Over the years, the term “pre-approval” has had many different meanings to lenders, real estate agents, and customers. Today, with stricter banking guidelines, it has narrowed greatly and has a true definition. To be pre-approved means that both the credit and the income of a potential borrower has been verified and reviewed by the mortgage professional. This means the customers’ income documentation has been input and into a bank’s mortgage origination system to correctly calculate, in detail, the monthly income of that customer. In the past, the credit score was the important piece, while many bankers and brokers would take a customer’s word or simply look at the customer’s paystubs and produce a pre-approval letter. Now, all facets of the customer’s income are taken into account and the letter itself should mean that the customer truly does qualify for the pre-approved amount.
This is incredibly important as although a customer wants a fast pre-approval, accuracy is paramount in order to get the customer to not only get pre-approved, but actually close on the home they are purchasing. Things such as bonuses, commissions, and overtime all can be counted toward income; however they must have been consistently received over a 2 year period and also be shown “likely to continue.” Other items such as write-offs and unreimbursed expenses also are factored into the equation. These factors, if not taken into account, can make a pre-approval letter as worthless as the paper it is printed upon.
Although it is nice to have a pre-approval letter done quickly, that is little consolation if the home purchase falls through due to a mortgage professional’s oversight. At the end of it all, moving into the home is the goal. In order for this to come to fruition, financing must be secured. That does not happen if all income factors are not considered from the beginning. Gathering several income and asset documents early in the process may seem tedious to a prospective new home buyer, but it is absolutely essential to ensure an accurate, thorough pre-approval. As a result, when a mortgage professional asks for multiple income documents, the prospective new home buyer truly needs to accommodate the request if they want the letter drawn up properly. Typical documents needed include, pay stubs, W2 forms, bank statements/proof of funds, etc.
Have you or someone you know had the frustrating experience of having a pre-approval fall through due to the lack of due diligence by a mortgage professional? You can be reassured history will not repeat itself if you work with a lender such as the Alpine Team Mortgage Spimplified will be just that, keep simple for you! Our office has the experienced knowledgeable professionals that can get you into your new home with a strong pre-approval letter and unparalleled communication line throughout the home buying process!
Give us a call at 801-912-8484 or email us firstname.lastname@example.org and let us help you today!