A mortgage pre-approval is a letter that tells you and sellers how much a mortgage company is willing to lend you to buy a home. This letter is based on a review of your credit history, income, and assets and typically lasts for 30 to 60 days.
We offer a Priority Purchase Pre-approval that’s fully underwritten, making your offer stand out from the pack even more.
Here are some things you should avoid before and during the pre-approval process.
Don’t rack up more debt
While reviewing your credit history, your lender will take a close look at your existing monthly debt, and factor in your hypothetical mortgage payment to determine your debt-to-income (DTI) ratio. Your DTI ratio tells you how much of your monthly income is used to make your monthly debt payments, and the ratio is represented by a percentage. In many cases, your lender prefers that you have a maximum 43 percent DTI ratio (but there are some cases when a higher DTI is accepted).
If you keep swiping or take out another loan and increase your outstanding debt amount, you’ll negatively affect your DTI ratio, which could potentially hurt your chances of qualifying for a mortgage.
Don’t change jobs
Your employment status and income are also scrutinized during the pre-approval process. If you quit your job, have a gap in your employment, or suffer a reduction in your income, your mortgage pre-approval may be in jeopardy.
Don’t miss any payments
Your lender also cares about whether you’re consistently paying down your existing debt on time each month, since that’s also a good indicator of if you’ll continue the same habits with your mortgage payments.
Failing to make on-time payments before or during your mortgage pre-approval can derail your homebuying process. Remember, your payment history influences your credit score more than any other credit factor. Late payments can drop your score, and a lower score could mean a slimmer chance of qualifying to buy a home.
Got questions about the pre-approval process and what type of loan might be best for you? Reach out to one of our loan officers today. We’re excited to connect and be your guide through your homebuying journey.