3 Things You Should Know About Applying For A Mortgage
If you want to purchase a home soon, you are going to need to apply for a mortgage. You should understand some of the basics of the mortgage application process before you get started.
Pre-qualification Is Different Than Pre-Approval
Pre-qualification and pre-approval are not interchangeable terms, the two terms refer to two different processes. When you are pre-qualified for a loan, that means that you have verbally provided a bank or loan officer with information about your income, employment history and credit history, and based upon your verbally provided information without any evidence to back it up, it is determined that you most likely would be approved for a loan.
When you are pre-approved, you have submitted paperwork to back up your verbal claims. An underwriter has determined, based on the paperwork that you have submitted, that you would be approved for a loan. However, you still need to go through a more in-depth vetting process in order to actually get approved for a loan.
Approval Process Takes Time
To find out if you pre-qualify for a loan, based on the verbal information that you provide, is a very quick process. You generally hear back in less than a day or two. The pre-approval process usually takes a few days longer, and to get actually approved for a loan, and provide all the required paperwork as well, can take a couple of weeks to a month.
Knowing you pre-qualify for a loan can help you start looking for a home and know what your budget may be. Getting approved for a loan will help you actual make an offer on a home.
Documentation Is Usually Required
Depending on the loan, you are going to need to provide documentation to back up your claims. The documentation that you need to provide will vary depending on the exact type of mortgage you are applying for.
In general though, when you apply for a mortgage, you will be asked to provide documentation that shows how much income you bring in. You will be asked to provide verification of your employment and often verification of the length of your employment. You may also be asked to provide documentation to show and verify other assets that you have as well.
If you want to start looking at homes, make sure that you qualify for a mortgage, then start the pre-approval and approval process. All of these steps take time, so the sooner you start the process, the sooner you will be in place to move forward with a purchase.
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