‘Debt-to-Income Ratio’ and Why This Number Matters When Getting a Mortgage

Eventhough many mortgage brokers are still quoting quick 10-minutepre-qualification over the phone or online, a true mortgage approval that holdsany weight is one that has been issued by an underwriter who has had anopportunity to review all of the necessary documents.

Witha constant stream of new lending guidelines, volatile mortgage rates andtightening regulation very few real estate agents will show new homes to aFirst-time-buyer without at least a pre-qualification letter.

Pre-ApprovalLetter will help you in three ways:

1.       Itlets you know how much mortgage you can qualify for

2.       Itgives you an estimate of what your total housing payment would be

3.       Submittinga strong “Pre-Approval” letter with a purchase offer will give the seller moreconfidence about your ability to complete your end of the agreement.

Get Pre-approved for aMortgage

It’sobviously a good idea to get your paperwork prepared ahead of time so that the pre-approvalprocess is as thorough as possible. In order to get a pre-approval letter,you’ll start by filling out a loan application and submitting a few documentsfor the loan officer and / or underwriter to review.

CommonLoan Pre-Approval Documents:

·        Last 2-year W2s and Tax Returns

·        2 most recent Pay Stubs

·        2 most recent Bank Statements, 401(K), Liquid Assets,Investment Accounts

Income/ Assets for Self-Employed:

·        Last 2-year Tax Returns – Business and Personal

·        Last Quarter P&L Statement

Letterof Explanation For:

·        Employment Gap or New Line of Work

·        Late Payments / Judgments / Bankruptcy on Credit Report

Other:

·        Bankruptcy Discharge

·        Child Support Documentation

·        Lease Agreements (If own other Rental Properties)

·        Mortgage Payment Coupons (If own other Real Estate)

Get Pre-Approved for aMortgage

Mostborrowers also want an opportunity to learn more about the loan officer beforedigging up all of these personal documents. Spend 15 minutes on the phoneasking the loan officer to explain how mortgage rates work, quizzing them onsome basic industry vocab or just to see if they know what to prepare youragent for ahead of time. The Q&A session can be more than just a mortgagebroker qualifying you, as long as you’re prepared to ask the right questions. Eitherway, you’ll definitely want to have the above list of approval documents readyonce you’ve decided on the right loan officer that you trust will meet yourexpectations.

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