Not all mortgage applicants are lucky enough to receive pre-approved mortgage because of credit crunch. However, if you are pre-qualified for a mortgage loan, it is important that you use this to be approved for a mortgage loan. Note that pre-qualification for a loan is different from pre-approved mortgage. We will discuss the difference between these two mortgage elements in this article.
A borrower is considered pre-qualified for a mortgage loan when he or she was able to satisfy a particular set of criteria set by the Federal Housing Authority or FHA. If a person is pre-qualified for a mortgage, he or she can move on to approval of financial status, which will be evaluated by the required authority. Once this is completed, then the borrower is now considered as having pre-approved for a mortgage loan. The only thing that separates pre-qualified and pre-approved mortgage is the credit worthiness evaluation of lenders.
Below are the requirements to pre-qualify for a mortgage loan
- Worked with the same employer/company for at least 2 years
- Steady or increasing income for at least 2 years
- Excellent credit report showing good credit performance
- For borrowers who filed bankruptcy in the past, demonstrate a steady improvement on your credit score for the past 2 years
- For applicants who’ve been through foreclosure, present 3 years post of the completion of the foreclosure process
- A typical mortgage payment is 30% of a borrower’s income. Therefore, borrowers need to present their monthly income average.
Requirements for pre-approved mortgage
- Copies of various financial documents proving your excellent financial status
- Attach the documents with the pre-approved mortgage application
Once you got all the required documents, send them to the designated loan authority and wait for their response. You might be notified for an interview to discuss the documents you presented. If everything goes well, then your loan is pre-approved. Pre-approved mortgage means that you are qualified for instant loan and under any circumstances, will not be refused for the amount you qualify for.
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