How Quickly Can You Get Preapproved For a Mortgage and Close On Time?

This Article Is On How To Get Pre-Approved For A Mortgage And Close On Time

The qualification and pre-approval process is the most important step of the mortgage approval process. The loan officer should fully take their time in qualifying borrowers prior to issuing a pre-approval letter. The number one reason why there are delays or stress in the mortgage process is due to the fact the borrowers were not properly qualified prior to being issued the pre-approval letter. Many borrowers who were issued a pre-approval letter without being properly qualified by a loan officer can delay their closing or get a mortgage loan denial. There is no reason why any pre-approved borrower should stress during the mortgage process. There is no reason why any borrower should get a last minute mortgage loan denial after being pre-approved. There is no reason why homebuyers should keep on delaying their closing date due to the mortgage underwriter suspending the mortgage process of the pre-approved borrower. A pre-approved borrower who has been properly qualified should not only just close their home loan but close it on time. The mortgage process does not have to be stressful. In this blog, we will go over how loan officers should pre-approve borrowers. Borrowers count on their loan officers to give them a solid pre-approval. Borrower count on their loan officers and lenders to make sure their home mortgage will not just close, but close on time.

How To Get Pre-Approved For A Mortgage: First Step Of The Mortgage Qualification And Pre-Approval Process

How To Get Pre-Approved For A Mortgage

Loan officers should never issue a pre-approval letter without properly qualifying borrowers. The first step of the mortgage process is for the loan officer to take the mortgage loan application (1003). Once 1003 is taken, the loan officer should go over line item per line item. The loan officer will run a tri-merger credit report. The loan officer should go over line item per line item of the borrower’s credit report. Specific emphasis should be placed on credit disputes. Credit disputes can halt the mortgage process unless they are exempt. You cannot have credit disputes during the mortgage process or the process will be suspended. Pre-approvals issued with non-exempt credit disputes are null and void. Credit disputes need to be removed for the mortgage process to start. Medical credit disputes are exempt. Non-medical credit disputes with zero balance balances are exempt. Any non-medical credit disputes where the date of last activity (DLA) is older than 24 months are exempt.

How Credit Disputes Can Halt The Mortgage Process

If the total aggregate outstanding balance of all non-medical credit disputes of all of your creditors is less than $1,000, the credit disputes do not have to be removed. We will discuss credit disputes in a later paragraph. Loan officers should gather initial documents such as two years W2s, two years income tax returns, 2 months bank statements, and other pertinent documents. After carefully reviewing the mortgage loan application, credit report, income information, documents, asset information the loan officer will run the file through the automated underwriting system (AUS). If the loan officer gets an approve/eligible per AUS, the loan officer can then issue the pre-approval letter. Once armed with a pre-approval letter, the borrower can go shop for a home.

The Importance Of Shopping For A Home With A Solid Pre-Approval Letter

I like to relay to our viewers why I keep on reiterating the word solid pre-approval instead of just stating pre-approval. The number one reason of stress during the mortgage approval process and/or a last-minute mortgage loan denial is due to the loan officer issuing a pre-approval letter to a homebuyer without properly qualifying the buyer. This is not the homebuyer’s fault. Borrowers trust and rely on their loan officer and believe what the loan officer tells them.

The Importance Of An Experience Loan Officer Qualifying Borrowers Issuing Pre-Approval Letters 

If the loan officer issues the homebuyer a pre-approval letter, the borrower trusts the loan officer the pre-approval is good and the home purchase will not just close but will close on time. But that is not always the case. As in other industries, the mortgage industry is not perfect. There are professionals who take their jobs and careers seriously and others who do it half-assed.

The Role Of A Mortgage Loan Officer

The role of a loan officer is to represent their clients with the utmost respect and service in originating their mortgage loan requests. Furthermore, the loan officer needs to make sure their client’s home mortgage application and the process are properly handled from qualification to closing. There are still loan officers who will issue pre-approvals without even running credit, reviewing documents, or even running the file through the automated underwriting system. One of the main mistakes loan officers make is not reviewing the borrower’s credit report and looking for credit disputes.

Vetting The Borrower Before Issuing Pre-Approval Letter

Credit disputes will halt the mortgage process. A pre-approval letter issued with outstanding credit disputes is null and void. Homebuyers should never enter into a real estate purchase contract without a solid pre-approval letter by a loan officer. A loan officer should never be issued a pre-approval letter without properly qualifying the borrower. An approve/eligible per AUS Findings should be rendered prior to issuing a pre-approval letter. If the borrower needs to be manually underwritten, the loan officer should go over the borrower’s file with a fine-tooth comb and make sure the borrower meets all of the manual underwriting guidelines.

Manual Underwriting On FHA And VA Loans

FHA and VA loans are the only two mortgage programs that allow manual underwriting. Once fully armed with a solid pre-approval letter, the homebuyer can start shopping for a home and enter into a real estate purchase contract.

What Does The Pre-Approval Letter Do When Shopping For A Home

What does a pre-approval letter mean?

Getting pre-approved shows the homebuyer has been fully vetted and qualified for a home mortgage. It shows the maximum the lender is going to lend and the homebuyer is qualified. The maximum purchase price, down payment, interest rate, type of mortgage, and terms of the mortgage is stated on the pre-approval letter. The loan officer can issue multiple pre-approval letters when you are ready to enter into a purchase contract. Only you and the loan officer will know the maximum buying power you are qualified for. Knowing the maximum buying power on a home will help you narrow down your home search to affordable properties. Homebuyers will get an idea of what your monthly payments would be (P.I.T.I.) Homebuyers with a solid pre-approval letter will have more credibility with real estate agents and with sellers if your loan is pre-approved.

Shopping For A Home With A Pre-Approval Letter

Some real estate agents and sellers won’t take you seriously until you have the pre-approval. They don’t want to waste their time, or yours. There are times when there are multiple offers on a home and either the seller’s agent and/or seller may want to talk to your loan officer. Loan officers will gladly speak to real estate agents and/or sellers and will do anything for their clients to help them secure the home of their dreams. The mortgage approval process is a true process.
It involves multiple steps from the start of the mortgage process leading to a clear to close and eventually the home closing. The mortgage loan approval takes time. Set and expect proper expectations. It is recommended borrowers take time and learn the overall stages of the home buying and the mortgage process. If you wait to apply until you’re ready to make an offer, you could lose out on the home to someone who is pre-approved. The lender often will lock in an interest rate, which protects you if rates rise while you are shopping for a home. If your circumstances don’t qualify you for a low-interest rate, you’ll know that going in. You might decide to look in a lower price range to make up the difference. Pre-approval gives you at least some peace of mind, which you will appreciate during the often-stressful process of buying a home.

How To Get Pre-Approved For A Mortgage: The Importance Of Hiring A Loan Officer

The home buying process is an exciting time. The mortgage approval process does not need to be stressful. Hiring a loan officer who is experienced, available, returns calls, and/or emails promptly is very important. Working with a loan officer with who you can get along is one of the most important factors in the overall homebuying and mortgage process and experience. Not all loan officers are created equally. Any licensed loan officer can help a prime borrower with 800 FIC0, low debt to income ratio, 20% down payment, and perfect credit payment history. However, this is not always the case. Homebuyers with bad credit, lower credit scores, prior bankruptcy and/or foreclosure, outstanding collections and/or charged-off accounts, employment gaps, multiple jobs in the past two years, or other out-of-the-ordinary factors can qualify for a mortgage too. However, you need a loan officer who has years of experience dealing with such files. Anyone can hire a licensed loan officer.

Importance Of Hiring A Qualified Loan Officer And Reputable Lender

What Does The Pre-Approval Letter Do When Shopping For A Home

Homebuyers can get referrals of loan officers from family, friends, neighbors, realtors, co-workers, boss/employees, and multiple other sources. However, is the referred loan officer the loan officer for you is the key question. The best source to check their backgrounds is online. Google their names. Look at review sites such as Zillow. Look at what the loan officer’s previous client’s have wrote about them. Just because a loan officer has a few bad reviews does not mean they are bad. If you do a lot of business, you are bound to get a few bad reviews. Be open minded. Talk to multiple loan officers and see how you like them, their demeanor, and most importantly, how fast they call you back. Are they available after hours, evenings, weekends, and holidays? Your loan officer will have access to all of your personal and financial information. You need to feel comfortable with them and be able to trust them.

Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at NEXA Mortgage LLC. We are a mortgage brokers licensed in multiple states. We are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, FHA 203k Loans, Reverse Mortgages Jumbo Mortgages, Non-QM mortgages, Bank Statement Mortgage Loans for self employed borrowers, and alternative financing.

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