How to Get Pre-Approved for a Mortgage
Matrix Mortgage Global – How to Get Pre-Approved for a Mortgage
Getting preapproved for a mortgage is an important first-step in purchasing a home. Not only does it save you time and make the process go more smoothly but it can also protect you from having to pay a higher interest rate should rates go up during your search.
There are three things that a mortgage pre-approval will tell you:
- The maximum amount you can spend.
- The monthly mortgage payment you will have to make should you buy a home at the maximum price.
- The interest rate you will be paying in the first term of your mortgage.
Getting preapproved for a mortgage will lock in a guaranteed maximum interest rate for 120-160 days. Pre-approvals do not cost you anything nor do they mean you are making a commitment to go with a certain lender.
How to get a mortgage pre-approval
The first step toward getting a pre-approval is making an appointment to sit down with a lender or mortgage broker. In most cases, it is better to see a mortgage broker because he or she can then shop around on your behalf to find you the best possible rate.
In order to get pre-approved, you will have to answer a number of questions about your financial situation as well as provide documentation.
Lenders will determine your eligibility for a mortgage based on the following four factors:
- Credit score
Your credit score helps determine your financial health and how big a risk the lender is taking if they give you a mortgage. If you have a credit score that is over 680, you should be able to get a mortgage from a traditional lender such as a major bank. If your score is between 600 and 680, you may still be able to get a loan from a traditional lender, but they will look at other factors first.
If your credit score is less than 600, it doesn’t mean that you can’t get a mortgage, but you will have to look at alternative lenders.
- Down payment
The next thing you will need for your mortgage pre-approval is a down payment. At the minimum, you will require 5%, however, if your down payment is anything less than 20%, it will be necessary to purchase mortgage default insurance.
- Debt service ratio
This calculation is used to determine how much you can afford to pay your mortgage given your income, expenses and other debt.
- Supporting documentation
Finally, depending on the lender there are a number of pieces of supporting documentation that you may be required to provide such as identification, pay stubs, a record of employment, information about other assets and debts, etc.
If you are ready to take the first step toward homeownership, get preapproved with Matrix Mortgage Global today. Call us at 1-877-542-0610.