be additional documentation necessary to get mortgage approval.
It’s worth noting that a mortgage approval is different than a mortgage qualification. While a qualification means your lender has provided an estimate based on the initial information you provide, an approval takes the process a step further by having an underwriter perform a full review. All loans are subject to credit approval. A qualification is not an approval of credit, and does not signify that underwriting requirements have been met. Conditions and restrictions may apply.
How much home can you afford? Crunch the numbers on your homebuying budget with this free home affordability calculator at lo.primelending.com/vblodgett/calculators/how-much-home-can-i-afford.
Submitted by Victoria Blodgett, Prime Lending, Ludlow, Vt.