Mortgage pre-approval process

{{whyLabel}}: Your credit score is the primary factor lenders use to determine your interest rate and loan eligibility.

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• Access your score via your bank's mobile app or a free credit monitoring service.
• Aim for a score of 620 for conventional loans, though 740+ secures the best market rates.
• Note the scores from all three bureaus: Equifax, Experian, and TransUnion.

{{doneWhenLabel}}: You have a documented credit score from at least one major bureau.

{{whyLabel}}: Pre-approval requires a clean history; errors on your report can lead to immediate rejection.

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• Visit AnnualCreditReport.com to get your free legal disclosure.
• Scan for accounts you don't recognize or incorrect late payment markers.
• Identify any high-utilization credit cards that need paying down.

{{doneWhenLabel}}: You have a PDF copy of your full credit report reviewed for errors.

{{whyLabel}}: Lenders use DTI to measure your ability to manage monthly payments; most require a ratio below 43%.

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• Add up all monthly debt obligations (car loans, student loans, minimum credit card payments).
• Divide this total by your gross monthly income (before taxes).
• If the result is over 43%, plan to pay off small debts before applying.

{{doneWhenLabel}}: You have a calculated DTI percentage.

{{whyLabel}}: Lenders need proof that you have the cash for a down payment and closing costs (typically 3-5% of home price).

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• Total the balances in your checking, savings, and brokerage accounts.
• Exclude retirement accounts unless you plan to take a loan against them.
• Ensure funds have been 'seasoned' (sitting in the account) for at least 60 days.

{{doneWhenLabel}}: You have a total sum of available cash for the home purchase.

{{whyLabel}}: Bonuses, commissions, or freelance income require extra documentation to be counted toward your qualifying income.

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• Gather 1099 forms or 2 years of consistent history for bonuses.
• Ensure you can prove the stability of this income for the next 3 years.
• Separate 'gift funds' from family and obtain a signed gift letter if applicable.

{{doneWhenLabel}}: All secondary income sources are listed with supporting evidence.

{{whyLabel}}: What a lender 'approves' is often higher than what you can comfortably afford daily.

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• Use the 28/36 rule: Housing costs shouldn't exceed 28% of gross income.
• Factor in property taxes, homeowners insurance, and HOA fees.
• Create a 'stress-test' budget including maintenance costs (1% of home value annually).

{{doneWhenLabel}}: You have a specific maximum monthly payment figure.

{{whyLabel}}: Different loans (Conventional, FHA, VA) have different pre-approval requirements and interest rates.

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• Compare Conventional loans (best for high credit) vs. FHA (lower credit/down payment).
• Check eligibility for specialized programs like VA (veterans) or USDA (rural areas).
• Decide between a 15-year (lower interest) and 30-year (lower payment) term.

{{doneWhenLabel}}: You have selected the primary loan type you will apply for.

{{whyLabel}}: Shopping around can save you thousands in interest; different lenders have different 'appetites' for risk.

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• Include one local credit union (often lower fees).
• Include one national bank (convenience and digital tools).
• Include one non-bank mortgage lender (often faster processing).

{{doneWhenLabel}}: You have the contact info for three distinct lending institutions.

{{whyLabel}}: Understanding the terminology prevents you from being overwhelmed during the high-pressure application phase.

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• Focus on the chapters regarding 'The Pre-Approval' and 'Mortgage Shopping'.
• Learn the difference between 'Pre-Qualified' (weak) and 'Pre-Approved' (strong).
• Take notes on 'Points' and 'Closing Costs'.

{{doneWhenLabel}}: You have read the relevant mortgage chapters of the book.

{{whyLabel}}: Lenders need to verify your current employment status and year-to-date earnings.

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• Download the two most recent pay stubs from your payroll portal.
• Ensure they show your name, employer, and all deductions.
• If you are self-employed, prepare a year-to-date Profit & Loss statement.

{{doneWhenLabel}}: You have digital copies of your most recent pay stubs.

{{whyLabel}}: This proves income stability over time, which is a core requirement for secondary market loans.

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• Locate your W-2 forms for the previous two calendar years.
• Save full copies of your federal tax returns (all schedules included).
• Ensure the documents are clear and legible for scanning.

{{doneWhenLabel}}: You have a folder with the last two years of tax documentation.

{{whyLabel}}: Lenders check for 'large deposits' to ensure you aren't taking secret loans for the down payment.

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• Download the full PDF statements (all pages, even the blank ones).
• Include all accounts where down payment funds are held.
• Be prepared to explain any deposit over 50% of your monthly income.

{{doneWhenLabel}}: You have the last two months of statements for all relevant accounts.

{{whyLabel}}: This triggers the official 'hard pull' on your credit and starts the underwriting review.

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• Complete the Uniform Residential Loan Application (Form 1003).
• Upload all gathered documents to the lender's secure portal.
• Request a 'Verified Pre-Approval' where an underwriter reviews the file, not just a computer.

{{doneWhenLabel}}: The application status shows as 'Submitted' or 'Under Review'.

{{whyLabel}}: Underwriters almost always ask for clarification on specific line items to finalize the approval.

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• Check your email daily for 'Letters of Explanation' (LOE) requests.
• Provide missing pages or updated statements immediately to avoid delays.
• Keep a log of all communications with your loan officer.

{{doneWhenLabel}}: All requested follow-up documents have been uploaded.

{{whyLabel}}: You need to know exactly what your 'ceiling' is before making offers on homes.

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• Check the expiration date (usually 60-90 days).
• Verify the loan amount, interest rate type, and any specific conditions listed.
• Ensure the letter doesn't have a 'property address' yet (it should be 'TBD').

{{doneWhenLabel}}: You have a signed Pre-Approval Letter in hand.

{{whyLabel}}: A new credit inquiry or a new loan can change your DTI and cause the lender to revoke your approval.

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• Do NOT open new credit cards or take out auto loans.
• Avoid making large purchases (like furniture) on existing credit lines.
• Delay any career changes or quitting your job until after closing.

{{doneWhenLabel}}: Your credit profile remains unchanged until the house is purchased.

{{whyLabel}}: If you don't find a home within the window, you'll need an updated letter to stay competitive.

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• Mark the expiration date in your digital calendar.
• Set a reminder for 14 days prior to expiration.
• Contact your lender 10 days before to provide updated pay stubs for a renewal.

{{doneWhenLabel}}: A reminder is set in your calendar.