Step 2 to Buying a Home: 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 pre-approved 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 pre-approved. 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.

Having a good mortgage lender is a crucial part of ensuring a smooth transaction. Working with a bad mortgage lender can make the process horrible 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. That’s why it’s important to work with the best. We recommend you talk with the following mortgage brokers:

Marcelle Loren,

Principal Mortgage Broker

MLoren@IslandMortgageHawaii.com

Mobile 808.895.3182

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Jennifer Coutts

Branch Manager, Prospect Mortgage

jennifer.coutts@prospectmtg.com

Direct 808-739-7801

Cell 808-226-2135

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George R. Beavin, J.D.

Branch Manager First Hawaiian Mortgage

Office 808-521-9999

magicmn@aloha.net --------

Some of the 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. 2013 and 2012 W2)

  • Past two year’s worth of US Tax Returns (ie. 2013 and 2012 Federal Tax Returns)

  • 2013 and 2012 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 a lot more documentation is needed today than it was 10 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 at that pre-approval letter. Once you’ve received your pre-approval letter, forward it to us for your file so we can have it when we are ready to submit an offer.

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.

Should You Shop Your Loan Around?

Absolutely. Every lender charges different fees and different interest rates so in my opinion we it’s good you shop your loan around to at least two lenders. We recommend waiting 2-3 weeks between meeting with lenders as the lender will need to pull your credit report in order to give you an accurate pre-approval letter.

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