Tuesday, February 26, 2013

Three Key Factors to Obtaining a Pre-Approval in Illinois, Michigan, Minnesota and Wisconsin

Getting pre-approved is a key factor in the home buying process. For many prospective home buyers, a pre-approval is required before you can even start looking at homes. For first time home buyers, the pre-approval process may be somewhat daunting. Here are 3 key factors required by a lender to issue a pre-approval and why they are needed (this is not a comprehensive list):

Credit Score – in today’s financial world, your credit score means everything. A good credit score determines your interest rate along with the type of program you qualify for. 740 is the golden number for borrowers – this score will give you the best interest rates available, but a range of 700 – 740 still gets you a low rate. Your credit score is determined by taking the median score reported by the three bureaus. For example, if your credit scores are: Experian – 712, Transunion – 760, Equifax – 740, your qualifying score is 740 as it is the median score reported.

Income – verifying income is key factor in determining qualifying ratios. Your gross monthly income is used to determine the monthly mortgage payment you will qualify for. Your qualifying ratios are composed of two percentages, the percentage of housing expenses and the percentage of all monthly liabilities. These ratios are calculated by dividing the total expenses by your gross monthly income to determine your front end (housing expenses) and back end ratio (all monthly liabilities). An ideal back end ratio is anything under 38%.

Stability – having and maintaining a history of job stability can make or break a loan. The number to remember here is 2. When possible, most lenders require a history of 2 years of job stability in the same field of work. With that, they also require a 2 year address history.

United Home Loans is licensed in Illinois, Michigan, Minnesota and Wisconsin and has extensive knowledge and expertise regarding the pre-approval process. Our licensed mortgage bankers can guide you through the pre-approval process to make the home buying process relaxed.


From contract to closing, we’re here to serve you. Contact us today to obtain a free pre-approval! 708-531-8388 or Get a Quick Quote


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