The Importance of a FULL Pre-Approval

By Josh Hayden

When most people first consider a new home purchase, they think of contacting a realtor so they can start searching for their potential dream home. 

While this is undoubtedly the “fun” part of the buying process, equally as important is getting in touch with a Mortgage Consultant (also known as a Loan Officer) to begin the pre-approval process. This allows you to confidently shop for your new home knowing that you can submit an offer as soon as you find the right property and not lose out on it because you didn’t get pre-approved. 

Additionally, without a pre-approval, you may be wasting your time looking at a type of home that isn’t in your budget.

Having a conversation with an experienced mortgage professional will avoid many of the potential hurdles that occur during the process. Some of these hurdles include credit scores, debt to income ratio, and other fees and closing costs associated with most transactions that may not have been explained. 

So What Do You Need To Get Pre-approved? 

10-15 minutes on the phone, two pay stubs and a bank statement (unless you’re self-employed) and enough information to answer the below items:

1. Income

The paystubs will suffice for the initial proof of income, but there are additional questions that will need to be answered, such as,

  • What you do for a living
  • The name of your company
  • How long you’ve been there
  • How you get paid (salary, hourly, monthly)
  • How much are you paid? 

2. Assets

Although there may be changes to your current assets prior to purchasing a property, we need to know where you’re currently at. In addition to providing a bank statement you’ll need to answer the following questions: 

  • How much do you have saved and in which type of account (checking, savings, investment, retirement)?
  • Will you be receiving a gift from family? 
  • Are any of these funds a loan from a retirement account? 

3. Property 

What type of property are you searching for? There are differences in a condo, townhouse, single family home, or multi-unit property. If you’re not 100% sure, then you can discuss all the pros and cons. 

4. Credit

Even though most people keep track of their credit scores through apps like Credit Karma or their banking provider, those are not the true credit scores. These providers simply take a surface look at one or two of the credit bureaus and spit out a calculation, while there may be an old account in collections or medical bill that you are unaware of that will impact your score once a true report is pulled. You want to have your credit report pulled to ensure there are no surprises and that your debt to income is accurately calculated. 

While this all may seem a daunting task, most of the work is done by your mortgage professional after the initial conversation. The typical turnaround is a few hours and you’ll have your letter in hand. Fifteen minutes can save you from losing the house of your dreams!