With interest rates at an all-time low, now is a good time to buy a house, or get a preapproval to speed up the home buying process and be ready for how fast the market is. Depending on where you are in your home buying and home ownership journey, you may have some questions about the mortgage preapproval process. This post will tackle your 7 biggest preapproval questions!
1. Why is it helpful to have a preapproval when you are going to buy a house?
Getting a preapproval will not only indicate to a seller that you are a serious and prepared buyer, but it will also prepare you for all that is needed once an offer is accepted, and the home buying process starts.
2. What do you need to get a preapproval?
When you are ready to get a preapproval, the general items you would need to bring with you are two years of W2’s, 30 days of pay stubs and proof of where funds needed for closing will be coming from. If you are self-employed and/or a commissioned borrower, you would have additional requirements and we suggest you speak with your mortgage loan officer about those details.
3. Why should you get a preapproval ahead of time?
Getting a preapproval sets you up for success as a buyer. Your mortgage loan officer will be looking at your income and assets to make sure that your situation will meet current underwriting guidelines – this is important because we have seen many changes over the last few years.
4. How long does a preapproval last?
The preapproval for a purchase lasts as long as the credit is current, which is 120 days.
5. How does getting a preapproval change when you are a first-time home buyer?
When you are a first-time homebuyer there can be so many new concepts, terms, and guidelines that you will be learning about. Getting the preapproval introduces you to these new things, and although it does not change the complexity of buying a home, it will hopefully make the process go much more smoothly.
6. Do you have to decide which type of mortgage you are going to get (% down, 15/30yr) before getting a preapproval?
No, your mortgage loan officer will help to guide you into the product that you qualify for or that best fits your lifestyle and/or needs. The mortgage loan officer may ask some upfront questions to make sure that completing the preapproval at this time is the route to go. Generally, you will need to know what your budget is for a monthly payment, how much money you are committing to the down payment, closing costs/escrows etc. and basic information about your employment and income before getting a preapproval. If you have questions about this, your mortgage loan officer will be able to walk you through all of that.
7. After getting a preapproval how important is communication with your mortgage loan officer about changes to your financial situation?
It is especially important to communicate any income, employment, or asset changes to your mortgage loan officer – no matter what stage you are in during the buying process. After the preapproval is complete and an offer is accepted, if there have been changes to your financial situation you could end up running into some bumps along the road. Some of these could be you no longer qualify for the loan, there is potential for a denial, or needing to restructure your offer. Even if your situation has improved there may be updated items needed that could impact the process.
We hope that answering these questions about the mortgage preapproval process will help you in your home buying and ownership journey. Cobalt CU offers a variety of mortgage products and services, and a mortgage loan officer would be happy to help you. To apply call 402-292-8000, visit us at one of our convenient locations or go to our online application today!
