What Steps Need to be Taken in Order to Secure a Mortgage Loan?
This week I want to address a very common question that we get every day, and that is what steps need to be taken in order to secure a mortgage loan? The question is simple, yet it can be complex, and the basic steps are first of all, you need to apply with the mortgage lender that you want to work with.
So applying involves giving them your information about your employment history, your assets, your social security number, your birth date, residence history, and a lot of other information so that they have all the information that they need in order to determine what you can qualify for.
The second part of that is the lender does have to pull your credit in order to do a preapproval for you to be able to secure the loan, so that involves what’s called a hard credit inquiry, which means that a third party creditor like a mortgage lender is acquiring a credit score on your behalf. So they pull what’s called a tri-merge credit report. A tri-merge credit report is simply pulling your credit score and your credit history from all three credit bureaus, Experian, Equifax, and TransUnion. So this is a necessary step that lenders do, and once we pull your credit, the credit report is good 120 days. That means you have to have the keys to the house, you have to actually close on the house within 120 days.
The third step that you have to take in order to secure a mortgage loan is you have to provide supporting documentation, so this is where it can get a little bit complex, depending on your circumstances. If you’re someone that works for a company and you’re W2-ed, and you have straightforward employment history and assets, you have your down payment saved up in the bank, for example. Then we would need two years of W-2s, we would need 30 days worth of pay stubs, we would need two months of bank statements, and any other asset statements, a copy of your or photo ID.
Beyond that, this is where it could get complicated, if you’re self-employed, if you have additional properties that you own, if you had a bankruptcy or foreclosure, a divorce, any kinds of these circumstances can lead to more documentation, like tax returns, divorce decree, bankruptcy discharge paperwork, business license if you’re self employed, profit and loss statement, year to date.
Things of this nature, depending on your scenario are items that we may require, so that would be something that we would inform you of as part of that preapproval process so that you then secure the home loan. So just real quick, a word about what pre-approval is, pre-approval means that you’re applying for the home loan before you find a house. You’re pre-approved to get the financing based on finding the property and going under contract in the property. So we are essentially reviewing all your paperwork and documentation and saying that if you find a property, a home within this price range, you can secure the loan. So that’s what a preapproval is. So that’s the step you have to take initially to secure a mortgage loan.
I hope that helps you guys out. If you have any other questions about that process or something specific about your situation, just give me a call in the office, text me or email me, that’s why I’m here.
