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2022 Jumbo Loans: Get Pre-approved and Lock Your Rate

April 20, 2022
mortgage blog, jumbo loan, pre-approval, preferred rate

Mortgage rates continue to push upwards and housing prices are still at record highs, but the market appears to be slowing down. Realtors say offers are coming in with greater caution and less competition as the season progresses, and jumbo loans are on the rise in high-cost areas. Nevertheless, high purchase prices create a challenge for most homebuyers who are ready to buy a bigger home or refinance a mortgage.

Jumbo loans offer qualified borrowers a mortgage solution to the high-cost dilemma.

Whether your want to refinance or buy a bigger home, getting pre-approved can help you lock in a mortgage rate before they jump again.

Jumbo Loan Limits for 2022

In early 2022, jumbo loan limits increased to $647,200 in most of the U.S. and up to $970,800 in high-cost areas. Why does this matter? Jumbo loan limits put mortgages in two distinct brackets: conforming and non-conforming home loans. Historically, conforming loans offer homebuyers the lowest mortgage rates.

Click here to visit the FHFA site and see the loan limits for every U.S. county.

Right now, jumbo rates are dropping and are even lower than conforming rates in some cases.

Jumbo loans offer freedom and opportunity for homebuyers, especially in areas where the cost of homes is substantially higher. Jumbo loans have stricter criteria to qualify, but a jumbo loan can give you extreme flexibility. And since jumbo loans are conventional home loans, qualified borrowers can use a jumbo loan to purchase single-family homes, multi-unit properties, vacation homes, and investment properties.

How to Qualify for a Jumbo Loan in 2022

Borrower criteria are more strict for jumbo loans. Since jumbo loans are not government-backed, mortgage lenders assume more risk and have stricter approval requirements. A high credit score and low DTI will give you the best mortgage rate and better loan terms.

Qualified borrowers will typically meet the following requirements:

  • High credit score or 680+
  • High cash reserves
  • Large down payment (20% or higher)
  • Low debt-to-income ratio (36% or lower)
  • Verifiable income and employment

Tips to Maximize Verified Income

Most of us can’t flip a switch to increase our income. However, you’ll qualify for a better jumbo loan when you can find ways to verify higher income. Employment is only one aspect of qualified income.

Consider the following revenue streams and be sure to include them if they apply to you:

  • investment gains, interest, and dividends
  • restricted stock units (RSU)
  • employee stock purchase plans (ESPP shares)
  • rental property income
  • business income
  • spousal support and/or child support

How to Lock Your Rate: Fast Track Your Mortgage Pre-approval

When you decide to get pre-approved for a jumbo loan, the mortgage lender does the extra work to verify your income, credit history, and required documentation to get your loan approved fast. If you’re refinancing, getting pre-approved for a jumbo loan can lock in your rate so you don’t hit any surprises during the application process.

If you’re purchasing a new home, getting pre-approved for a jumbo mortgage will lock your rate and give you a pre-approval letter to present with every offer. As a buyer, you’ll be confident knowing that your loan is approved up to the maximum amount designated. What’s more, realtors and sellers will know that you’re a serious buyer who can close fast.

Step 1: Connect with a local mortgage advisor.

First, talk to a mortgage advisor as soon as you think you might be ready for a jumbo loan. A mortgage advisor can start the mortgage pre-approval process and lock in your rate right away.

A local mortgage advisor will understand the unique challenges of the housing market in your specific area and can get move your documentation quickly to underwriting. A mortgage advisor is your greatest asset in the loan process, so be sure to work with someone who understands your goals.

Find a qualified mortgage expert in your local area

Step 2: Download your free credit report.

You can download a free credit report once every 12 months. Know your credit score and check the report to see if any errors need attention. Your credit score will directly impact the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report

Step 3: Gather required documentation.

An experienced mortgage advisor will provide a checklist to follow, lock in your rate, and get your jumbo loan pre-approved fast.

Start gathering the paperwork you may need to fast-track your jumbo loan pre-approval.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • RSU, ESPP shares, or other stock options
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

Ask your mortgage advisor for a quick list to help keep things on track.

Next Steps

Get pre-approved and lock in your mortgage rate now if you’re thinking about a jumbo loan. Getting pre-approved is the best next step, especially in today’s housing market.

An experienced mortgage advisor can help you get approved, lock in the lowest mortgage rate, and secure the right home loan. Connect with a mortgage advisor to discuss your options and save money on your mortgage. We’d love to help.

Boost Your Credit Score and Save Money on Your Mortgage

July 9, 2021
blog credit score

Applying for a mortgage can feel stressful, especially if you don’t know your credit score or if your credit score is low. Your credit score directly impacts the terms of your loan, mortgage interest rates, and whether or not you might qualify. 

The great news is you can save thousands of dollars on your mortgage by boosting your credit score. Why? Lenders look at credit scores as an important factor in determining your ability to repay the loan. Lower risk (for the lender) means a better mortgage for you.

Together, a better credit score and low debt-to-income ratio can help you save thousands of dollars on your mortgage.

RELATED: WHY GETTING PREAPPROVED FOR A MORTGAGE IS A SMART STRATEGY

How can I raise my credit score quickly?

A better credit score means a better mortgage. However, if your credit score isn’t where you want it right now, there’s a lot you can do to improve it. Follow the steps below to boost your credit score fast.

  • Excellent credit: 740 + 
  • Good credit: 700 – 739
  • Fair credit: 620 – 699
  • Not so great: 580 – 619

Smart tips to boost your credit score in less than 60 days

Step 1: Download a free copy of your credit report

Review your credit report for accuracy and look for any errors or negative marks that need your attention. Get a free copy of your credit report here from the Federal Trade Commission.

Step 2: Clean up any errors on your credit report

First, check to confirm that your personal information is correct (name, address, past addresses, etc.) Next, check for collection accounts, late payments, credit inquiries, or anything else that shouldn’t be there. If needed, you can also dispute credit inquiries or negative items that might hurt your credit score. Most errors can be cleared within 30 days.

Step 3: Pay down high credit card balances

The lower your balances are, the higher your credit score will be. Ideally, you want to aim for a balance below 30% of your available credit (also called your credit utilization ratio). This is because lenders consider it a lower risk when a borrower isn’t maxed out on their credit.

RELATED: BECOME A HOMEOWNER WITH LESS THAN 3% DOWN

Step 4: Catch up on past-due payments

Bringing your accounts current will boost your credit score. If needed, call your creditors to make a payment arrangement so that you bring your accounts current.

Step 5: Keep old accounts open

Payment history can help your credit score. So even if you have old accounts that you haven’t used in years, keeping them open with a zero balance is a smart move.

Step 6: Don’t apply for new credit cards or loans

Each time you apply for a new credit card or loan, it negatively impacts your credit score. So when you’re ready to apply for a mortgage, hold off on buying that car or opening a new line of credit.

Does it hurt my credit score when I apply for a mortgage?

No. When you apply for a mortgage, it shows up on your credit report as a new inquiry, but it doesn’t negatively affect your credit rating for the first 45 days. However, if you apply to multiple lenders beyond the first 45 days, the additional inquiries will begin to affect your credit score.

Should I pay off my loans early to improve my credit score?

In most cases, no. Believe it or not, keeping installment loans open and making your payments on time is the best way to keep your credit score in check.

Should I pay off my credit cards to boost my credit score?

Probably not. The best strategy is to pay down your balances significantly and keep your credit line open with a low balance. If possible, pay down your highest balance credit cards first and push your balance below 30% of the credit line.

High credit score? Leverage your mortgage options.

A high credit score means lenders will compete for your business. Download a free copy of your credit report so you can resolve any errors or misinformation. Keep making your payments on time and don’t take on any new debt or apply for new credit lines.

Now’s not the time to open a new credit card or apply for a new loan. Instead, keep your credit report as clean as possible when you’re ready to apply for a mortgage.

Low credit score? The FHA home loan might be the best fit.

A good credit score will typically get you the lowest mortgage rate. But there are also specialty loan programs available for homebuyers who have a lower credit score. In addition, your credit score isn’t the only factor when it comes to qualifying for a mortgage. Talk to a mortgage expert who understands the big picture and can help you reach your homeownership goals. 

RELATED: TOP 5 HOME LOANS FOR FIRST-TIME HOMEBUYERS

Let’s talk about Debt-to-Income Ratios and Credit Scores

When you apply for a mortgage, your debt-to-income ratio impacts your mortgage application right along with your credit score.

Why? Lenders compare your total monthly income with your monthly debt repayments to determine how much you can afford. If your monthly debt payments are higher than 40% of your pre-tax income, it might be harder to qualify for the best rate.

It might be worth it to pay down your debt when it comes to your credit score, so your debt-to-income ratio is favorable.

How to Calculate Debt-to-Income Ratio (DTI)

To calculate your DTI, combine your required monthly payments (e.g., monthly rent or mortgage, minimum credit card payments, student loans, car payments), and subtract the total from your gross monthly income.

For example, if your gross monthly income is $6,000, then 43% would be $2,580. This is the maximum amount a lender would approve for a monthly mortgage payment for a conventional loan. Next, subtract your monthly debt repayments:

Monthly car payment = $200
Credit card payment = $135
Student loan payment = $250

In this scenario, your monthly debt obligation would be $585. From the lender’s perspective, this means you have $1,995 available to make a monthly mortgage payment ($2,580 – $585 = $1,995.)

Note that your new monthly payment will need to cover your mortgage payment, homeowner’s insurance, property taxes, and mortgage insurance if required.

RELATED: HOW DO I QUALIFY FOR A MORTGAGE WITH STUDENT LOAN DEBT?

What Happens with Co-applicants or a Joint Mortgage?

If you want to buy a house with a partner, spouse, friend, or relative, your mortgage application will require a credit report for everyone on the application. We blogged about this recently, which you can check out here: How to apply for a joint mortgage with a friend or relative (their credit score might help you qualify).

Summary

Buying a home or refinancing a mortgage can be a lot less stressful when you know what to expect. Mortgage lenders look at your credit report to evaluate risk and determine if you’ll be able to pay back your loan. Talk to a mortgage advisor (for free) to discuss options that can save you money.

The best way to boost your credit score is to make your payments on time, fix any errors on your credit report, and lower your balance on revolving credit cards.

Find out your credit score and download your free credit report. You can clean up any errors, dispute negative marks, and take action to boost your credit score in less than 60 days.

Next Steps

To get the best mortgage interest rate and terms, work with a local mortgage expert who understands your financial situation. No matter your credit score, we’re dedicated to helping you save money on your mortgage. Financial freedom might be closer than you think.

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Bump Your Credit Score and Get a Better Mortgage

July 6, 2022
blog credit report

Applying for a mortgage can be a stressful process, especially for new homebuyers.  While mortgage rates begin to steady, it’s a little easier to make a budget and determine how much you can afford. But if you really want to get your best mortgage, one of the best actions you can take is to boost your credit score. Most people can bump it up several points in less than 60 days.  Your credit score directly impacts the terms of your loan, mortgage interest rates, and whether or not you might qualify. 

The great news is you can save thousands of dollars on your mortgage by boosting your credit score. Why? Lenders look at credit scores as an important factor in determining your ability to repay the loan. Lower risk (for the lender) means a better mortgage for you.

Together, a better credit score and low debt-to-income ratio can help you save thousands of dollars on your mortgage.

RELATED: WHY GETTING PREAPPROVED FOR A MORTGAGE IS A SMART STRATEGY

How can I raise my credit score quickly?

A better credit score means a better mortgage. However, if your credit score isn’t where you want it right now, there’s a lot you can do to improve it. Follow the steps below to boost your credit score fast.

  • Excellent credit: 740 + 
  • Good credit: 700 – 739
  • Fair credit: 620 – 699
  • Not so great: 580 – 619

Smart tips to bump up your credit score in less than 60 days

Step 1: Download a free copy of your credit report

Review your credit report for accuracy and look for any errors or negative marks that need your attention. Get a free copy of your credit report here from the Federal Trade Commission.

Step 2: Clean up any errors on your credit report

First, check to confirm that your personal information is correct (name, address, past addresses, etc.) Next, check for collection accounts, late payments, credit inquiries, or anything else that shouldn’t be there. If needed, you can also dispute credit inquiries or negative items that might hurt your credit score. Most errors can be cleared within 30 days.

Step 3: Pay down high credit card balances

The lower your balances are, the higher your credit score will be. Ideally, you want to aim for a balance below 30% of your available credit (also called your credit utilization ratio). This is because lenders consider it a lower risk when a borrower isn’t maxed out on their credit.

RELATED: BECOME A HOMEOWNER WITH LESS THAN 3% DOWN

Step 4: Catch up on past-due payments

Bringing your accounts current will boost your credit score. If needed, call your creditors to make a payment arrangement so that you bring your accounts current.

Step 5: Keep old accounts open

Payment history can help your credit score. So even if you have old accounts that you haven’t used in years, keeping them open with a zero balance is a smart move.

Step 6: Don’t apply for new credit cards or loans

Each time you apply for a new credit card or loan, it negatively impacts your credit score. So when you’re ready to apply for a mortgage, hold off on buying that car or opening a new line of credit.

Does it hurt my credit score when I apply for a mortgage?

No. When you apply for a mortgage, it shows up on your credit report as a new inquiry, but it doesn’t negatively affect your credit rating for the first 45 days. However, if you apply to multiple lenders beyond the first 45 days, the additional inquiries will begin to affect your credit score.

Should I pay off my loans early to improve my credit score?

In most cases, no. Believe it or not, keeping installment loans open and making your payments on time is the best way to keep your credit score in check.

Should I pay off my credit cards to bump up my credit score?

Probably not. The best strategy is to pay down your balances significantly and keep your credit line open with a low balance. If possible, pay down your highest balance credit cards first and push your balance below 30% of the credit line.

High credit score? Leverage your mortgage options.

A high credit score means lenders will compete for your business. Download a free copy of your credit report so you can resolve any errors or misinformation. Keep making your payments on time and don’t take on any new debt or apply for new credit lines.

Now’s not the time to open a new credit card or apply for a new loan. Instead, keep your credit report as clean as possible when you’re ready to apply for a mortgage.

Low credit score? The FHA home loan might be the best fit.

A good credit score will typically get you the lowest mortgage rate. But there are also specialty loan programs available for homebuyers who have a lower credit score. In addition, your credit score isn’t the only factor when it comes to qualifying for a mortgage. Talk to a mortgage expert who understands the big picture and can help you reach your homeownership goals. 

RELATED: TOP 5 HOME LOANS FOR FIRST-TIME HOMEBUYERS

Debt-to-Income Ratios and Credit Scores

When you apply for a mortgage, your debt-to-income ratio impacts your mortgage application right along with your credit score.

Why? Lenders compare your total monthly income with your monthly debt repayments to determine how much you can afford. If your monthly debt payments are higher than 40% of your pre-tax income, it might be harder to qualify for the best rate.

It might be worth it to pay down your debt when it comes to your credit score, so your debt-to-income ratio is favorable.

How to Calculate Debt-to-Income Ratio (DTI)

To calculate your DTI, combine your required monthly payments (e.g., monthly rent or mortgage, minimum credit card payments, student loans, car payments), and subtract the total from your gross monthly income.

For example, if your gross monthly income is $6,000, then 43% would be $2,580. This is the maximum amount a lender would approve for a monthly mortgage payment for a conventional loan. Next, subtract your monthly debt repayments:

Monthly car payment = $200
Credit card payment = $135
Student loan payment = $250

In this scenario, your monthly debt obligation would be $585. From the lender’s perspective, this means you have $1,995 available to make a monthly mortgage payment ($2,580 – $585 = $1,995.)

Note that your new monthly payment will need to cover your mortgage payment, homeowner’s insurance, property taxes, and mortgage insurance if required.

RELATED: HOW DO I QUALIFY FOR A MORTGAGE WITH STUDENT LOAN DEBT?

 

Summary

Buying a home or refinancing a mortgage can be a lot less stressful when you know what to expect. Mortgage lenders look at your credit report to evaluate risk and determine if you’ll be able to pay back your loan. Talk to a mortgage advisor (for free) to discuss options that can save you money.

The best way to boost your credit score is to make your payments on time, fix any errors on your credit report, and lower your balance on revolving credit cards.

Find out your credit score and download your free credit report. You can clean up any errors, dispute negative marks, and take action to boost your credit score in less than 60 days.

 

Next Steps

To get the best mortgage interest rate and terms, work with a local mortgage expert who understands your financial situation. No matter your credit score, we’re dedicated to helping you save money on your mortgage. Financial freedom might be closer than you think.

Refinance Your Mortgage and Lock in the Best Rate (How To)

June 12, 2021
blog refinance

The recent dip in 10-year Treasury bonds is good news for homeowners ready to refinance a mortgage and first-time homebuyers. Whether you want to refinance your mortgage for a lower payment, apply for a cash-out refinance, or refinance your mortgage for a lower rate, now’s the time to take action.

Historically, a dip in Treasury yields translates to lower mortgage rates. Still, the economy is opening up, and rates have been near historic lows for months. Despite the downshift, mortgage experts predict rates to begin an upward rise soon.

Connect with a mortgage advisor to start the process early and lock in a low mortgage rate before they start to rise again.

Related: First-Time Homebuyer Advantages for 2021

How to Refinance Your Mortgage and Save Money in 5 Steps

Every borrower wants the best rate possible, and lenders will compete for your business if you’ve got a good financial track record. Borrowers with a good credit score and a low debt-to-income ratio will have leverage when deciding to shop around. But even if you’re financial picture isn’t where you’d like it to be right now, these tips will help you prepare.

When you apply for a mortgage refinance, the top three factors that will impact your mortgage application are your credit score, debt-to-income ratio, and home equity (loan-to-value ratio).

Take note of these five steps to leverage your knowledge and approach lenders with confidence.

Step 1: Protect your credit score.

Download a free copy of your credit report so you can resolve any errors or misinformation. If you have high consumer debt or multiple loans, pay down the balances to improve your credit score.

Keep making your payments on time and don’t take on any new debt or apply for new credit lines. Now’s not the time to open a new credit card or apply for a car loan. Keep your credit report as clean and consistent as possible when you’re ready to refinance.

Step 2: Shop around for the best mortgage refinance lender.

Just because rates are low doesn’t mean lenders will give you the best mortgage rate. Shopping for the best rate is a common strategy for most homeowners, but it’s smarter to shop around for the best mortgage advisor.

Yes, mortgage rates are one of the main factors borrowers consider when refinancing a mortgage. But the best loan terms are part of an overall package that goes beyond your interest rate. Fees, closing costs, points, and mortgage insurance are a few costs that can overshadow a low mortgage rate.

You don’t want to end up with a mortgage refinance that ends up costing you more and keeps you from meeting your long-term financial goals. 

We recommend shopping around for the best mortgage advisor. Read reviews, check in with colleagues, follow up directly when you find a low rate.

A great mortgage advisor will talk with you about your financial and homeownership goals. Together, you can refinance your mortgage with a custom solution that checks all the boxes. You should be able to refinance your mortgage with a low-interest rate, a better mortgage payment, and loan terms that meet your financial goals.

  • Do they deliver exceptional customer service?
  • Do they offer the refinance product you want (fixed, adjustable, streamline, cash-out, etc.)?
  • Do they understand your financial goals?
  • Do they have great customer reviews?

Related: When is it a good time to change mortgage lenders?

Step 3: Compare mortgage refinance offers to find the best loan.

Advertised rates are helpful metrics to find out where the market is trending, but refinancing a mortgage can end up costing you a lot of money if you’re not careful.

So, shopping for the lowest rate won’t always get you the best mortgage refinance. Instead, compare your refinance offers side-by-side using the loan estimates provided by your lender.

The truth is, mortgage rates vary based on the borrower’s information, the loan product, and the lender. Certain lenders might advertise super low rates, but they might offer you higher rates than other lenders based on your credit score. The same goes for your debt-to-income ratio and your home equity.

When you apply for a mortgage refinance, you’ll receive a quote, also called a loan estimate. Your loan estimate will offer a line-by-line breakdown that shows the terms of your home loan.

Prepare ahead of time and review this sample Loan Estimate. All lenders use the same format, so this will make it easier to compare refinance offers.

Step 4: Estimate the closing costs for a mortgage refinance.

Refinancing your mortgage is about saving money for most borrowers. So if your mortgage refinance has a lower rate but high closing costs, it might not be a great solution.

Check out your Loan Estimate again to verify closing costs and any other fees that might be negotiable. Closing costs will be written in a different section and cover one-time expenses.

When you refinance a mortgage, many borrowers have the option to pay closing costs up front, roll them into the loan, or get a lender credit in exchange for a higher rate. 

To find out which fees are negotiable, check out this sample Loan Estimate.

Closing costs typically include:

  • Origination Fee
  • Appraisal Fee
  • Credit Report Fee
  • Prepaid Homeowner’s Insurance
  • Prepaid Interest
  • Property Taxes
  • Mortgage Insurance

Remember these are one-time fees that you wouldn’t incur without refinancing your mortgage. One way to know whether refinancing your mortgage will save you money is to calculate your closing costs.

Related: The Truth About Closing Costs and No-Closing Cost Loans

Step 5: Lock your rate when you apply for refinancing.

Lenders vary in how and when they offer mortgage rate locks, so be sure to ask your mortgage advisor about the terms. Often, borrowers have the option to lock in a mortgage rate early in the application process.

A float-down option often allows rate flexibility that protects the borrower: if market rates drop, the borrower’s rate “floats down” with the market; but if rates rise, the quoted rate stays secure. Mortgage lenders typically offer rate locks for 30 to 60 days. 

Ask your mortgage lender about locking your rate and what happens if mortgage rates shift. If the refinance process takes longer than anticipated, you don’t want the uncertainty of a fluctuating mortgage rate in the mix.

Related: Your Complete Guide To Refinancing Your Mortgage

Final Takeaway

Refinancing a mortgage can help you reach your financial goals faster. Take a minute to clarify your goals to make an informed decision once you get a loan estimate from your lender. Keep your credit report in check, take a close look at closing costs, and lock your rate if possible. Most importantly, shop around for the right mortgage lender and make sure you’re comparing apples to apples when you evaluate the terms of your refinance.

Next Steps

To get the best refinance rates and loan terms, work with a local mortgage expert who understands your financial situation. We’d love to discuss your financial goals and build a custom mortgage refinance that saves you money. 

Smart Tips to Get Preapproved for a Mortgage (Before That Offer)

June 4, 2021
blog young couple on couch2

As soon as you start shopping for a new home, one of the most important steps you can take is to get pre-approved for your home loan. Getting pre-approved for a mortgage can boost your buying power and give you peace of mind while you shop.

Why? When you get pre-approved for a mortgage, the lender has already approved a maximum amount for your home loan. You won’t have to worry about whether or not you’ll get approved for a different amount, and you’ll have real buying power when you make an offer.

Follow these tips and learn how to get pre-approved for a mortgage fast. Once the mortgage pre-approval process is underway, you can hit those open houses with confidence.

Getting Pre-qualified vs. Pre-approved for a Mortgage

First things first, getting pre-qualified and getting pre-approved for a mortgage aren’t the same thing, and knowing the difference can give you an edge.

Pre-qualification seems like a simple process because it requires less documentation. 

To get pre-qualified, a lender will ask you for some basic information, including your credit score, current income, and employment status. A pre-qualification is helpful as an estimate for what you can afford, but it doesn’t guarantee that you’ll qualify for a home loan for that amount.

Pre-approval is a more thorough process, but the payoff for potential buyers is significant.

When you get pre-approved for a mortgage, the lender does the extra work to verify your credit and income, along with the required documentation for a home loan. Your mortgage advisor will discuss different loan options, current mortgage rates, and your budget. 

Once your mortgage is pre-approved, you’ll have a mortgage pre-approval letter that you can present with every offer. You’ll know the maximum amount you can borrow, and the sellers will know that you’re a serious buyer who can close fast.

A mortgage lender won’t finalize the loan terms until you’ve made an offer that the seller accepts. Once the new property is in escrow, the lender will complete the terms of your home loan and get paperwork ready for closing.

Related: The truth about closing costs and no-closing-cost loans

Top 5 Questions on Getting Pre-approved for a Mortgage (Answered)

1. Do I need to get pre-approved for a mortgage before I make an offer?

The short answer is no. There is no requirement to be pre-approved for a mortgage before you make an offer.

However, getting pre-approved for a mortgage is one of the best moves you can make if you want to make a competitive offer that stands out. In today’s housing market, your offer will be stronger if you have fewer contingencies. 

For example, let’s say you make an offer on a property, and there are five other offers. In this scenario, the sellers have a lot of options. There are exceptions to every situation, but most sellers (and realtors) will want buyers who can close fast with the fewest contingencies.

A mortgage pre-approval letter shows that you’re a serious buyer who is ready to close fast. It also assures the seller that you’ve been approved for a home loan that meets or exceeds the offer.

2. What documents will I need to get pre-approved?

Getting pre-approved for a mortgage is similar to starting an application for a home loan, with a few exceptions. Mortgage lenders require varying documentation depending on the type of home loan you want, but it’s a good idea to start gathering the basic financial information early.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

If you’re self-employed or plan to qualify using non-standard income, your advisor can talk with you about additional information that will be required.

3. Does getting pre-approved for a mortgage affect my credit score?

Probably not. In most cases, getting pre-approved for a mortgage won’t affect your credit score. During the process, your lender will pull your credit report to process your mortgage pre-approval. A single request typically won’t impact your credit.

However, some buyers decide to apply with multiple lenders to compare rates and loan options. This strategy can negatively impact your credit score since multiple lenders will trigger numerous credit inquiries.

Working with an experienced mortgage advisor can help protect your credit rating. A qualified mortgage advisor can pull your credit score just once and shop for the best rates and loan options from various lenders–without affecting your credit score.

Related: How to find an experienced mortgage advisor in your local area

4. How long will it take to get a mortgage pre-approval letter?

Typically, a qualified borrower can get a mortgage pre-approval letter in just a few days. Depending on your situation, it might take a bit longer, which is why it’s wise to start early.

Connect with an experienced mortgage advisor so you can make sure all your documentation is in order. If you have good credit and verifiable income, getting pre-approved for a mortgage is a quick process.

If you have a financial situation that is less common, getting pre-approved for a mortgage is even more important, so you aren’t faced with holdups when you’re ready to make an offer. A qualified mortgage advisor can keep things moving quickly.

5. What happens if my home loan doesn’t get approved?

Once you’ve made an offer on a new home, it can be stressful waiting to find out if your home loan is approved. Even worse, rushing to get your application pushed through only to get denied.

This is one reason it’s smart to get pre-approved for a mortgage before you find your perfect home. Getting pre-approved for a mortgage gives you confidence and stability.

By getting pre-approved early, your mortgage advisor can put together customized loan options that fit your financial situation. Even if your credit isn’t perfect, there are several loan options that could be a good fit. Especially if you’re a first-time homebuyer.

How to Get a Fast Mortgage Pre-approval


Step 1: Estimate how much you can afford

Use a mortgage calculator to find out how much you can afford. The results will only be a ballpark figure, but it can help set expectations. Decide on your price range, then connect with a mortgage advisor to discuss your homeownership goals.

Check out this mortgage calculator to see how much you can afford


Step 2: Connect with a Mortgage Advisor

First, talk to a mortgage advisor as soon as you’re thinking about getting a home loan. A qualified mortgage expert can start the mortgage pre-approval process right away while you start shopping for your next home.

Find a qualified mortgage expert in your local area


Step 3: Download your free credit report

You can download a free credit report once every 12 months. It’s a good idea to find out your credit score and check the report to see if any errors need attention. Your credit score will have a direct impact on the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report


Step 4: Gather required documentation

Most mortgage lenders require similar documentation, with a few exceptions. Start gathering paperwork you’ll need to verify income and assets, employment information, bank statements, and tax returns. If you’re self-employed or plan to use non-standard income to qualify, your mortgage advisor can talk with you about additional information that might be required.

Ask your mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will provide a checklist to follow and will make sure the process runs smoothly.

Final Takeaway

Getting pre-approved for a mortgage means that your mortgage lender has already approved the total loan amount for your home loan. Getting pre-approved will help you stand out among other potential buyers and also lets sellers know you’re serious and you’ll be able to close fast.

Shopping with a mortgage pre-approval letter will give you peace of mind and a competitive edge when you decide to make an offer. Start the process early so your lender has all the required documentation and your mortgage advisor can keep things running on time.

Next Steps

If you’re thinking about buying a home, getting pre-approved for a mortgage will give you several advantages in today’s housing market. Start gathering your documentation and connect with a mortgage advisor to discuss your homeownership goals. Getting pre-approved is a straightforward process with big payoffs. We’d love to help.

Get Preapproved for a Mortgage Before You Make an Offer

July 13, 2022
mortgage blog, preapproved, mortgage

When you’re shopping for a new home, one of the most important steps you can take is to get pre-approved for your home loan. Getting pre-approved for a mortgage can boost your buying power and give you greater confidence when you make an offer.

Why? When you get pre-approved for a mortgage, the lender has already approved a maximum amount for your home loan. You won’t have to worry about whether or not your financing could fall through and you’ll have real buying power when you make an offer.

Follow these tips and learn how to get pre-approved for a mortgage fast. Once the mortgage pre-approval process is underway, you can hit those open houses with confidence.

 

Getting Pre-qualified vs. Pre-approved for a Mortgage

First things first, getting pre-qualified and getting pre-approved for a mortgage aren’t the same thing, and knowing the difference can give you an edge.

Pre-qualification seems like a simple process because it requires less documentation. 

To get pre-qualified, a lender will ask you for some basic information, including your credit score, current income, and employment status. A pre-qualification is helpful as an estimate of what you can afford, but it doesn’t guarantee that you’ll qualify for a home loan for that amount.

Pre-approval is a more thorough process, but the payoff for potential buyers is significant.

When you get pre-approved for a mortgage, the lender does the extra work to verify your credit and income, along with the required documentation for a home loan. Your mortgage advisor will discuss different loan options, current mortgage rates, and your budget. 

Once your mortgage is pre-approved, you’ll have a mortgage pre-approval letter that you can present with every offer. You’ll know the maximum amount you can borrow, and the sellers will know that you’re a serious buyer who can close fast.

A mortgage lender won’t finalize the loan terms until you’ve made an offer that the seller accepts. Once the new property is in escrow, the lender will complete the terms of your home loan and get the paperwork ready for closing.

Related: The truth about closing costs and no-closing-cost loans

Top 5 Questions on Getting Pre-approved for a Mortgage

1. Do I need to get pre-approved for a mortgage before I make an offer?

The short answer is no. There is no requirement to be pre-approved for a mortgage before you make an offer.

However, getting pre-approved for a mortgage is one of the best moves you can make if you want to make a competitive offer that stands out. In today’s housing market, your offer will be stronger if you have fewer contingencies. 

For example, let’s say you make an offer on a property, and there are five other offers. In this scenario, the sellers have a lot of options. There are exceptions to every situation, but most sellers (and realtors) will want buyers who can close fast with the fewest contingencies.

A mortgage pre-approval letter shows that you’re a serious buyer who is ready to close fast. It also assures the seller that you’ve been approved for a home loan that meets or exceeds the offer.

2. What documents will I need to get pre-approved?

Getting pre-approved for a mortgage is similar to starting an application for a home loan, with a few exceptions. Mortgage lenders require varying documentation depending on the type of home loan you want, but it’s a good idea to start gathering the basic financial information early.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

If you’re self-employed or plan to qualify using non-standard income, your advisor can talk with you about additional information that will be required.

3. Does getting pre-approved for a mortgage affect my credit score?

Probably not. In most cases, getting pre-approved for a mortgage won’t affect your credit score. During the process, your lender will pull your credit report to process your mortgage pre-approval. A single request typically won’t impact your credit.

However, some buyers decide to apply with multiple lenders to compare rates and loan options. This strategy can negatively impact your credit score since multiple lenders will trigger numerous credit inquiries.

Working with an experienced mortgage advisor can help protect your credit rating. A qualified mortgage advisor can pull your credit score just once and shop for the best rates and loan options from various lenders–without affecting your credit score.

Related: How to find a experienced mortgage advisor in your area

4. How long will it take to get a mortgage pre-approval letter?

Typically, a qualified borrower can get a mortgage pre-approval letter in just a few days. Depending on your situation, it might take a bit longer, which is why it’s wise to start early.

Connect with an experienced mortgage advisor so you can make sure all your documentation is in order. If you have good credit and verifiable income, getting pre-approved for a mortgage is a quick process.

If you have a financial situation that is less common, getting pre-approved for a mortgage is even more important, so you aren’t faced with holdups when you’re ready to make an offer. A qualified mortgage advisor can keep things moving quickly.

5. What happens if my home loan doesn’t get approved?

Once you’ve made an offer on a new home, it can be stressful waiting to find out if your home loan is approved. Even worse, rushing to get your application pushed through only to get denied.

This is one reason it’s smart to get pre-approved for a mortgage before you find your perfect home. Getting pre-approved for a mortgage gives you confidence and stability.

By getting pre-approved early, your mortgage advisor can put together customized loan options that fit your financial situation. Even if your credit isn’t perfect, there are several loan options that could be a good fit. Especially if you’re a first-time homebuyer.

 

How to Get a Fast Mortgage Pre-approval


Step 1: Estimate how much you can afford

Use a mortgage calculator to find out how much you can afford. The results will only be a ballpark figure, but it can help set expectations. Decide on your price range, then connect with a mortgage advisor to discuss your homeownership goals.

Check out this mortgage calculator to see how much you can afford


Step 2: Connect with a Mortgage Advisor

First, talk to a mortgage advisor as soon as you’re thinking about getting a home loan. A qualified mortgage expert can start the mortgage pre-approval process right away while you start shopping for your next home.

Find a qualified mortgage expert in your area


Step 3: Download your free credit report

You can download a free credit report once every 12 months. It’s a good idea to find out your credit score and check the report to see if any errors need attention. Your credit score will have a direct impact on the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report


Step 4: Gather required documentation

Most mortgage lenders require similar documentation, with a few exceptions. Start gathering paperwork you’ll need to verify income and assets, employment information, bank statements, and tax returns. If you’re self-employed or plan to use non-standard income to qualify, your mortgage advisor can talk with you about additional information that might be required.

Ask your mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will provide a checklist to follow and will make sure the process runs smoothly.

Summary

Getting pre-approved for a mortgage means that your mortgage lender has already approved the total loan amount for your home loan. Getting pre-approved will help you stand out among other potential buyers and also lets sellers know you’re serious and you’ll be able to close fast.

Shopping with a mortgage pre-approval letter will give you peace of mind and a competitive edge when you decide to make an offer. Start the process early so your lender has all the required documentation and your mortgage advisor can keep things running on time.

Taking Action

If you’re thinking about buying a home, getting pre-approved for a mortgage will give you several advantages in today’s housing market. Start gathering your documentation and connect with a mortgage advisor to discuss your homeownership goals. Getting pre-approved is a straightforward process with big payoffs. We’d love to help.

Relocating? Get Pre-approved for a Mortgage First

October 12, 2022
mortgage blog, pre-approved mortgage, preferred rate

When you’re relocating, shopping for a new home can be exciting but it can also feel overwhelming. One of the most important steps you can take is to get pre-approved for your home loan–even if you’re moving out of state. An experienced mortgage advisor can help you get pre-approved for a mortgage before you move in the zip code you need.

The best part is you’ll know exactly how much you can afford before you shop and you can lock in the lowest mortgage rate available. Getting pre-approved for a mortgage can boost your buying power and give you greater confidence when you’re ready to make an offer.

When you get pre-approved for a mortgage, the lender has already approved a maximum amount for your home loan. You won’t have to worry about whether or not your financing could fall through and you’ll have real buying power when you make an offer.

First, find a local mortgage advisor ahead of time who can help guide you through the process. No matter what state you’re about to call home, a qualified advisor can lock in your rate and partner with you through every step.

These tips and learn how to get pre-approved for a mortgage fast. Once the mortgage pre-approval process is underway, you can hit those open houses with confidence.

Getting Pre-qualified vs. Pre-approved for a Mortgage

First things first, getting pre-qualified and getting pre-approved for a mortgage aren’t the same thing, and knowing the difference can give you an edge.

Pre-qualification seems like a simple process because it requires less documentation. 

To get pre-qualified, a lender will ask you for some basic information, including your credit score, current income, and employment status. A pre-qualification is helpful as an estimate of what you can afford, but it doesn’t guarantee that you’ll qualify for a home loan for that amount.

Pre-approval is a more thorough process, but the payoff for potential buyers is significant.

When you get pre-approved for a mortgage, the lender does the extra work to verify your credit and income, along with the required documentation for a home loan. Your mortgage advisor will discuss different loan options, current mortgage rates, and your budget. 

Once your mortgage is pre-approved, you’ll have a mortgage pre-approval letter that you can present with every offer. You’ll know the maximum amount you can borrow, and the sellers will know that you’re a serious buyer who can close fast.

A mortgage lender won’t finalize the loan terms until you’ve made an offer that the seller accepts. Once the new property is in escrow, the lender will complete the terms of your home loan and get the paperwork ready for closing.

Related: The truth about closing costs and no-closing-cost loans

Top 5 Questions on Getting Pre-approved for a Mortgage

1. Do I need to get pre-approved for a mortgage before I make an offer?

The short answer is no. There is no requirement to be pre-approved for a mortgage before you make an offer.

However, getting pre-approved for a mortgage is one of the best moves you can make if you want to make a competitive offer that stands out. In today’s housing market, your offer will be stronger if you have fewer contingencies. 

For example, let’s say you make an offer on a property, and there are five other offers. In this scenario, the sellers have a lot of options. There are exceptions to every situation, but most sellers (and realtors) will want buyers who can close fast with the fewest contingencies.

A mortgage pre-approval letter shows that you’re a serious buyer who is ready to close fast. It also assures the seller that you’ve been approved for a home loan that meets or exceeds the offer.

2. What documents will I need to get pre-approved?

Getting pre-approved for a mortgage is similar to starting an application for a home loan, with a few exceptions. Mortgage lenders require varying documentation depending on the type of home loan you want, but it’s a good idea to start gathering the basic financial information early.

  • Identification such as a passport or driver’s license
  • Employment verification
  • Proof of income (e.g., pay stubs, W-2 statements, bonuses, alimony)
  • Tax returns for the past two years 
  • Recent bank statements
  • Investment account statements

If you’re self-employed or plan to qualify using non-standard income, your advisor can talk with you about additional information that will be required.

3. Does getting pre-approved for a mortgage affect my credit score?

Probably not. In most cases, getting pre-approved for a mortgage won’t affect your credit score. During the process, your lender will pull your credit report to process your mortgage pre-approval. A single request typically won’t impact your credit.

However, some buyers decide to apply with multiple lenders to compare rates and loan options. This strategy can negatively impact your credit score since multiple lenders will trigger numerous credit inquiries.

Working with an experienced mortgage advisor can help protect your credit rating. A qualified mortgage advisor can pull your credit score just once and shop for the best rates and loan options from various lenders–without affecting your credit score.

Related: How to find a experienced mortgage advisor in your area

4. How long will it take to get a mortgage pre-approval letter?

Typically, a qualified borrower can get a mortgage pre-approval letter in just a few days. Depending on your situation, it might take a bit longer, which is why it’s wise to start early.

Connect with an experienced mortgage advisor so you can make sure all your documentation is in order. If you have good credit and verifiable income, getting pre-approved for a mortgage is a quick process.

If you have a financial situation that is less common, getting pre-approved for a mortgage is even more important, so you aren’t faced with holdups when you’re ready to make an offer. A qualified mortgage advisor can keep things moving quickly.

5. What happens if my home loan doesn’t get approved?

Once you’ve made an offer on a new home, it can be stressful waiting to find out if your home loan is approved. Even worse, rushing to get your application pushed through only to get denied.

This is one reason it’s smart to get pre-approved for a mortgage before you find your perfect home. Getting pre-approved for a mortgage gives you confidence and stability.

By getting pre-approved early, your mortgage advisor can put together customized loan options that fit your financial situation. Even if your credit isn’t perfect, there are several loan options that could be a good fit. Especially if you’re a first-time homebuyer.

 

How to Get a Fast Mortgage Pre-approval


Step 1: Estimate how much you can afford

Use a mortgage calculator to find out how much you can afford. The results will only be a ballpark figure, but it can help set expectations. Decide on your price range, then connect with a mortgage advisor to discuss your homeownership goals.

Check out this mortgage calculator to see how much you can afford


Step 2: Connect with a Mortgage Advisor

First, talk to a mortgage advisor as soon as you’re thinking about getting a home loan. A qualified mortgage expert can start the mortgage pre-approval process right away while you start shopping for your next home.

Find a qualified mortgage expert in your area


Step 3: Download your free credit report

You can download a free credit report once every 12 months. It’s a good idea to find out your credit score and check the report to see if any errors need attention. Your credit score will have a direct impact on the terms of your loan and your mortgage rate. By getting a free copy of your credit report early, you can resolve any errors ahead of time.

Click here to download your free credit report


Step 4: Gather required documentation

Most mortgage lenders require similar documentation, with a few exceptions. Start gathering paperwork you’ll need to verify income and assets, employment information, bank statements, and tax returns. If you’re self-employed or plan to use non-standard income to qualify, your mortgage advisor can talk with you about additional information that might be required.

Ask your mortgage advisor for a quick list to help keep things on track. An experienced mortgage advisor will provide a checklist to follow and will make sure the process runs smoothly.

Summary

Getting pre-approved for a mortgage means that your mortgage lender has already approved the total loan amount for your home loan. Getting pre-approved will help you stand out among other potential buyers and also lets sellers know you’re serious and you’ll be able to close fast.

Shopping with a mortgage pre-approval letter will give you peace of mind and a competitive edge when you decide to make an offer. Start the process early so your lender has all the required documentation and your mortgage advisor can keep things running on time.

Taking Action

If you’re thinking about buying a home, getting pre-approved for a mortgage will give you several advantages in today’s housing market. Start gathering your documentation and connect with a mortgage advisor to discuss your homeownership goals. Getting pre-approved is a straightforward process with big payoffs. We’d love to help.