With lending institutions turning down 50% of all potential home buyers due to unsatisfactory credit scores, insufficient incomes, and high debt obligations, it is a good idea for borrowers to seek pre-approval to make qualifying more favorable. Getting pre-approved is the best way to know where a borrower stands in the loan qualification process. A preliminary lender can evaluate creditworthiness by requesting income, savings, debt obligations, credit reports, and credit ratings to be followed up by the lender’s appraisal regarding approval status. If qualifications are met, the amount considered for funding is also offered. Loan pre-approval will get you one step closer to being a home owner!
Steps to Take When Seeking Loan Pre-Approval
Access and Repair the Credit Reports – Evaluate the reports from each of the three credit bureaus for accuracy, checking every detail and entry for verification and correctness. Take any necessary steps to correct any mistakes affecting a lender’s decision. Take sufficient time to accomplish this important step before approaching any lender to put the credit status in the most positive framework.
Gather All Required Documentation – Along with the pre-approval or loan application, there will be numerous documents required for inspection by the lender, including proof of current and past employment via pay-stubs, existing loan documentation, credit card bills, banking statements, social security numbers, and telephone and email contact addresses. In addition, there will be requests for verification of current residency as well as a list of previous addresses and length of time lived in those locations. On top of this will be questions regarding the number of dependents, annual income, and a list of all assets including property owned, checking and savings accounts, as well as any stocks, bonds, and retirement accounts.
The pre-approval process can take anywhere from one to two weeks for complete evaluation and response from the lender. Naturally, depending upon how complete the documentation was provided, and how complex the finances, determines the response time. In addition, if the loan pre-approval is granted, it will have a 30 – 90 day time limit stipulation attached to the lending offer.