3 important Things You Need to Get Pre-Approval for your Mortgage
Everyone is looking for a home to buy at Lake of the Ozarks right now. As fast as houses are selling, it is absolutely essential to have your loan pre-approved before you start looking for one. Pre-approval involves providing your lender with all the documentation to determine exactly what amount you are qualified to borrow. This approval amount will be good for a specific period of time, for example, 60-90 days. Not only will having your pre-approval letter make sellers more willing to take you seriously as a buyer, without it, the home you are looking at is likely to be long gone before you can get that process completed. So here is how to start.
1) Proof of Income.
To put it simply, your lender needs to see that you have the
ability to make your mortgage payments. That is why the bank wants to know how
much your household income is, your employment history, and the assets you have
as well. You should be prepared to provide
1 or 2 years of tax returns. The lender
will want to see that your income is consistent and does not fluctuate from year
to year. You should also be able to
share pay stubs, W-2s or other proofs of income. If you are self-employed, there may be more
documentation needed to give the bank the full picture needed to approve your
loan. In many ways it may come down to
your debt-to-income ratio. Most lenders
prefer clients to be using only about a third of their income towards debt in
order to get a mortgage with better terms.
2) Proof of Assets.
The costs of buying a home involve more than just the
mortgage payment. Of course, there are closing
costs and the down payment to secure. But
the bank may also want to see you have some cash reserves. It is crucial for you and for your lender
that you are able to make your payments even if you run into financial difficulties
or uncertainties. That is why you may be asked to share information regarding your savings accounts, investment and
retirement accounts, and other assets as a part of the pre-approval process.
3) Credit Score and History.
Your credit score and history are seen as a direct
reflection of how responsible you are financially. Lenders can see if you tend to borrow too much
and if you make late payments. Having a
higher credit score will give you a greater choice of lenders to choose from and
will afford you better interest rates and terms on your loan. The interest rate alone can make a huge
difference in your final expenditure. On
a 30-year loan for $250,000, the difference between a credit score of 620-639 and
760-850 can cost a borrower around $81,000 more in total cash output! If you have a low credit score, it is worth
it to spend a few months boosting your score before attempting to get pre-approval
for your mortgage.
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| (photo credit: Fun Lake MO) |
At Your Favorite Real Estate Team, we help people every day realize their dream of owning their own lake home. Right now, the market is hot, and we want to make sure everyone we help to buy a home at the Lake of the Ozarks is ready for the process and in position to secure the home of their dreams quickly and with ease. We are experts in Real Estate at the Lake of the Ozarks, so when you are ready to buy your very own lake home, just know we are ready to help.
CONTACT ED SCHMIDT FOR ALL YOUR LAKE OF THE OZARK REAL ESTATE NEEDS
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