We advise our clients that prequalifying is just not enough and  recommend they obtain a full credit and income approval prior to falling in love with a home and writing an offer.

So what’s the difference between a preapproval and a credit and income approval? Preapproval is fine for the simple borrower, who is usually much easier to underwrite. If you work at Walmart and you make $13.50 an hour, 40 hours a week, fine. The chances are that a preapproval might be enough. You don’t have large student loans. You have a set hourly rate or annual salary, and you are not moving your family across the country to start a new job. So, you complete a quick online application showing you have good credit, have been at the same job for two years, and receive a W-2 salary for $28,000 a year. Preapproved. It’s as easy as that. Congratulations! You fit the box.

Physicians always seem to have more moving pieces: new employment, student loans, relocations, and jumbo loan sizes all add complexity, which equals more potential pitfalls. You don’t want to work through documenting and getting underwriting approval on all these issues after you have a home under contract and you’ve started loading up the kids in the U-Haul.

Credit and income approval starts with an application online or over the phone, then you also submit all of the documents that underwriting will need to sign off  and close your loan, including transcripts if you are just coming out of medical school, two years of tax returns and W-2s, your new employment contract or offer letter, your source of down payment, and explanation as to what’s happening with your student loans if they are transitioning between IBR or deferment and regular repayment.

All of these items can greatly affect your loan application being approved or declined. It’s my advice to not only have them reviewed by your loan officer but also insist that they are reviewed by an underwriter (the gatekeeper of the money) and ask for a fully underwritten credit and income approval. Once you have a credit and income approval, you’ve eliminated 99 percent of the things that can and do go wrong in the loan process. You also have a much more attractive offer to present when you find your new home. You’re not just preapproved by some gun-slinging loan officer; you’ve been underwriter approved. It’s basically a blank check at that point. Find a home that appraises well and you are done!

 

If you have any additional questions or want to request a free consultation – you can either contact us via chat or fill out the consultation request below:

Copyright©2017 Fairway Independent Mortgage Corporation. NMLS#2289. 4801 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Other restrictions and limitations may apply. Fairway is not affiliated with any government agencies. Fairway is required to disclose the following license information. Alaska Mortgage Lender License No. AK2289; Arizona Mortgage Banker License No. 0904162; CA: Licensed by the Department of Business Oversight under the Consumer Finance Lenders Law; Loans made or arranged pursuant to a California Finance Lenders Law License #262571; Illinois Residential Mortgage Licensee No. MB. 0005475; Kansas Licensed Mortgage Company. KS License #MC.0001375; MA Mortgage Broker and Lender License #MC2289"; Minnesota: MN-MO- MN-MO-20183136. This is not an offer to enter into an agreement. Any such offer may only be made in accordance with the requirements of Minn. Stat. Section 47.206 (3) and (4); Mississippi Licensed Mortgage Company; Licensed by the New Hampshire Banking Department Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker-NYS Department of Financial Services; OH MBA License #2289; Oregon Mortgage Lender License ML-3791; Rhode Island Licensed Broker & Lender; VA: NMLS ID # 2289; Washington Consumer Loan Company License No. CL-2289.