Mortgage Basics
first time home buyer Mortgage Basics Intro
first time home buyer Should I Buy a Home
first time home buyer How Mortgages Work
first time home buyer Factors that Effect Your Payment
first time home buyer Paperwork & Loan Fees
 
Prequalification
Lender questtions and how they affect your loan
Questions you should ask
Paperwork requied for a buyer
Other Lender Paperwork
Good Faith Estimate
In conclusion
first time home buyer Loan Processing, Now What?
first time home buyer Atlas, Closing
Prequalification and Preapproval
Be on top of the paper and things will go much smoother
 

 

  
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If you already own a home and you're looking to refinance, you can skip this chapter. If you plan to buy a home, the first step is to determine how much house you can afford, and then to start shopping for a mortgage. Your goal is to get prequalified or, better yet, preapproved. Once you have done that, you can start shopping in earnest for a home.

By getting prequalified or preapproved for a mortgage, you will have negotiating leverage because the seller knows that you already have a loan virtually in your pocket. And you won't be tempted to buy an unaffordable house.

Prequalification
Prequalification acts as a dry run of the loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process may take only minutes or a few hours at most, and is usually free.

While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness.

 

Preapproval
Preapproval takes prequalification one step further. The lender will contact your employer, your bank and others to verify your income, assets, debts and credit history, and then issue you a letter stating that your mortgage is approved for a certain amount within a certain time. You may be charged a small fee to cover the cost of your credit reports and your application, often refunded at closing.

Gain the buying edge
The advantages of prequalification and preapproval are twofold: you're more attractive to sellers, who needn't worry that they'll accept your offer only to have your loan turned down, and you'll save time to closing when you find a home because the lender will have already completed the necessary qualifying and underwriting steps.

Important note: Should your financial circumstances change before closing, make sure to contact your lender, as your prequalification or preapproval may no longer be valid.
 

<<Part 4: Paperwork and Fees Intro
 
Mortgage Tip: Need a Mortgage with Bad Credit? Not the End of the World

A few bad credit mortgage tips to make sure you get the best deal possible:

  1. Shop Around - Don't be embarrassed by your bad credit, embrace the challenge of taking steps to improve it - and a mortgage can absolutely be one of those steps. Talk to different mortgage brokers and look online at your bad credit mortgage options.
  2. Make sure your credit score is correct. Remove paid off or closed accounts - make sure you aren't a victim of identity theft or mis-reporting. It can take some time and effort to fix your credit report, but it'll be worth the work.
  3. Once you have a bad credit mortgage, use it to your advantage. Making mortgage payments on time is the fastest road to improving your credit score.
 
 
 
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