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Tips for Getting Pre-Approved

Published 4:13 pm Tuesday, August 29, 2023

Congratulations! You’ve decided it’s time to purchase a new Conaway home in East Texas. Whether it’s your first time buying or you’ve bought before, the process can be a little overwhelming. There’s a lot of information available on the home buying process in general, but one of the best ways to streamline that process is by first getting pre-approved for a loan. Our trusted lender is here to help you every step of the way.

When it comes to financing a new home, the typical first step is to get pre-approved by a mortgage lender. This is a process where the lender goes through several parts of your financial information, such as income, assets versus debts, and credit, to ensure your financial stability to buy a home. You might be thinking, how can I make sure I get approved? While there’s no guarantee that you will get approved, we’ve put together a few tips to improve your chances for pre-approval and, hopefully, future loan approval.

1) Check and Increase Your Credit Score

As mentioned above, one of the things that a lender will check in regards to your financial stability is your credit score. You can typically check your credit score for free online and even order your credit reports to see if there are any discrepancies or inaccuracies. If you find there’s incorrect information, you want to make sure to get that taken care of as soon as possible. Creditors can work with you to resolve or dispute inaccurate information, which will in turn help increase your credit score.

When making any big purchase, it’s always good to know where your credit score stands. Even if you currently have a good credit score, an even higher score can only help when it comes to getting a great mortgage rate. For a conventional loan, the average recommended score is 620. However, scores of 740 or higher typically have a much lower interest rate, which can save you money in the long run.

2) Calculate and Improve Your Debt-to-Income Ratio

Another aspect of your finances that a lender will consider is your debt-to-income ratio. This is a comparison of your gross (pre-tax) income to housing and non-housing debts. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support.

Typically, mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should be no more than 41% of income. The sooner you’re able to determine what your ratio looks like currently, the easier it will be to make changes in order to close the gap and heighten your chances for pre-approval.

3) Gather All Necessary Income & Personal Information

Getting pre-approved starts with a loan application. After submitting the application, the lender likes to see a few documents to verify some important items. Having this information readily available and prepared will make the process so much simpler. Here’s a list of some of the most common pieces of information needed:

• SSN and drivers’ license
• Current addresses and employment details
• Bank and investment account information for all accounts
• 2 years of proof of all sources of income (Tax returns, W-2s, 1099s, pay check stubs etc.)
• List of monthly debt payments, including real estate debts

4) Ask For Help

Most importantly, ask for help. Don’t let the fear and confusion of the pre-approval process hold you back from purchasing a new home. Working with a lender will help you understand how much you can afford and how much you’re qualified to borrow. The key word here is “help.” Take advantage of their wealth of knowledge and ask plenty of questions to ensure you understand what the lender is offering you.

Choosing the right lender for you doesn’t have to be difficult. Conaway Homes has a trusted preferred lender that will make sure the process is stress-free. As a special offer, The Texas Loan Company has partnered with Conaway Homes to put $1,300 towards the closing costs of any buyer who finances with this preferred lender.

If you have any questions about the pre-approval process or any other part of purchasing a new Conaway home, please feel free to connect with us. We look forward to showing you all that our East Texas homes have to offer!