How Long Does It Take To Get A Mortgage Offer
So, you are about to buy a house, or perhaps you are just about to start looking for a property and are thinking How long does it take to get a mortgage to be approved?.
As a home buyer, the first piece of information you will need is how much of a mortgage you will be able to get. Each bank and building society and even broker can produce an agreement in principle for you . All you need to do is ask them how much the maximum amount the lenders would be willing to lend you, based on your income and any debts you may have.
How to prepare for a new mortgage application?
What documents are required for a mortgage in principle application?
It is always best to get your finances in order and your paperwork ready for a speedier mortgage application. Mortgage lenders require a handful of documentation from you in order to process your mortgage app. These usually include:
- 3 months payslips
- Proof of deposit
- 3 months bank statements
Youll Need Proof Of Income
Mortgage lenders will want to see proof of how much you earn, so youll probably need a P60 form which you get every year from your employer and shows a summary of your pay and how much tax has been deducted.
Youre also likely to be asked for three months worth of bank statements and payslips so the lender can look at both how much you have coming in as well as your outgoings.
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A good answer to any interview question is succinct and makes use of telling detail. Whatever you say about your motivation, you need to back it up with examples from your studies, work experience and/or extracurricular activities, and it should relate to the skills and aptitudes required for the job you’re going for.
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Have A Question About How To Apply For A Mortgage
Buying a home, whether your first or not, is exciting but we understand that there may be times of uncertainty or nervousness, especially if youre eager to avoid mistakes on your application.
Most of the time, knowing the answers to the questions that surround your worries can provide clarity and reduce your concerns.
If you have a niggling question, send an enquiry via our website and one of our expert mortgage advisors will answer as soon as possible.
Proof Of Income And Deposit
- Your last 3 payslips
- Your last 3 bank statements, showing your name and address
- If youâre self-employed, your last 3 years of tax returns and tax year overviews
- Proof of other types of income, like bonuses and rental income
- Proof of your deposit
- If your deposit is a gift, youâll need a letter from the person giving it to you confirming they donât expect to be repaid
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Other Proof Of Income We May Need Depending On Your Circumstances
If this income is paid into a Barclays account, you dont need to provide bank statements.
If any applicant receives
Benefit income, including Child Benefit
One of the following
Alternatively, you can provide bank statements for the last three full months, and one of the following
Work Out How Much You Can Borrow
Mortgage lenders usually lend up to four-and-a-half times the total annual income of you and any joint buyer. For example, if your total household income is £50,000 a year, you might be offered a mortgage up to £200,000.
Some mortgage lenders offer larger amounts to people in certain professions or those with higher earnings. For example, Clydesdale Bank has a range of mortgages for professionals such as architects, doctors, optometrists and pharmacists.
Other lenders have different rules if you earn over a certain threshold. Halifax, for example, will lend 4.5 times your income if you earn under £40,000, 4.75 times your income if you earn £40,000 to £50,000, 5 times your income if you earn £50,000 to £75,000, and 5.5 times your income if you earn more than £75,000.
Remember that, while you may need it, you dont have to borrow the maximum amount available to you.
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Close Old Inactive Accounts They Can Kill Your Application
If you’re not using an account, it may be worth closing it. Leaving it open might be a fraud risk, and it could display out-of-date details.
Having said that, when applying for a mortgage, longer, stable credit relationships are a positive. So, if you’ve two credit cards, one recently opened and an older one, it’s probably not worth closing the older one before the mortgage application as you could lose the credit score boost it gives you.
See the Should I Cancel? section of our Credit Scores guide for full information on why you should close old accounts. Remembered, if you are closing an account, just cutting up the card isn’t good enough you must tell the bank you want it closed.
How Long Does A Property Valuation Take
The surveyors office will contact the estate agent to arrange access to the building you are buying so that they can carry out a building survey. Most surveyors will complete their report on the property the same day as the building inspection. This will be sent electronically to the lender for the lenders underwriter to make a decision on the true value of the property. This sometimes differs from an estate agent valuation which can cause issues. It is important that the valuation given to your lender isnt inflated as it will only be downvalued and could disrupt your mortgage application timeline.
It usually takes 7-14 days from the mortgage application until the property valuation is completed.
The underwriter will be looking for confirmation from the surveyor that the property is worth the amount that you are buying it for and that the building is structurally sound.
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Information Youll Need When Applying For A Mortgage
Before you start your mortgage application, it helps to have all the information youll need to hand. This will speed up the process and ensure you dont miss any important details of your application.
- P60 form This shows your salary details, including what you pay in tax. You can ask for this from your employer.
- Payslips The lender will usually ask for your last three months of payslips.
- ID Accepted forms of ID include your passport and driving license.
- Utility bills You may needto show your regular outgoings, such as utility bills or council tax.
- Proof of address Lenders will normally ask for two proofs of address, such as a bill orbank statement. This must be from the last three months.
- Benefits or income support If you receive any benefits from the government, you will need to give proof of this.
- Bank statements Lenders will want to see at least three months of activity on your current account.
- Other debts If you already have a mortgage or have taken out a loan, you will need to disclose the details. This includes your repayments and when the loan ends.
If you are self-employed, your lender may ask for further details such as:
- Your accounts from the last two or three years
- Tax return forms
Questions To Ask Your Lender Or Broker When Getting Preapproved
When getting preapproved, ask your broker or lender the following:
- how long they guarantee the preapproved rate
- if you will automatically get the lowest rate if interest rates go down while youre preapproved
- if the pre-approval can be extended
Ask your lender or broker about anything you dont understand.
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How To Get A Mortgage: A Step
You probably already know that a mortgage is a type of loan that you use to buy a home. Its a good idea to learn as much as you can about getting a mortgage before you start shopping for a home.
The best way to avoid wasting time is to know the players and the process.. That means working with a lender to get the best possible loan.
In this article, well get you ready to go mortgage shopping by going over what lenders are looking for, the paperwork involved and the five steps it takes to complete the mortgage process.
What Do You Need To Apply For A Home Loan
Applying for a home loan can be an intimidating process. It’s one of the things that can cause first-timers to drag their feet the feet on buying a home. Even homeowners who’ve been through it before may put off refinancing simply because they fear an extended and cumbersome process.
But it doesn’t have to be that way. A home loan application can be a fairly simple and straightforward process. You don’t necessarily have to supply a lot of documents your lender can often pull those up for you. And you don’t even have to spend a lot of time meeting with your lender or hanging around a bank many lenders now allow you to apply for a home loan online.
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What About The Down Payment
You don’t have to post your down payment at the time you apply for a mortgage. That will be paid at closing, along with any other fees being paid up front. However, you will have to show that you can afford the down payment your loan requires.
That proof is normally provided by your banking statements or other financial assets. If you are receiving down payment assistance from another person or from a public agency, you will need to show proof the funds will be provided to you.
Most lenders will require at least a 3-5 percent down payment, though you’ll need to pay ongoing fees for mortgage insurance if you put less than 20 percent down. The major exception are VA loans, which usually allow no down payment and charge no mortgage insurance. FHA mortgages allow down payments as small as 3.5 percent.
If refinancing, your accumulated home equity serves the same purpose as a down payment.
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Consider Factors That Arent On The Mortgage Application
When you apply for a home loan, youre committing to one of the biggest debts youre likely to take on in your lifetime. These tips may keep you from applying for more loan than your budget can afford and can help you consider the costs of homeownership beyond your monthly payment.
. Just because lenders allow you to borrow up to 43% of your total income doesnt mean you should spend that much. Lenders dont evaluate your lifestyle or daily personal expenses, so when you pick a monthly payment, make sure you leave room for:
- Health care expenses
- Savings goals
Add homeownership costs to your budget. A broken water heater, landscape spruce-ups and regular maintenance are all on your dime as a homeowner. According to HomeAdvisors 2020 State of Home Spending report, homeowners spent $3,192 on home maintenance. Insurance companies suggest you budget 1% of your sales price or $1 per square foot toward these expenses to cushion the blow of unexpected costs.
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Ensure Your Id And Address Documents Are Up To Date
If you need to provide proof of ID or address to satisfy money laundering requirements it must be the original document, not a copy, and be current and valid.
- Passport must not be expired
- Driving License must have your current address
- Council tax statement – latest one available
- Utility Bills usually dated within 3 months
- Bank statements physical statements are required if you use these as proof of address
The 14 Documents You Must Have To Get A Mortgage
Find out which documents are needed for a mortgage. Mortgages 101
To make your dreams of homeownership come true, youll have to jump through a series of hoops known as the mortgage process. Regarded as lengthy, the application part of the mortgage process requires you, as a borrower, to submit a series of documents to prove everything from your identity to your current income to your ability to pay back the loan. To get your mortgage application approved without any hiccups, its best if you gather everything you need ahead of time, so youre ready when the lender requests information to help get your mortgage loan approved.
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Common Homebuyer Mistakes Between Application And Closing
Your loan is not complete after pre-approval, and its not even complete after you submit all your documentation, and get a full approval. Your loan really isnt complete until the lender verifies everything is as it should be and determines your loan is clear to close.
While some factors that can affect your qualification for your mortgage and the purchase of a home are out of your control , there are several moves you can make between application and closing that could prevent you from getting a mortgage.
Lenders review your credit, income, and assets soon after you submit your application and if all goes well, theyll issue an approval for your loan. But that approval is not set in stone until they clear you to set a closing date.
Before they do so, they may request signatures on certain documents, make additional documentation requests, etc. and because all these things can take time, they will also want to make sure none of the information you submitted in your application has changed between when you applied and when your loan is ready to close.
If any of the information they relied on to approve your loan changes dramatically while your loan is being processed, they may have no choice but to deny your loan, even if it is right before the purchase is supposed to close.
Here are some of the things you shouldnt do while youre waiting to close on your new home:
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Existing Debts Past Financial History And Other Obligations
Lenders need to get a full picture of your financial health, which includes looking at your debt, credit history, and liabilities. Unlike other categories, documentation isnt always necessary unless theres a discrepancy in your credit report.
While the lender will pull your credit report directly to underwrite your loan, you should know what your credit report looks like before you apply so you can be prepared. Youre entitled to a full credit report at no cost from each of the three nationwide credit reporting companiesExperian, Equifax, and TransUnionevery year.
Before you apply for a mortgage, its best to get copies of all three credit reports. This gives you time to review and correct any errors so youre not surprised later.
Debt and expenses
Lenders will look at any recurring expenses and debts to calculate your overall monthly debt payments. They will compare your total monthly debt payments to your income to determine your Debt-to-Income Ratio that helps them determine your ability to repay a mortgage. Examples of these recurring debts include:
- Lines of credit
- Student loans
One thing to note is that all of your monthly debts may not be included in your credit report. Things like child support payments or utility payments may not appear on your credit report, so be prepared to provide additional documentation on these amounts if your lender asks for them.
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Using A Mortgage Broker/agent
- If you are using a mortgage broker/agent and when they know all they need to know about you and your needs, theyll start to consider which mortgage might be a good fit for you. Theyll think about whether you meet various lenders qualification requirements.
- The mortgage broker/agent will provide you with options based on an assessment of the lender, the mortgage, its structure, its features and its risks in light of the information you have provided about your circumstances. The mortgage broker/agent must also explain his or her rationale for the options that have been identified.
- Make sure the mortgage broker/agent provides you with information that will help you determine whether you can afford the mortgage, including an estimate of the total cost of borrowing for the term of the mortgage. The total cost of the mortgage depends on the terms and conditions for paying it back, such as the interest rate and the amount of time it takes to pay off the entire mortgage or amortization period. The total cost can be much more than the amount you are borrowing. You need to determine if the rate, amortization period and total cost of the mortgage are right for you.
- Review the Working with a Mortgage Professional Checklist for more helpful tips.
Making A Mortgage Appointment
A mortgage advisor may be able to offer recommendations on the right mortgage for you.
To find a mortgage thats suited to your needs, a mortgage advisor will look at your:
- Your personal circumstances, needs and preferences
There are several ways you can book a mortgage appointment, including:
- At your bank Most banks or building societies will have their own team of mortgage advisors.
- Over the phone Many independent advisors are contactable by phone.
- Via email If youre short on time, drop your chosen advisor an email with a few of your concerns and they should be able to help.
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