6 Steps to Get Preapproved for a Home Loan

Having the right action plan can make buying a home a lot easier. Explore this step-by-step guide to better understand the ins and outs of the preapproval process.

1. Polish Your Credit Score.

Your credit score is a factor that helps determine the mortgage rates you qualify for. When applying for a mortgage preapproval we recommend a credit score of at least 680, but you'll want to get your score as high as possible.

Generally, credit scores of 740 and up will enable you to qualify for the best mortgage rates. Meaning, you'll likely see no difference in mortgage options if you have a score of 740 vs. 840.

2. Connect with a Mortgage Loan Officer.

You may find yourself faced with questions like:

• How much home can I afford?
• What's the lowest interest rate I can get?
• What should my down payment be?

A Mortgage Loan Officer is a licensed professional trained to help you answer these questions. Their job is to assist you through the loan process and help you find the right loan for your unique situation. You'll get advice specific to your financial goals and, after an initial conversation, you should have a good idea of your home financing options. 

At Cal Coast our Mortgage Loan Officers are not incentivized in any way to promote one loan over another. This means you can rest assured they have your best interest in mind.

3. Determine Your Payment Comfort Level.             

During your initial conversation, your Mortgage Loan Officer will let you know the maximum property value you'll likely be approved for. This can make it easy to search for homes within your budget. However, just because you qualify for a certain amount doesn't mean it makes sense to get the most expensive home possible. Your budget should be based on your comfort level and how much you are able to put towards a monthly payment. You don't want to be stuck with a huge mortgage payment that leaves you strapped for cash every month.

One way to gauge your comfort level is to budget your finances as if you had a mortgage payment to make. If you're currently renting just subtract your rental costs from your target monthly payment and put the rest into savings. This can give you insight on your payment comfort level as well as help you save.

4. Research Your Local Housing Market.

Armed with a realistic budget, you can start to narrow down your housing options. If you're planning to buy in Southern California, try Cal Coast’s Home Rewards search engine where you can access the most up to date listings and get personalized alerts when new home listings become available. You can also receive expert guidance from a dedicated real estate agent by clicking the link directly below and selecting ENROLL NOW. Once you find a home you're interested in, you can create an account (takes 30 seconds) and get paired with a trusted agent.

5. Gather your financial records and work with your Mortgage Loan Officer to apply.

Once you've gotten a feel for your local housing market you should get in touch with your Mortgage Loan Officer to officially apply for your preapproval. If you don't feel like visiting a branch your Mortgage Loan Officer can take your application over the phone. Many of our members find this option convenient as the entire process can be done from the comfort of their home. To reach your Mortgage Loan Officer you can call 858-636-3045 (Mon-Fri, 9am-4pm) or schedule an appointment when it's convenient for you. To schedule a Saturday appointment please email RealEstateLoanOfficer@calcoastcu.org.

You can also apply by visiting a Cal Coast branch in person. At the branch simply let the teller know that you're looking to get preapproved for a mortgage and they will pair you with a personal finance representative who will take it from there. To avoid repeat trips try to bring as much documentation as possible! Feel free to use our interactive map to find a branch near you.

When you apply for a mortgage preapproval you'll be asked to provide copies of certain documents. If you have your documents ready, you could have your Cal Coast Preapproval Letter in-hand in as little as 24 hours. These documents allow us to verify your information, so that we can provide you with accurate interest rates and an official Preapproval Letter.

Here's a list of documents you will need to get started:

• Last year's federal tax returns
• Pay stubs for the last 30 days
• W-2s for the past 2 years
• Most recent one month bank statement for all accounts being used for funds to close

There's no need to worry if you don't have access to a photocopier. You can bring your documents to any branch and our staff can take care of that for you. Depending on your situation you may be asked to provide additional forms.

If you're having trouble tracking down a particular document, don't let that discourage you from starting an application. Your Mortgage Loan Officer may be able to find an alternative solution, so be sure keep them in the loop!

6. Receive your custom Preapproval Letter and shop homes with confidence!

During the application process your Mortgage Loan Officer will determine what loan options are available to you, based on the information you provide. They will work with you to find the right loan that fits your needs and financial goals. Once you've chosen a loan program, and feel confident in your decision, your Mortgage Loan Officer will create a customized Preapproval Letter for you to include in your offer package.

A Preapproval Letter lets sellers know that you are a serious candidate, with the financial means to follow through with the purchase. Many sellers won't even consider an application if the buyer has not been preapproved.

Within your Preapproval Letter you will find information important to your home hunt, including:

• Interest rate
• Length of the loan
• Maximum loan amount you qualify for
• Maximum monthly payment you qualify for

Typically, preapprovals are valid for 90 days as that is how long it takes for a credit report to expire. If you need more time it's not a big deal — just let your Mortgage Loan Officer know and they'll be happy to help get you an extension.