Pre-qualification is the proper beginning to the loan process, and should occur prior to shopping for your home. We gather information about your credit, income, assets and debts; to establish how much house you can afford. Loan programs have different qualifying rules and amounts. The pre-qualification process is where we determine the best loan program, maximum house payment & loan amount for your situation. By knowing what you qualify for, you are now ready to house shop with confidence.
Often, you hear the words pre-qualifcation and pre-approval used. Typically, prequalifcation is done by telephone, online or in writing in a few minutes. The more indepth process is preapproval, with verfication of data supplied. Houston Capital preapproval status gives you: (1) leverage in the purchase process (2) helps you close quicker and (3) tells sellers & realtors you selected an established reputable local lender.
To provide approval, we analyze two main criteria:
Ability to repay a mortgage is determined by your employment and income level. Qualifying ratios are calculated for your new house payment and maximum permissable debt. Stable employment is a requirement judged by a period of two years, ideally with same employer. If your job has changed in the last two years, with no change in line of work, that's acceptable. If the job change resulted in higher earnings, that's a positive factor. If the job change resulted in lower earnings or unemployment, additional scrutiny may be required. Stable income is a requirement judged by type and history of income. As a salaried employee, your income is "fixed" and considered stable. If you are a commissioned or bonused employee, that is a fluctuating income type that is "non-fixed" , therefore we average it over a two year period for stability purposes. Self employment income is examined in greater detail that non self employment. In self employment, we anaylze your income earned, as well as the health of the business.
Willingness to repay is determined by multiple factors. Occupancy purpose is part of our analysis, whether you will live there or rent it out. The manner in which you handled prior financial obligations, credit and housing history, is all of great importance. How you have paid housing before is the best indicator of how you will pay the new mortgage.
No rules are carved in stone, they are simply basic lending criteria. Every borrower has a unique situation, and is analyzed on a case-by-case basis. So, if you are light in one area, your stronger area may compensate for the weaker one. Houston Capital Mortgage Team is in the business of lending mortgage money, and our primary purpose is to help you qualify for approval, wherever possible. Houston Capital is highly knowledgeable of lending guidelines and takes advantage of guideline flexibilities, rather than using a set of generic rules like most lenders. Often, we transfer in mortgage loans declined by others, and can convert them into happy loan approvals.