Getting a pre-approval mortgage is vital before buying a new house. However, a pre-approval mortgage will help you to discuss the loan options with the lenders. Moreover, this step will help you to clarify home finding the budget and the monthly mortgage payment.
The pre-approval process allows us to shop interest rates and find the best deal. If you are deciding to buy a house, then it is vital to know what a mortgage pre-approval does and how to boost your chances of getting one. Here in this article, we are going to discuss all the aspects of pre-approval mortgage Richmond hill.
What are the factors lenders look before giving you a pre-approval mortgage?
Lenders will look at some factors before giving you the mortgage such as credit score, employment history, credit history and assets and liabilities.
However, pre-approval is like a physical exam. It will ensure that you will repay your mortgage loan.
What is the time of getting a pre-approval mortgage?
Sometimes lenders will put an expiration date on your pre-approval because there is a change in your financial profile. Therefore, you have to fill out a new mortgage application. However, pre-approval is valid for 60 to 90 days.
If you are deciding to purchase a new house, then a pre-approval process is helpful to identify credit issues and give you the time to address them. A pre-approval from six months to one year is useful to enhance your credit score.
A seller wants to see your mortgage and proof of funds to show that you are a serious buyer.
Explaining the process of pre-approval mortgage in Richmond hill
Some lenders can pre-approve within an hour, but others can take several days. However, the pre-approval process can be confusing and exciting but is best for finding a great deal. The period for getting a loan depends on the complexity of your finances.
Firstly, you have to fill out the mortgage application involving your identification details and social security numbers so that the lenders can pull your credit.
Below we are going to show you some examples of the mortgage application. Follow these eight sections carefully.
Terms of the loan.
In this section, you have to mention the loan amount, length of the time to repay and the interest rate.
Here you have to consider the legal description of the property, refinance, intended type of residency or investment.
You have to write your identification including date of birth, full name, social security number, marital status and address history.
In this section, you have to write contact data, dates employment, title and monthly income.
Monthly income information.
Write your monthly income, bonuses, commissions, dividends and alimony. However, you want housing expenses involving mortgage payments, insurance, property taxes and homeowner association dues.
Assets and liabilities.
Here you want your bank statements, retirement savings, mutual fund accounts, and corresponding values. Moreover, you have to list all the liabilities involving charge accounts, car loans, student loans and other debts.
Details of your transaction.
In this section, you have to include purchase price, loan amount, the value of repairs and mortgage insurance.
Here you have to submit past bankruptcies, pending lawsuits, liens. Moreover, you will ask whether you intend to use the home as your primary residency.
Documentation needs for pre-approval mortgage Richmond hill.
Now you have to gather some important documents after submitting your mortgage application. Below we are going to list documents that are vital for securing your final loan approval.
- Sixty days of bank statements.
- Thirty days of pay stubs.
- Tax returns.
- Asset income statements.
- Driving license.
- Divorce papers to use alimony.
- Gift letters.
Factors affecting pre-approval mortgage
It is vital to understand the factors affecting pre-approval because it will enhance your chances of getting a mortgage.
Debt income ratio
If your DTI ratio is high, then you have to struggle to repay your loan. On the other hand, a lower DTI ratio will help you to qualify for a more competitive interest rate.
If your down payment is higher, then your loan amount will lower. That results in a decrease in your LTV ratio.
So getting a pre-approval mortgage in Richmond hill is the best way for shopping interests and finding the best deal. However, if you are deciding to buy a new house, then pre-approval will help you to get your credit and finances in a better shape. Therefore, go through this article and now get a pre-approval mortgage to buy your dream house.