Step 2: Get Pre-approved for a mortgage
Once you’ve found a Realtor to represent and advise you on what is going to be the biggest financial transaction you ever make, step 2 to buying a home is to get preapproved by a mortgage lender. As Realtors, we won’t put an offer in on a home for a client unless he or she has been preapproved. In addition, it’s important that you have an understanding of how much you can comfortably afford to spend on a home, what your monthly payments will be, what interest rate you qualify for, and how much you’ll be paying each month in taxes, etc. Here’s a great booklet that demystifies the mortgage process which I highly recommend all buyers read before applying for a mortgage.
Having a good mortgage lender is a crucial part of ensuring a smooth transaction. Working with a bad mortgage lender can make the process a living nightmare for everyone involved and put your purchase in jeopardy of not closing on time or at all. You also might end up regretting the lender you chose for years if you end up paying a higher interest rate than you should have if you had shopped your loan through various lenders. You could also lose out on your dream property because your mortgage lender was disorganized and couldn’t get you fully approved during underwriting, etc. That’s why it’s important to work with the best. The list below are lenders recommend by past clients and who are in good standing.
Recommended Local Lenders to strengthen your offer:
Blakely Mus + Corey Gee
Loan Officer + Branch Manager
Cross Country Mortgage, LLC
625 West Ridge Pike, Building A, Suite 100
Conshohocken, PA 19428
Personal NMLS2018371 Branch NMLS1854092 Company NMLS3029
Corey: 267-294-5026
Apply Online: ccm.com/Corey-Gee
E Corey.Gee@ccm.com
Blakely: 610.320.2775
John Antonelli
President, NMLS 132711
Vantage Point Mortgage NMLS 141899
Office 267-705-2333 x 101
Mobile 610.639.6304
Fax 610.340.2222
To apply online: https://www.vpmortgage.com/apply-with-john/
401 Old Penllyn Pike, 2nd Floor, Blue Bell, PA 19422
Fully licensed mortgage broker in PA, NJ, DE, FL and NC
Jonathan Bahr
Sr Mortgage Advisor, CrossCountry Mortgage
M 410.490.3604
W ccm.com/Jonathan-Bahr
Paperwork You Need To Gather
Each lender has slightly different requirements regarding what documentation they need from you for the pre-approval process, but in general, expect to provide the following items:
A completed application. The lender will provide this to you directly
The two most recent months (or a quarterly statement) of any asset information listed on the application. Generally: checking, savings, 401k, mutual funds, individual stock accounts, IRA’s, etc…..
Most recent month of a paystub
Past two year’s worth of W2 (ie. 2019 and 2018 W2)
Past two year’s worth of US Tax Returns (ie. 2019 and 2018 Federal Tax Returns)
2019 and 2018 Corporate Tax Returns (if self-employed and you own over 25% of the company)
Getting a Pre-Approval Letter
Generally, once you submit the above items to your lender you should receive a pre-approval letter within 2-3 business days. The lender may ask for additional documentation. They are not trying to be difficult by asking for additional documentation, rather, after the housing bubble burst, underwriters became much stricter regarding the loan approval process so more documentation is needed today than it was 15 years ago. In addition to receiving a pre-approval letter which shows the amount you can afford to purchase, you should ask your lender to show you what that pre-approval amounts into in terms of a monthly mortgage payment plus any PMI, taxes, and insurance. That way you can make sure you are comfortable with what your monthly housing payment will be. Once you’ve received your pre-approval letter, forward it to me for your file so I can have it when we are ready to submit an offer.
Ask About Free Money
Pennsylvania and our local counties offers several grant programs for home buyers where you my qualify for money to put towards your down payment or closing costs. These programs have strict requirements and may require classwork. If any of the programs interest you, talk to your mortgage lender to see if you qualify.
Get a Loan Estimate and Understand Your Closing Costs
In addition, mortgage lenders are required to provide you with a Loan Estimate (LE) within 3 days of receiving your pre-approval. The LE provides an estimate of the closing costs you’ll need on top of your down payment and shows exactly what fees the mortgage lender is charging you. Make sure you understand these fees. Generally, we estimate closing costs to be approximately 3-7% of the purchase price of the property depending on county and township. Your mortgage lender can provide you with more detailed estimates based on your exact pre-approval price. Remember, these closing costs are due at settlement (except for the appraisal and inspection fees which are due during the process in most cases) and are on top of your down payment. Therefore, if you’re buying a $500,000 property and putting down 20% towards the loan you’ll need to have $115,000-$135,000 cash available at closing ($100,000 for your down payment and approximately $15,000-$35,000 for the closing costs).
Should You Shop Your Loan Around?
Yes but be cautious. Every lender charges different fees and different interest rates. In today’s market the fees seem to be written out differently and some may be more conservative than others. Make sure one is not simply making the quote look good and leaving out items like homeowners insurance estimates or lock estimates. Remember, having the lender cover the cost of the appraisal is not worth a higher interest rate for most buyers. Using particular companies that spend a lot of money on marketing (you have seen them on tv, for example) can mean an uphill battle from a transactional stand point as well as a weaker offer in a multiple offer situation.
Questions about the pre-approval process? Just call 215.767.7150 or email at Shaina@MontCoLiving.com.
