Want to know the secret on how to get a mortgage fast? Speed sometimes becomes essential in the home-buying game. I know, because I'm a real estate agent who's seen my clients in this position.
A growing number of mortgage lenders are stepping up the pace, offering rapid pre-approval to home buyers—some within 24 hours after a borrower submits their application, says Keith Gumbinger, vice president at HSH.com, a mortgage information website.
“We’re seeing many mortgage lenders are taking steps to keep up. with on-line lenders”
For example: In simple cases, Banks electronic system can give an applicant pre-approval within 72 hours or less, says John Schleck, senior vice president of sales at the lender.
Nonetheless, “Just because you can get a mortgage more quickly doesn’t necessarily mean it’s the best mortgage for you.” “Speed and convenience can be valuable, but you still have to research the mortgage market and shop around.”
Looking to get a mortgage fast? Here are four things you need to know.
1. Understand the difference between pre-approval and pre-qualification
“Home sellers want a solid pre-approval from a buyer when they’re considering an offer.”“ They don’t want a buyer who has only been pre-qualified by a mortgage lender.” This begs the question: What’s the difference between mortgage pre-approval and pre-qualification?
In a nutshell, mortgage pre-approval is a commitment from a lender to provide you with home financing up to a certain loan amount. In order for a lender to issue pre-approval, an underwriter must do a full review of your income, assets, and credit. That’s a significantly more intensive process than mortgage pre-qualification, where a lender basically takes your word that your finances and credit score are what you say they are, without verifying any information.
Watch: What Your Mortgage Broker Wishes You Knew (That No One Else Will Tell You)
Although both pre-qualification and pre-approval are intended to give the seller confidence that you’ll be able to obtain a mortgage, a pre-approval carries more weight, because it's based on actual proof.
Indeed, when you get pre-approved, you’ll receive a pre-approval letter on your lender's letterhead that may specify the loan amount you're qualified for. (Note: The letter will usually state that the loan is subject to the property you choose, verification of your financials at the time of purchase, and any other lender requirements.) Submitting this letter to a home seller when you make an offer will strengthen your bid.
Still, a stern warning to home buyers: “If you get ‘pre-approved’ within minutes of submitting a mortgage application, make sure you’ve actually been pre-approved and not pre-qualified.”
2. Have your paperwork ready
Gathering your loan application documents and having them ready to upload electronically is the “most important thing borrowers can do to speed up the mortgage pre-approval process.”
In general, the paperwork you’ll need to assemble for your lender includes the following:
Pay stubs from the past 30 days showing your year-to-date income
The last two years of federal tax returns
Two years of W-2 forms from your employer
60 days or a quarterly statement of all of your asset accounts, which include your checking and savings, as well as any investment accounts such as CDs, IRAs, and other stocks or bonds
Any other current real estate holdings
Residential history for the past two years, including landlord contact information if you rented
3. Be prepared to answer questions from an underwriter
“Pre-approval can still be a rigorous, time-consuming process for many home buyers, especially if their financial situation has some complexity to it.” If Mom and Dad are helping with your down payment, or you recently changed jobs, or you just got divorced, you may not be able to get pre-approved in a rapid fashion.
4. Don’t let your mortgage pre-approval expire
Reality check: After getting pre-approved, it may still take you a while to find a home and go under contract—especially if you’re shopping in a hot market where you’re fighting multiple offers on properties. However, mortgage pre-approval is typically good for only up to 90 days.
The reason pre-approval letters "expire" is because banks need the most up-to-date information about your salary, assets, and debts. Three or four months is long enough for you to have left a job, taken on new debts, or spent what was previously in your bank account.
In the event that you aren't able to close on a home purchase by the time your pre-approval expires, your lender may offer you an extension of your pre-approval; however, the lender will have an underwriter perform another evaluation of your income, credit score, and other key information to ensure there are no changes to your financial situation.
The drawbacks of getting a mortgage fast
Although speedy mortgages are becoming more common, getting one may mean that you forfeit the right to shop around to find the lowest interest rate and best mortgage terms for you. So, if you're not in a rush, don't be. You might benefit from taking your time to meet with at least three lenders and compare and contrast what they have to offer.
Need to get pre-approved for a loan? NOW is the time to get a Pre-Approval letter from our preferred lender. You'll be on your way to locking in your interest rate and giving the assurance to prospective sellers that you mean business. This is easy and necessary, and can be done via email or over the phone.
The time is NOW to get your home on the market! Contact Carriene Porter at Precision Realty & Associates, LLC. Her years of experience and vast knowledge can assist you in this important decision in buying and selling your home. Call or text today 801-809-9866!
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