YOUR GUIDE TO
HOME LOAN PRE-APPROVAL WITH MIMUTUAL MORTGAGE
WHY DOES A MORTGAGE PRE-APPROVAL MATTER? You’ve probably heard about a mortgage pre-approval, but maybe you’re not sure whether it’s right for you. If you’re ready to buy a home, a pre-approval means you’ll work with a secure lender prior to making an offer on a home. This proactive step can help you to be better prepared for the purchase process. MiMutual Mortgage can prepare you for success as a buyer in a seller’s market. So, what are the advantages of obtaining pre-approval?
BUYER LEVERAGE When a seller is considering offers, they want to be sure the offer will make it through closing. A pre-approval assures the seller and their agent that your financial stability and ability to pay have already been evaluated. This can give you an edge in a tight market.
BARGAINING POWER Your pre-approval lets the seller and their representative know you’re ready to negotiate, if necessary, with the backing of a trusted lender. You’re clearly a serious buyer with a pre-approval in hand.
YOUR TIME IS PRECIOUS Shopping for a home should be enjoyable, but when you’re unsure how much home you can afford, that enjoyable experience can become disappointing and time consuming. A pre-approval from MiMutual Mortgage can provide you with confidence regarding your price range so you can focus on what’s important to you. Let us manage the financials while you decide whether that backyard is big enough.
NOT ALL SURPRISES ARE FUN Imagine finding your dream home, making an offer, and then finding out your mortgage application won’t be approved due to a blemish on your financial record you didn’t even know was there, or a change in the way your income is allocated. Conducting your own review of your income and household budget isn’t always enough to know your true price range. There are so many factors to consider; an established lender can provide a more accurate determination of your buying power.
CLOSE YOUR LOAN FASTER
Securing a mortgage pre-approval can significantly reduce the time it takes to go from finding the perfect house to getting the keys to that perfect house. You will already have provided a lot of your information to the lender. That means the process is already in motion. Your loan can close faster, saving you time and in some cases, money. Once your offer is accepted, you can move into the full mortgage application process more quickly with a pre-approval in hand. Although a pre-approval is not a guarantee, it can provide additional confidence and a more solid framework for the entire experience of buying a home.
WHAT WILL I NEED TO PROVIDE WHEN REQUESTING MY PRE-APPROVAL? Here are some items you should gather for your pre-approval. (You are not required to have all of the documents on hand to submit your request for pre-approval.)
1 2 3
PAY STUBS You should have your most recent pay stubs or other earned
income documentation for the last 30 days. RETIREMENT BASED INCOME Provide income documentation for any
retirement pensions, annuities or Social Security. DISABILITY BASED INCOME Make sure to also include proof of income
from worker’s compensation, State Disability, Social Security Disability or private settlement.
IDENTIFICATION You will need a U.S. government-issued form of ID,
BANK STATEMENTS The lender will need most recent two months of
usually a State-issued Driver’s License.
official bank statements, which include the account number(s). TAX RETURNS AND W2’S/1099’S You’ll be asked to provide your tax
filings and W2’s /1099’s for the last two years for all forms of income you received (earned income, self-employment, etc.)
BANKRUPTCY DISCHARGE DOCUMENTS As applicable.
You won’t need to supply a credit report. With your authorization, we will pull your credit report, free of charge.
WE HAVE NUMEROUS LOAN OPTIONS. WE’LL FIND THE ONE THAT’S RIGHT FOR YOU. CONVENTIONAL
A conventional mortgage adheres to conventionally accepted standards with consideration to legal requirements and limitations, and by mutual consent of the lender and borrower. Generally, a down payment of at least 5% is required but for some buyers it can be as low as 3%. Private mortgage insurance is required for a conventional loan unless your down payment is at least 20%. This loan type is not guaranteed against buyer default by either the VA or FHA.
FHA An FHA loan is issued by a private lender just like a conventional loan but the FHA loan is insured or guaranteed against default on the part of the buyer. This added protection for the lender allows for a lower down payment, lower homeowner’s insurance premiums and sometimes lower closing costs. The FHA loan can be a good fit for lower to moderate income and first-time buyers.
USDA RURAL DEVELOPMENT The USDA Rural loan is available in certain areas of the country where barriers to home ownership may exist which aren’t a factor in more populous areas. The loan is issued by a private lender and like the FHA loan is guaranteed against buyer default, allowing for less stringent requirements and even a higher borrowing amount. The buyer may borrow up to 100% of the fair market value of the home in order to forego a down payment requirement.
RENOVATION A Renovation mortgage allows you to buy a home that needs a little TLC and fold the renovation amount into the mortgage loan, which makes the cost of renovations more affordable when compared to your average credit card or home equity loan interest rates.
RENOVATION A HomeStyle
Renovation loan is a government-backed loan that allows qualified borrowers to add an extra amount, for remodeling or improvements, to a home purchase mortgage or a limited cash out refinancing. There are no restrictions on the types of, or a minimum amount, for the cost of these renovations or improvements.
FHA 203K This home improvement loan can be borrowed to make renovations or improvements to either a house you want to purchase or the home you already own. Funds can be used to make common upgrades such as modernizing a bathroom or kitchen or completely rehabilitating an uninhabitable property. You may borrow up to 96.5% of the appraised fair market value after the improvements or renovations would be completed.
VA The VA loan is very similar to the FHA loan but is specifically provided to military veterans and certain surviving spouses. This loan type is issued by a private lender and guaranteed by the Department of Veterans Affairs and provides lower closing costs, 100% financing and does not require mortgage insurance. VA Loans are available for home purchase, construction of a home and energy-efficiency home improvements. The VA will provide a certificate of eligibility (COE). You may apply for your COE at benefits.va.gov.
WHAT TO EXPECT FROM THE MORTGAGE PROCESS
When you request a preapproval, you’ll provide some initial information and documents to your lender and authorize the lender to pull your credit. Once pre-approved, you’ll be issued a pre-approval letter.
4 GATHERING AND SUBMITTING YOUR DOCUMENTS:
You’ll want to provide the documents requested by your Loan Officer as quickly as you’re able to. That way, your lender can help you choose the right loan type and tell you how much cash you’ll need at closing.
2 SHOP FOR A HOME:
You and your Real Estate Agent can begin the fun of looking at homes for potential purchase. You’ll already know your price range because you got a preapproval. The agent can help you to negotiate the price and submit your offer.
5 THE APPRAISAL AND PROPERTY INSPECTION:
If the purchase requires a home inspection, it will be completed at this step. Your Loan Officer will order an appraisal which will determine the property’s market value to be certain you’re paying a fair price. In some circumstances, additional inspections will be required.
3 THE LOAN APPLICATION:
Your offer has been accepted by the seller. Now it’s time to submit the full application and lock in the interest rate. You’ll now have a Loan Officer who will give you a list of documents to provide.
6 MORTGAGE APPROVAL:
At this step, the Loan Officer has submitted your documents to the Loan Processor. Once their review is completed, your documents and information will move forward to the Underwriter for the full approval.
At this point in the process, your Underwriter may issue a “conditional approval” and ask for additional information or clarification of the information you’ve already submitted. This is a normal part of the process and is not a cause for concern.
INSURING THE PROPERTY:
CLEAR TO CLOSE:
In order to close your loan, you’ll need to provide proof of home insurance. This is a legal requirement of the mortgage process.
10 CLOSING DISCLOSURE: A few days before closing, the title company will prepare closing documents which will indicate the final amount to be paid at closing. Your earnest money deposit will be applied as a credit towards closing costs. Closing costs are paid via cashier’s check with the exception of amounts over $10,000, which will need to be wired to the title company.
At this step, you’re truly approaching the finish line! Once all conditions have been met, the loan file is complete and your Underwriter will sign off on the loan; issuing your “clear to close.” You can then schedule your closing!
Once you sign your final documents, you’re all done and you can start moving into your new home! Your First Mortgage payment will be due on the first of the month, a full month after your closing. For instance, if you close on January 11th, your first payment will be due on March 1st.
Remember that this is only a guideline. Please follow any instructions given to you by your Loan Officer throughout the mortgage approval process.
And Now, What NOT to Do When Preparing to Buy a Home Don’t take out any new loans such as an auto or personal loan. Don’t leave your current job or open a new business. Don’t leave debt or “negative issues” off of your loan application. Don’t authorize credit checks other than by your mortgage lender. Don’t cosign a loan or line of credit for another person. Don’t make large purchases which require payments, such as major appliances or furniture. Don’t apply for new credit cards or accept new “pre-approved” credit offers. Don’t be late on your bill payments. Don’t accept or negotiate a change in wage type, e.g., hourly rate to commissions. Don’t make bank deposits without clear documentation of the source. I would love to help guide you through the mortgage pre-approval process with MiMutual Mortgage. We offer secure, professional, friendly service and consider every buyer a partner for life. Call me today, and let’s talk about your plans for the future!
Contact me for more information! Adam Phizacklea NMLS #160175 Direct: (810) 772-1243 Office/Fax: (734) 663-1800 email@example.com www.mimortgagepro.com
825 Victors Way, Suite 305, Ann Arbor, MI 48108 To see where MiMutual Mortgage is a licensed lender go to the Nationwide Mortgage Licensing System (NMLS) www.nmlsconsumer.org and search NMLS ID# 12901. Principal licensed office is 911 Military Street, Port Huron, MI 48060. The content in this advertisement is for informational purposes only. This is not an offer for extension of credit or a commitment to lend. All loans must satisfy underwriting guidelines. Equal Housing Lender.