How Long Does It Take to Get Preapproved for a Mortgage?
Preapproval for a mortgage can be an essential step in the home-buying process. It demonstrates to sellers and real estate agents that you are serious about purchasing a property.
During the preapproval process, a lender will verify your credit and finances to determine how much you qualify for. They may also require financial documents and pay stubs as proof of income.
Getting Preapproved
If you’re ready to begin your home search, getting preapproved for a mortgage is an essential first step. This lets you know how much money you can borrow and gives you leverage when making offers on houses. Furthermore, it helps you stand out from competitors and shows real estate agents that you’re serious about purchasing property.
Obtaining preapproval can take as little as an hour or up to several days, depending on the lender and your financial situation. Typically, lenders will verify all of your information within one day using online tools and documents such as W-2s and pay stubs.
Before you begin this process, it’s wise to check your credit report and score to assess its health. Furthermore, research your down payment options and other elements that could influence the cost of purchasing a home.
Your credit score is an essential factor in whether or not you qualify for a mortgage loan. Two major credit scoring companies, FICO and Vantage Score, calculate scores based on several factors.
Your credit score should ideally be in the 700s or higher. You can increase it by paying all bills on time, avoiding large balances, keeping recent late payments low, and disputing inaccurate data on your credit reports.
Once you’ve cleared all your credit checks and submitted all documents, the next step is to meet with an officer at a bank or lender to get preapproved. You’ll fill out a mortgage application, providing personal details like your Social Security number and photo ID.
You will then be required to authorize a credit check and your loan file transferred to an underwriter. They verify all your information is accurate and that you meet the borrower guidelines for the loan program you have applied for.
Your loan file will undergo a credit check that counts as a hard inquiry on your report, which could temporarily lower your score. However, if you apply for multiple pre-approvals from different lenders simultaneously, each application will only count as one hard inquiry and won’t negatively affect your score.
Getting Prequalified
Prequalifying for a mortgage can be beneficial when searching for your dream home, as it gives you an estimate of how much you may qualify to borrow. It also boosts your confidence when making offers and gives sellers peace of mind that you are serious about the deal.
Mortgage prequalification is usually a straightforward process that involves answering some basic questions over the phone or online. During this period, lenders assess your credit scores, income and debts to estimate how much money you might be eligible to borrow.
Once approved for a loan, the lender will send you a preapproval letter that details how much money you can borrow. This helps narrow down your search to homes within your price range and makes you an appealing buyer to potential home sellers.
Preapproval can be a lengthy process. On average, lenders take three days to review all of your information and issue you with a preapproval letter.
Furthermore, preapproval often includes a hard credit check that could negatively affect your credit score. Therefore, you may want to search around and find a mortgage lender with a soft inquiry on your report (i.e., one that doesn’t impact your score) before being preapproved.
Building credit takes time, so it’s wise to start as soon as possible. You can do this by opening credit cards and traditional lines of credit and making regular payments on them.
These tools can also assist in building up savings and paying off existing debt. Doing so will create a strong foundation for your credit, which in turn may boost your score and enhance the likelihood of qualifying for a mortgage loan.
When searching for a mortgage lender, it’s best to work with someone who offers competitive rates and excellent customer service. You can start your search on Zillow where licensed mortgage lenders with positive reviews and high ratings from real estate agents can be found.
Getting Underwritten
Before applying for a mortgage, an underwriter must evaluate your eligibility. They assess factors like creditworthiness, employment history and savings in order to determine how much money can be borrowed.
The underwriting process can take some time, especially if your application is complex. You may need to provide multiple forms of documentation, so it’s wise to gather these items prior to beginning the underwriting process.
Once you’ve submitted all necessary paperwork and information, your lender will send it off to a mortgage processor. Usually located in a central location that may be far away, this person may take several days to review your file.
Your lender will require you to submit tax returns and Form W-2s for the past two years, as well as bank statements, retirement accounts and savings account numbers. They may also request an appraisal for the home you wish to purchase.
The underwriter will review your credit history to confirm you’ve kept up with all payments and haven’t run into any red flags such as late payments, bankruptcy or overuse of credit. They’ll also take into account your debt-to-income ratio to determine if you can afford your new mortgage.
Underwriters also take into account your income, or how much money you make each month and for how long. This serves as a good indication of whether or not you can afford the payments on your mortgage.
Underwriters also check to see if you have enough money saved up in reserves – extra cash that can cover mortgage payments in case of loss of income. Some loans require reserves, so having these saved makes it more likely that you’ll be approved for the mortgage.
The underwriting process can take some time, but it’s worth the effort if you want to purchase a home. Being prepared with all necessary paperwork and information before beginning can save you a lot of frustration in the future.
Closing
When applying for a mortgage, there are several steps you must take. One of the most essential is getting preapproved; this demonstrates your seriousness about purchasing a home and provides sellers with an estimate of how much house you can afford.
Preapproval from lenders requires them to run a credit check and verify your financial information, typically done before you start searching for a home. Doing this makes offers more likely to be accepted by the bank.
Your lender may require additional documents, such as pay stubs and tax returns. This could add extra time to the process.
Once approved, it usually takes 30-45 days to close on your mortgage. To expedite this process, keep all paperwork current, respond quickly to lender requests and find a new lender who offers you the most advantageous rate.
Once all these steps have been completed, your mortgage lender will send you a Closing Disclosure outlining all the terms and conditions of your loan. This document is required by law and can help you comprehend all costs and fees due at closing.
Before signing your loan documents, it is essential that you thoroughly review and sign the Closing Disclosure. This includes seeking expert advice if there are any queries or issues.
Once you’re ready to close on your mortgage, your lender will order an appraisal of the property and conduct a title search. These steps guarantee there are no issues with the home’s title.
Finally, your lender must verify that you have insurance on the home. While this can take some time, if you’re willing to provide all documentation requested by your lender, it should not delay the process too much.
Once all the necessary steps have been completed, your lender will give the go-ahead to finalize your mortgage. You’ll receive a Closing Disclosure that outlines all loan terms, fees and other details; thereafter you have a mandatory three-day waiting period in which to sign and notarize it.
