When should I call a lender in the Buying process?
Contacting a lender to get pre-approved for a loan should be the first action item for anyone that is interested in buying a home. The pre-approval process will typically begin with a phone conversation or a face-to-face meeting between the borrower and the loan officer. The prospective borrower will need to fill out a loan application and give the loan officer permission to run a credit report.
Why are these steps important?
The initial conversation will allow the loan officer to get valuable information such as:
-The number of people on the loan
-Will there be a non-occupant co-borrower
-Permission to run a credit report
-How much cash the borrower has for closing costs and a down payment
-Time-frame for purchasing a home
-Is the borrower self-employed?
-Is the borrower paid by salary, commission, overtime etc?
The loan application provides a great deal of information as well such as:
-Does the borrower own any properties currently
-Employment information
-How long the borrower has been employed at current job
-Monthly income
-Assets such as checking accounts, savings accounts and retirement accounts
-Past credit issues: bankruptcy, foreclosures, short-sales etc.
The credit report provides additional information that is valuable in the pre-approval stage.
–Credit score which will determine the type of loans available
-Score also determines interest rates that the borrower qualifies for
-Amount of monthly debts that need to be factored into the borrower’s debt-to-income ratio
-Are there any collection accounts that need attention prior to final loan approval
-If scores are low, many times a loan officer can offer help in raising the borrower’s credit scores
After gathering information from the initial conversation, loan application and credit report, the lender may need additional documentation in order to provide a pre-approval letter. Once this information is received and reviewed, a lender should be able to let a borrower know the amount of a monthly housing expense payment they would qualify for. A pre-approval letter is a written commitment by a lender to provide a mortgage loan to a borrower. With a pre-approval letter in hand, potential buyers are able to look for properties in their price range with a high degree of confidence that they can purchase a home that fits their needs.
If you are curious about how the process works, check out our previous blog on the entire Loan Process or download our Loan Process Flyer.
NMLS # 838973
If you have any questions about a loan, or would like clarification on any of the information we have provided thus far, please contact our preferred Lender, Keith Harris at Intercoastal Mortgage Company.
The JS Realty Team – not only serving Brambleton, serving all of Northern Virginia.