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1st step to buying a home: pre-approval

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Imagine walking in to your new house. You moved in a few weeks ago, you’ve unpacked most of your things, and it’s starting to feel like home. But then you wake up from this fantasy and realize you don’t know how to make this dream become a reality. We’re here to help.

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The process of purchasing your first home should be exciting and rewarding knowing you are taking control of your finances by investing into your own home. We want to give you a head start with understanding the process.

First things first. You’ll need to shop for a lender. Start with your own bank (a source you trust and believe in) and shop with other lenders as well. You’ll want to compare rates, cost associated with the loan and feel comfortable with the lender’s service levels before you apply.  A good lender will work closely with your specific situation. They will explain the loan and buying process and answer all your questions as a first-time home buyer.

The mortgage loan process has changed drastically over the years, so be prepared that the lender will want at least 30 days to get your loan approved and closed. Processing times will vary based on how complex your personal history is to document and verify. We suggest getting a pre-approval letter from your lender before shopping for your new home.

Why do you need a pre-approval letter?

  • A pre-approval letter will give your real estate agent a price range to know what homes to include in your search. It outlines the loan amount and terms you are approved for.
  • Pre-approval gives you a negotiating advantage. A seller might be more inclined to accept your offer if you have a pre-approval letter, even if you make an offer that’s lower than a buyer without a pre-approval. Sellers want the assurance of knowing their buyer can get financing since they are also planning on a home move.
  • A pre-approval letter is a stronger option than a pre-qualification letter because the approval is based on verified credit, income and asset data that an underwriter has reviewed and approved. The pre-qualification is based only on the data provided on the loan application that has not been verified or reviewed by an underwriter.

In order to expedite your loan process, here is a list of the documentation to bring to your lender when you have your first meeting for a loan application:

  • Last two years of W-2’s and tax returns with all schedules – This allows the lender to evaluate any other income or loss for qualifying purposes. All self-employed borrowers will need to provide a two year history of tax returns to determine income for qualifying purpose.
  • Most recent paystubs to cover 30 consecutive days – The lender will review and calculate income for wage earners.
  • Most recent asset statements to cover 30 days – This statement, also known as your bank statement, will need to show you have sufficient funds in your account to close on the loan. Any large deposits will need to be documented as to where the funds came from to meet loan requirements.
  • Additional information may apply based on the type of loan you are applying for – another important reason to select a lender who will walk you through the process and give you clear explanations.

The home-buying process can be long and complicated. Preparation involved in getting a pre-approval letter is fairly simple and it helps both you and the seller in the long-run.

Stay tuned for part two of this series: The second step to buying a home—choosing the right loan for you.


Diane Hughes is Sr. Vice President/Director Mortgage Sales for UMB at 1010 Grand Blvd., Kansas City, MO.  She is responsible for the bank-wide mortgage services and has 29 years of experience as a Mortgage Banker. 


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  • Bobby Roosco

    My wife and I have been trying to build our credit score. I have only had a credit card for a year, but she has for 4 years. We are hoping by the time we are ready to buy a house our credit score will be through the roof. What is a good credit score to shoot for in order to get a $100,000 home? https://www.usdaloansdirect.com/first-time-home-buyer/

    • umbblog

      Great question, Bobby! There are a variety of loans available for most levels of credit scores. To be eligible for good rates, you want to aim for scores in the 620 to 680 range. Even better rates and terms occur when your middle credit score is 680-720 – that’s when looking at the three scores you get from the different credit bureaus. At a middle credit score of 720 or higher, you’ll more likely qualify for the best rates and terms available. While improving your credit score will help you qualify, keep in mind other factors improve your chances as well. For example, the larger the down payment, or equity (http://blog.umb.com/fwotw-equity) you have the more likely you are to qualify. Also, lowering the percent of your income that goes towards debt, called your debt-to-income ratio (http://blog.umb.com/fwotw-debt-to-income) will help you qualify as well.

      If you haven’t already, we recommend applying to get pre-approved now, even before you’re ready to search for a home. Your loan officer can guide you as to what steps can be taken over the next 12 months to ensure you are in best possible position to qualify for a mortgage when the time comes.