Some people find the process of financing a home just as, if not more, daunting than choosing a new property. Indeed, things like pre-approval, credit checks, income verification require a lot of effort and time. At HMQ Loans, we assist our clients with things like choosing lenders and mortgage pre-approval in New Jersey.
What does mortgage pre-approval mean?
Pre-approval is one of the most crucial steps you take in the home financing process. It means that a lender has checked your financial history and verified things like credit rating and income. It is a stamp of approval from your lender, which you can show the seller of your desired home that you can afford to pay the monthly mortgage payments.
The pre-approval process starts with a mortgage application where you fill out your personal information. This includes your social security number, type, and purpose of the loan you’re applying for and information about the property you’re hoping to buy. You’ll also provide information about your employment history, monthly income, and expenses as well as a review of all your assets and liabilities. It also requires knowledge about any declarations you have, such as foreclosures or past bankruptcies.
How long it will take for the pre-approval process will depend on the lender and your financial circumstances. If you have a complicated financial history, it will take longer. Typically, pre-approval can take as little as a few hours or over several days. Your pre-approval letter is also valid for a limited time, usually between 60-90 days.
Requirements for a pre-approval
For mortgage pre-approval, you’ll need proof of your assets, income, verify your employment information, have a good credit score, and provide other personal information. If you have any questions regarding mortgage pre-approval in New Jersey, don’t hesitate to contact us!
For your proof of income, you’ll need to provide recent payslips and documents for any other sources of income such as alimony. For proof of assets, you’ll need to provide bank statements with the closing balances to show that you can afford down payments and closing costs. Lenders will also use this information to calculate your debt-to-income ratio for pre-approval.
A pre-approval of a conventional loan will usually require you to have a high credit score, usually a FICO rating of over 620. The higher your credit score, the easier it is to get a better interest rate.
How is a pre-approval different from a pre-qualification?
A pre-qualification is an assessment of how much money a lender can lend you based on the financial information you give them. The pre-approval process is more rigorous, and the lender verifies all the information you provide.
Of these, a pre-approval carries more weight because a lender has already verified your financial information. In a pre-qualification, they don’t check it and is only for estimation purposes.
At HMQ Loans, we understand how overwhelming finding a mortgage can be. If you have trouble with something like mortgage pre-approval in New Jersey, we can assist you. We can get you pre-approvals in as little as 24 hours!