Buying a House? 4 Ways a Mortgage Lender Can Help
The first professional that people talk to when they want to start the home buying process is typically a real estate agent. However, unless you plan on paying cash for your house, you should also plan on speaking with a mortgage lender early in the process.
There are 4 key ways that a mortgage lender can help you when buying a house:
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Pre-Approval
This is a step that many homebuyers skip, but taking time to get yourself pre-approved will be helpful for the process. It allows you to know what price range you can look at for a house and it lets sellers know that you are a serious buyer when it comes time to put in an offer.
To get pre-approved you need to find a mortgage lender that you want to work with. Then you will provide them with some basic information about your income and they will look at your credit to determine if they can pre-approve you, and for what limit.
When you know you are serious about starting your home search take action with getting pre-approved. Many pre-approvals expire after 30 to 60 days, but it is simple to have it rerun to stay current.
Knowing where you stand going into the process will help speed the process along when you find the house of your dreams.
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Show You How to Improve Your Chances
Unfortunately not everyone is able to be pre-approved. If you are turned down for pre-approval of a mortgage, a lender can explain why. The majority of lenders will also provide you with the steps that you need to take to correct the problem and work towards approval of a mortgage loan. They want to continue working with you to help you get approved.
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Credit Score
Having a good credit score is one of the keys to obtaining a mortgage. If your credit score isn’t where it needs to be, don’t give up. The mortgage lender that turned you down can actually help you boost your credit score. They can provide you with actions to take to work in the right direction.
It can take several months for the credit bureaus to obtain updated information, but lenders can do a “rapid re-score.” This allows new information to reported and updated on your credit report within days, instead of months.
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Unusual Situations
The majority of homebuyers are employed by a company that provides them W-2s. They earn a set wage and have predictable income. However, this isn’t the case of everyone, and having a different situation can make it more difficult to get approved.
If you have an unpredictable income because you are self-employed or live on commission, lenders can help. They will typically look at your tax returns from the past two years to determine your approval amount. It can be in your best interest to wait to apply for pre-approval until you have submitted your tax returns for the prior year if that was a good income year for you.
Many people are leery of lenders because they tend to get a bad rep. However, lenders are the key to obtaining a house for the majority of people. Finding a mortgage lender that you are comfortable working with will help you along in the process. Do not delay in getting pre-approved so you know that you will not run into any bumps in the road along the approval process.