There are several processes you might go through as part of obtaining a mortgage for a new home purchase, and one potential such process is known as pre-approval. One that involves providing financial and other information to a lender ahead-of-time to get a broad idea of purchasing power, plus a letter of pre-approval that often plays a big role as you scour the market, pre-approval is not a required process, but one many buyers choose to go through for several different reasons.
At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to walk you through pre-approval or any other process involved in our mortgage or refinancing services. Being prepared is a regular theme in the mortgage world – this two-part blog series will go over several areas we might recommend when it comes to preparing various financial areas and documents you’ll need for a smooth pre-approval process.
Here’s this big theme again: Get started early, and don’t leave thigs for the last minute. A big part of the value of the pre-approval process is gaining advanced knowledge on the kind of purchasing power your finances allow you – what kinds of loans you will likely qualify for, the sorts of interest rates you can expect and similar factors.
The earlier you learn this information, the better you can position yourself throughout the process. Even if you end up delaying your actual home purchase somewhat, you’ll have a great idea of the landscape in front of you and what you can expect when it’s time to finalize things.
Checking and Improving Credit
Credit is an area that’s important across several parts of the mortgage application or homebuying process, including for pre-approval. For starters, take the time to check your credit using one of several free resources available today (these don’t ding your score anymore, generally) – if your score is lower than you had expected, it’s time to get to work repairing this situation.
For one, ensure the report does not have any errors, and dispute these if they’re present. These are uncommon, though, and the larger area here involves paying down your debts and taking similar steps to improve your score. The higher it is, the more trust a lender can place in you to repay the funds.
Bank Accounts and Income
Lenders will also look at your sources of income and your primary bank accounts, so ensure everything is in order here. This is usually a relatively straightforward process.
One exception: Cases where you have recently deposited a large sum of money that’s not part of your normal income, such as a gift or an inheritance of some kind. Lenders will need to know the source of such funds – there are rules against receiving certain other kinds of loans. As long as you can explain the unrelated fund increase, you should be just fine.
For more on how to prepare for mortgage pre-approval, or to learn about any of our mortgage rates or other mortgage services, speak to the staff at Altius Mortgage today.