Mortgage Lending

THE LOAN PRE-APPROVAL PROCESS

The first step in the home buying process is to get “pre-approved” for a home loan. Pre-approval means that you’ve met with a home loan officer and discussed your plans, reviewed your credit history and have been approved for a specified amount. Once pre-approved, you will receive a pre-approval letter that will be used when you are ready to make an offer on a property.

There is a difference between pre-qualified and pre-approved. Getting pre-qualified is an informal evaluation of your financial situation without verification of the facts. Being pre-approved will require financial documentation and additional personal information for verification.

Acquiring a pre-approval letter is important in that the seller and the seller’s agent will want to confirm that you have the financial ability to complete the purchase after your offer has been accepted.

LOAN TYPES

FHA, VA, and Conventional are the three types of loans that are available.

The Federal Housing Administration insures FHA loans and borrowers are required to pay monthly MIP (Mortgage Insurance Premiums) to insure the loan in case of default.

Veterans are able to qualify for VA loans which are guaranteed by the Veterans Administration. Borrower must pay a one-time VA funding fee for the VA loan.

Conventional “conforming” loans are neither insured by the FHA nor guaranteed by the Veterans Administration and are less than the amount of $333,700. Private mortgage insurance is required for loans with less than 20% down payment to insure the added risk. A conventional loan is typically the best option on a purchase with 20% or more down, as no additional fee is required to insure or guarantee the loan. Fixed or adjustable rate terms are available with both FHA and Conventional loans.

Choosing the right type of mortgage can be straight forward. However, it is important to evaluate your personal financial situation and consult with your mortgage lender to determine which features of the available loan programs best fit with your needs. This applies especially if you are considering an Adjustable Rate Mortgage (ARM).

REQUIRED DOCUMENTS FOR LOAN PRE-APPROVAL

A copy of the following documents will be needed:

• W-2 statements of the most recent two (2) years.

• The last (30) thirty days of pay stubs.

• Most recent monthly bank statements.

• Most recent statement of 401K, IRA or Mutual Fund Accounts.

• Most recent brokerage statement for any stocks, bonds or certificates of deposits (or copies of actual certificate).

• Purchase agreement (Typically provided by your agent to the lender).

• If you are currently renting: either 12 months of canceled rent checks or the name and address of your current landlord.

• If divorced: a fully executed divorce decree.

• For a refinance: a copy of the mortgage deed and most recent property tax statement.

• For self-employed borrowers (employed in sales, paid by commission or owns rental real estate): Two (2) years of signed personal tax returns, including all schedules.

• If self-employed through a corporation: last two years of corporate returns, as well as a year-to-date profit-and-loss statement and balance sheet.

The loan program you select may require more or less documentation as different programs require varying amounts of information. Please contact us for information on our preferred lenders. We can be reached at 612-692-2000 or via email at: admin@CityofLakesRealty.com or please provide the information below and we will have one of our preferred lenders reach out to you.