The Fastest Way to Get Pre-Approved

The Fastest Way to Get Pre-Approved

Getting pre-approved for a loan can make the whole home-buying experience go smoother.

When you’re pre-approved, REALTORS® are more likely to want you as a customer, sellers are more likely to accept your offer, and—by knowing what you can afford—you’ll know what homes to look at.

And it doesn’t have to be a hassle either. With these easy tips, you can get a pre-approval without ever leaving your sofa.

Get Your “Pre-Approved” Facts Straight

Applying for a pre-approval doesn’t require nearly as much paperwork as applying for a mortgage, but you’ll still need to be as accurate as possible if you want to make sure you’re getting the best deal—and the most offers.

Start by gathering the information you’ll need:

  • Estimated purchase cost.If you have a home in mind, look up the seller’s asking price to get an idea of how much you’d need to borrow.
  • Down payment amount.Knowing how much you can put down will have a big effect on your pre-approval.
  • Personal information. You’ll need basic info like Social Security numbers and driver’s license numbers for anyone on the application.
  • Proof of income.Gather recent paystubs, tax returns and paperwork from your employer.
  • Proof of assets.Gather bank statements, retirement accounts, CDs and other documents showing your assets.

Estimate Your Credit Score

While any prospective lender will pull your credit score, you’ll also be asked to estimate your credit score on your application.

To make things easier, you can order a copy of your credit scores for a small fee from one the three credit bureaus—Equifax, TransUnion and Experian—before you apply for a pre-approved loan. By law, you’re entitled to one free credit history report a year from each of the credit bureaus.

You can also use your credit report to make an educated guess about your credit scores. For example, if you have low-to-no debts, active credit lines and a history of timely payments, you probably fall in the “good” credit score range.

Apply Online

Once you have your information and credit scores together, you have two options to apply for a pre-approved loan. If you have a particular lender in mind, you can visit the lender’s direct website to see if you can apply online.

Many lenders have this feature, but you’ll have to fill out an application for every lender you want to use.

If you want to go the faster route, try a pre-approval service like the one featured on the realtor.com® individual listings page. By checking the box that says, “I want to get pre-approved by a lender”, you’ll be connected with up to three lenders right away.

Staying Safe

Before you apply online, read through the company’s privacy settings. Look for companies who state this information:

  • Clearly list how your personal information will be used
  • Explains their pre-approval process
  • Guarantees not to sell your personal information to third-party companies or vendors

Knowing what you can expect while getting pre-approved will keep your identity safe.

 

My two cents – Your Home Loan is THE MOST IMPORTANT PART of your home purchase – second to the actual home! You need to work with a reputable lender who picks up the phone nights and weekends. I prefer my clients do not work with an online lender since their customer service lacks greatly during the most crucial part of the transaction – the escrow period. And that could cost the buyer money for not performing in time per the contract. If you are looking for a great lender – give The Caton Team a call and we’d be happy to connect you with client approved and Caton Team tested lenders.

 

I read this article at: http://www.realtor.com/advice/fastest-way-get-pre-approved/?cid=eml-2014-09-bob-blog_2_pre_approval-blogs_finance&MID=2014_09_BoB_2013&RID=9851214

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The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ Office BRE# 0149900

 

Debt-to-income ratio can sink mortgage application – why and how….

WASHINGTON — For many home buyers, qualifying for a mortgage not only is a tough challenge but one that ends unhappily: They get rejected.

The reasons for the turndowns typically involve multiple factors, including below-par credit scores, inadequate documented income to support the monthly payments, and little savings in the bank.

But a new survey by credit-score giant FICO offers buyers a rare peek inside the heads of credit-risk managers at financial institutions across the country and in Canada. Researchers asked a representative sample of them what single factor in an application makes them most hesitant to fund a loan request — in other words, what’s most likely to prompt them to say no.

The results provide practical insights to anyone who is thinking about applying for a mortgage. Tops on the list? Surprise, it’s not your credit scores. It’s not how much you’ve got for a down payment or what’s in the bank. It’s your “DTIs” — your debt-to-income ratios. Nearly 60% of risk managers in the FICO study rated excessive DTIs their No. 1 concern factor — five times the percentage who picked the next biggest turnoff.

Yet many new buyers have only a rough idea in advance of an application — even for a pre-approval letter — about their own DTIs, how lenders view them, and what sort of limits they’re likely to encounter.

Since they are so important to a successful application, here’s a quick overview on what goes into DTIs and why they are such a big red flag. Debt-to-income ratios for home loans are the most direct indication to a bank about whether you are going to be able to afford to repay the money you want to borrow.

Debt ratios for home loans have two components.

The first measures your gross income from all sources before taxes against your proposed monthly housing expenses, including the principal, interest, taxes and insurance that you’d be paying if the lender granted the mortgage you sought.

As a general target, lenders like to see your housing expense ratio come in at no higher than 28% of gross monthly income, though there is flexibility to go higher if other elements of your application are viewed as strong. In May, according to mortgage software and research firm Ellie Mae, the average borrower who obtained home purchase money through investors Freddie Mac and Fannie Mae had a housing expense ratio of 22%. Federal Housing Administration-approved borrowers had average housing expense ratios of 28%.

The second DTI component — the so-called back-end ratio — measures your income against all your recurring monthly debts. These include housing expenses, credit cards, student loans, personal loan payments and others. Under federal “qualified mortgage” standards that took effect in January, your back-end ratio maximum generally is 43%, though again there is wiggle room case by case.

Most lenders making loans eligible for sale to Fannie or Freddie prefer not to see you anywhere close to 43%. In May, according to Ellie Mae, the average approved home purchase applicant had a back-end ratio of 34%. Even at FHA, which tends to be more lenient on credit matters than Fannie or Freddie, the average back-end ratio for buyers was 41%. The average for denied applications was 47%.

A good place to learn more about DTIs and to compute your own is Fannie Mae’s consumer-friendly “know your options” site (www.knowyouroptions.com), which includes calculators and other helpful tools.

The new FICO survey found that the second leading cause of concern for loan officers is “multiple recent credit applications.” Lenders spot these on your credit reports and take them as signals that you are seeking to add on even more debt, which could affect your ability to repay the mortgage money you’re asking them to give you.

In third place as an instant turnoff: your credit scores. Most lenders want to see FICO scores well above 700 — Fannie and Freddie averages were in the 755 range in May; FHA average approved scores were a more generous 684.

Bottom line here: If you want to be successful in your mortgage application, be aware of these key turnoff points for lenders and take steps to avoid the tripwires. Most important: Postpone your purchase until your DTI ratios tell you that yes, you can afford the house you want and lenders won’t reject you out of hand.

kenharney@earthlink.net

Distributed by Washington Post Writers Group.

 

I read this article at: http://www.latimes.com/business/la-fi-harney-20140720-story.html?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fbusiness+%28L.A.+Times+-+Business%29

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

Visit our Website at:   http://thecatonteam.com/

VISIT OUR NEW INSTAGRAM PAGE: http://instagram.com/thecatonteam

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

 

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008