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The loan approval process generally begins with an initial interview where the prospective home buyer and the mortgage professional meet to discuss the potential loan. You will need to bring information to verify your income and long-term debts.
Often people prefer to meet with the mortgage company before house hunting to determine in advance what price range they can realistically afford and the mortgage amount for which they can qualify. This step is called pre-qualification and can save you much time and trouble by making certain you are looking in the correct price range.
For your first meeting with the mortgage company, you should bring:
- A purchase contract for the house (if you have one)
- Your bank account numbers and the address of your bank branch, along with checking and savings account statements for the previous 2-3 months
- Pay stubs, W2 withholding forms, tax returns for two years, or other proof of employment and income verification
- Divorce settlement papers, if applicable
- Credit card bills for the past few billing periods, or canceled checks for rent or utility bill payments, to show payment history and amount of revolving debt
- Information on other consumer debt such as car loans, furniture loans, student loans and retail credit cards
- Balance sheets and tax returns, if you are self-employed
- Any gift letters, if you are using a gift from a parent or relative or other organization to help pay the down payment and/or closing costs. This letter simply states that the money is in fact a gift and will not have to be repaid.
Having these items on hand when you visit the mortgage company will help speed up the application process. Usually an application fee and the appraisal fee will have to be paid when you submit the mortgage application. This is only done after you have successfully negotiated on a home and have had your offer accepted by the seller. Generally, there is no fee for pre-qualification.
After the initial meeting with the mortgage company, you should have a general idea if you qualify for the size and type of loan you want. The mortgage company should let you know if you qualify for the loan in 30 to 60 days. If you are denied a home loan, the mortgage company must explain the reasons. If this happens, the mortgage company will usually discuss any options with you.