How much funds required before getting preapproved for mortgage? Not the actual loan, but buying power?

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How much money do you estimate a lender requires you to have immediately to issue a pre-approval letter assuming you’re looking at a 30-year fixed rate conventional loan for around $ 130,000 with 5% down (These are, of course, estimates)? I ask because my wife and I would like to start looking at houses with a realtor as soon as possible, but realtors generally don’t want to or won’t work with you unless you’ve been pre-approved. My wife and I have a decent amount of money saved, a steady work history, good incomes, and excellent credit scores, so I’m not really worried about that aspect. However we are probably short just a little bit of the amount needed for a down payment and closing costs. The frustrating part is that by the time we find a house and close, we will have more than enough, so I suppose my question is this:

Will lenders tell us we have to wait another month(ish) to get pre-approved or will they look at what we’ve been able to save for the past few months and agree that by the time we find a house, we’ll have more than enough money. Again, this is not for the actual loan. We haven’t found anything yet. We just want to be able to seriously look.

Please only advice from lenders and people that have dealt with this type of situation…and please, please, please, no “If you are planning on getting a house, make sure it’s only 25% percent of your take home pay, 3-6 months living expenses, ….” I agree with you, but it has nothing to do with my question. Thanks.

2 Comments
  1. Reply
    loanmasterone
    May 4, 2011 at 2:04 am

    In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

    Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.

    He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

    The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

    When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.

    #1 One month of pay stubs for each person that will be on the mortgage.

    #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

    #3 Two years of federal income tax along with the W-2 that match.

    Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

    Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

    Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.

    If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

    You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

    Make sure your mortgage broker explain all your options so you may make an intelligent decision.

    What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

    So select the best option for you and your financial situation.

    You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

    Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

    Your mortgage broker will now order an appraisal to show proof of the property value.

    The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.

    After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

    Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

    I hope this has been of some use to you, good luck

    “FIGHT ON”

  2. Reply
    Noneya
    May 4, 2011 at 2:24 am

    Ya know it really depends on the lender. What I do for my clients in your situation is run them for the approval and tell them the approval is contingent on them having the funds by closing. It really isn’t that big of a deal either.
    One side note, you need to make sure that you request seller concessions to cover your closing costs.

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