How to Get Home Loan Pre-approval

There are many sources to obtain real estate financing in order to buy your Los Angeles home

. First talk with your real estate agent who may know lenders with a history of offering competitive programs and coming through with the promised rates and terms as stated. Often you may be able to get referrals from friends and family who have already gone through the process with their lender. Once you have your referrals, call at least three to figure out which lender has the best program tailored for your own personal situation. They will review your financial data and then order a credit report. There are numerous programs for the lender to select from, ones for first-time buyers all the way to programs for serious investors. A first-time buyer might be looking for a state-backed mortgage program with little money down and low interest rates. A loan for a median priced home in Long Beach of $245,000 is quite different than a median priced home in Palos Verdes Estates of $1,482,500 (data per Los Angeles MLS). Typically a 30-year loan is given, and in today's market a fixed rate loan is most likely chosen over a variable rate loan. A seasoned investor may wish to have a 15 year loan with less loan origination costs, and have a larger down payment but would like a lower interest rate. Once the data is gathered, the lender will give you details of the program that is right for you. The pre-approval letter is given by a lender to document the loan details for a loan you would qualify for. This is based on the information you provided them, and also based on the likelihood that your employment will continue and your cash will still be available for closing costs. It is only an estimate, and may be modified once all your data has been verified. This pre-approval affords you with an opportunity to preview homes with top agents who trust that you can pay for the home you are purchasing. The following is what your lender will typically ask you to submit for pre-approval status: - Complete loan application - Two years of your most recent W-2 forms - Profit and Loss Statements (if you are self-employed) - Two of your most recent pay stubs - Last two years of federal tax returns - Three months of bank account statements (for down payment verification) - Purchase agreement (if you have one at this point) If you own a corporation, two years of most recent corporate returns. There are lenders who charge a fee for this pre-approval, this is not necessary though. You don't have to pay for a pre-approval, most lenders do not charge a fee and they are excellent lenders. The pre-approval letter will last for at least the next three months depending on the loan, then you may have to qualify once again if the time expires. Give about one to three weeks for the pre-approval process to take place. It is wise to start this pre-approval mortgage loan process well in advance of looking for your Los Angeles home. Credit reports sometimes contain inaccurate information, which may affect qualifying for the loan or being placed in a loan program that charges higher interest rates than necessary. The buyer should get a copy of their own credit report prior to starting this pre-approval process. The buyer then has time to correct any problems with the credit companies prior to having the lender involved. The mortgage lender will provide the potential borrower a pre-approval letter up to a specific loan amount. Monthly payments and closing cost information should be detailed as well. The letter is then ready to be given to your LA real estate agent, and to get the home buying process started.

How to Get Home Loan Pre-approval

By: Lori English

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