If you are wondering how to get your mortgage application approved fast, I am going to give you some good advice. As I have stated many times on this website, mortgage lending is detailed. However, there are a few things that can help you with getting a fast approval, and quicker closing for your loan.
Without wasting more of your valuable time…here goes…
Credit History Comes First and Foremost
- You need a credit history of at least 24 months
- The credit history needs all revolving credit lines and installment loans without any 1 x 30 delinquent/missed payments within the past 12 to 24 months.
- If there is one (1 x 30) with a solid explanation of why it was late, this issue may not prevent you from getting approved, depending upon your credit scores, and how much credit you have.
- No public records
- Your credit obligations make up your debt to income. Therefore if you have too much credit and your DTI ratio is greater than 36% (manual underwriting) or possibly 45% with an automated underwriting system, this could be an issue.
- Child Support, and/or alimony payments if applicable are counted and should be paid on time.
- Student loans are counted
- Credit scores should be within a range of 680 plus to give positive results. This does not mean that you will not get approved with a lower score but to get approved rapidly you are going to need good credit scores.
- If there are any new credit lines in the credit report, they must be explained and documented.
Employment History
- Currently employed with a steady income for the previous 24 months history. If you have been on a new job for less than 24 months, prior history may be needed
- Normally one-month paystubs and 2 years of W-2s are required for documentation, all payouts on paystubs must be documented.
- Sufficient income for debt obligations which includes new housing payment
- Income that supports debts for debt to income ratios (DTI) of 36% for perfect evaluation but not than 45% usually with all other matter in line.
- The income of tips, commission, and all fluctuating income should have a 24-month history, but not less than 12 months. (If all other factors are good).
- Self- Employed income needs a 24-month history with the 1040s for the prior 24 months. If you have only a 12-month history but worked in a similar line of work – it is possible to be approved if everything else is consistent in the file.
Assets
- It is important to show savings ability. If you have at least a 5 % to 10% downpayment from your own funds with evidence to support that, it is in your favor. (If the remaining aspects of your application is in line with approved standards). There is a 3% product for conventional lending also that has similar guidelines.
- If you have a 20% downpayment it is even more favorable. This means you will NOT need Mortgage Insurance (MI).
- You can receive a gift for a 20% downpayment. Gift funds must have a gift letter from a family member with receipt of those funds been proved before or at closing. A certified check from the source at closing is the easiest transfer of funds which the gift letter should state.
- All funds for closing must be seasoned and proven.
- Allowable 401K funds are a suitable source of funds. The account, how the funds may be withdrawn, and receipt are applicable.
- Bank statements for each account being used must cover a 60 day period, with any large deposits explained and documented.
Property
- The appraised value of the property being used as collateral must be sufficient for sales price and loan amount.
- The property must be in good-acceptable conditions prior to the closing of the loan. This means if there are repairs they must be negotiated with the seller and completed prior to closing.
- Fair condition is not acceptable.
- The property must be owned free and clear of multi encumbrances, meaning no prior liens, encroachments, or related issues.
- Before closing the Title must be free and clear to be transferred.
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Summing Up
The above-stated information is not all-inclusive. Here is why…there are things that can pop up when your paystubs are reviewed, your credit is checked by the lender, and income and employment are verified. There could be more questions, however, they may be easily answered. The property evaluation/appraisal must be approved.
However, if you meet the criteria above you are in luck. If your credit is good, your income meets the parameters above, and you have sufficient assets to close, you are on your way to getting fast approval.
Rule of thumb – “Know before you go.”
First Time Homebuyer Mistakes to Avoid
