Your Questions About Home Loan Pre-approval

Nancy asks…

Home Loan Worries???

My husband and I were pre-approved for a home loan on June 27th found a house and got a call today that the loan had been approved through underwriting. The mortgage guy wanted to close on the 27th but my realtor said we have to wait until the 9th because the city has to do their inspection on the 3rd so I called the mortgage guy and he said If we dont close by the 1st we wont qualtify anymore because the guidlines are changing Im confused can this be dont because of 9 days the preapproval alone was good for 60 days and it hasent even been 30 yet Someone help please explain

John answers:

Your pre-approval is basically worthless, as far as a loan guarantee goes. Any lender can change criteria at any time, and can deny your loan right up until the moment of closing. Yes, I’ve seen it happen, when an unsavvy borrower went out and bought $10K of furniture ‘for their new house’ on a credit card, and the lender ran a last minute credit check to verify that nothing had changed.

What’s with your realtor, that this city inspection is coming in at the last moment ? Did he decide to take a siesta until you were ready to close ?

Laura asks…

home loan information?

I found a home that I am interested in purchasing and the cost is 19,900 and I was wondering if I would be able to get a loan for greater than the cost of the home say like 25,000. I am also considering offering less for the home because it has been on the market for almost a year now. maybe 15,000 if that be the case would the bank allow me to get a loan for 20,000. This is my first time buying a home and I was just wondering.

John answers:

What ever lender you decide to use will lend you an amount of the value of the property based on the appraised value of the property. Once the appraiser has determined the value of the property most lenders will allow you to borrow approximately 80%-90% of that value.

The rest is called a down payment, expected to be placed in a legal escrow by you with proof that these funds are yours.

VA lenders will allow 100% of the purchase price. FHA lenders will allow 103% loan, this extra money is to be used to repair any repairs listed on the appraiser’s appraisal report.

Lenders will not lend more than the value of the property based on the appraisal report, so the answer to your question is no.

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 benefit to you, good luck

“FIGHT ON”

Daniel asks…

Mortgage Loan: Pre-qualification and pre-approval?

What’s the difference? I thought it was preferable to be pre-approved because you can still be turned down for certain loan amounts if you are only pre-qualified. Does it really make a difference in the long run?

John answers:

Pre approved is much better then being pre qualified, with pre approval they go more in depth on your credit, jopb, bank account etc. But even with a pre approval you could still be denied a loan. Most real estate agents will not show a home without pre approval, that way they know how much money you can afford and dont waste theirs and your time showing you homes out of your price range. Or pre approval only took less then an hour when we purchased our home

David asks…

Difference between pre approval and formal approval for a home loan?

Okay so we have got our letter of pre approval for a home loan. But now have to wait 21 days to find out about formal approval? So what is the difference between both? And the process? What do they do in this next stage after pre approval for it to get to full formal approval and finance to go through? Is there a way it could be declined after a pre approval? We are in western Australia. Perth. Through key start.

John answers:

Pre approval means “looks good with a quick look, you should probably be OK for X amount as long as everything checks out”. Formal approval is where they verify everything, etc.

Yes, people get declined after pre approvall all the time.

Thomas asks…

Va Loan Question?

We do not have good credit scores, they are very low 500s. I found out through research that we would qualify for a Va loan due to my hubby being in the military for 3 years (during desert storm). There is nothing on our credit report as far as derrogatory in the past 12 months. Everything on there is 1 to 3 years old and mostly medical with the exception of a 3 yr old foreclosure and a 2 year old repossesion of a vehicle. In the last 12 to 15 months though, nothing new….My question….is VA our best bet for nothing down? Are there any other programs I should check? With my credit history do I have a good chance for a Va or any loan?
American…..I dont think thats right. Everything I have researched on VA says that the credit scores do not matter to them as much as the past year of history. Also we got a FHA loan on our first home with scores of 530….I know that there are loans available for bad and horrible credit…I am just trying to find them.
Ok…one other thing….we do not have an actual bank account. My hubby has signed up to have his check direct deposited into an account set up by his work…that will start in about 2 weeks. We have never had a reason to use a bank. We also never had a bank account when we purchased our first home through fha…..We make just enough to pay bills and expenses…not enough to save anything.

John answers:

The VA home guarantee loan is very forgiving for it’s vets.

The lenders will over look a few things on the credit report and the low score should not make too much of a difference.

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”

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