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5 Things You Need to Be Pre-approved for a Mortgage

Shopping for a home may be exciting and fun, but serious homebuyers need to start the process in a lender's office, not at an open house. Most sellers expect buyers to have a pre-approval letter and will be more willing to negotiate with those who prove that they can obtain financing.

Potential buyers need to show documentation to prove their assets and income, good credit, employment verification, among other documentation to be pre-approved for a mortgage.

Key Takeaways

  • Serious homebuyers need to start the process in a lender's office, not at an open house.
  • Most sellers expect buyers to have pre-approval letter and will be more willing to negotiate if you do.
  • To get pre-approved you'll need proof of assets and income, good credit, employment verification, and other types of documentation your lender may require.

Pre-qualification vs. Pre-approval

A mortgage pre-qualification can be useful as an estimate of how much someone can afford to spend on a home, but a pre-approval is much more valuable. It means the lender has checked the potential buyer's credit and verified the documentation to approve a specific loan amount (the approval usually lasts for a particular period, such as 60 to 90 days).

Potential buyers benefit in several ways by consulting with a lender and obtaining a pre-approval letter. First, they have an opportunity to discuss loan options and budgeting with the lender. Second, the lender will check the buyer's credit and unearth any problems. The homebuyer will also learn the maximum amount they can borrow, which will help set the price range.

Final loan approval occurs when the buyer has an appraisal done and the loan is applied to a property.

Potential buyers should be careful to assess their comfort level with a given house payment rather than immediately aiming for the top of their spending limit.

5 Things You Need To Get A Mortgage Pre-Approved

Requirements for Pre-approval

To get pre-approved for a mortgage, you'll need five things—proof of assets and income, good credit, employment verification, and other types of documentation your lender may require. Here is a detailed look at what you need to know to assemble the information below and be ready for the pre-approval process:

1. Proof of Income

Buyers generally must produce W-2 wage statements from the past two years, recent pay stubs that show income as well as year-to-date income, proof of any additional income such as alimony or bonuses, and the two most recent years' tax returns.

2. Proof of Assets

The borrower needs bank statements and investment account statements to prove that they have funds for the down payment and closing costs, as well as cash reserves.

The down payment, expressed as a percentage of the selling price, varies by loan type. Many loans come with a requirement that the buyer purchase private mortgage insurance (PMI) or pay a mortgage insurance premium or a funding fee unless they are putting down at least 20% of the purchase price. In addition to the down payment, pre-approval is also based on the buyer's FICO credit score, debt-to-income ratio (DTI), and other factors, depending on the type of loan.

All but jumbo loans conform to government-sponsored enterprise (Fannie Mae and Freddie Mac) guidelines. Some loans, such as HomeReady (Fannie Mae) and Home Possible (Freddie Mac), are designed for low- to moderate-income homebuyers or first-time buyers.

Veterans Affairs (VA) loans, which require no money down, are for U.S. veterans, service members, and not-remarried spouses. A buyer who receives money from a friend or relative to assist with the down payment may need a gift letter to prove that the funds are not a loan.

3. Good Credit

Most lenders require a FICO score of 620 or higher to approve a conventional loan, and some even require that score for a Federal Housing Administration loan. Lenders typically reserve the lowest interest rates for customers with a credit score of 760 or higher. FHA guidelines allow approved borrowers with a score of 580 or higher to pay as little as 3.5% down.

Those with lower scores must make a larger down payment. Lenders will often work with borrowers with a low or moderately low credit score and suggest ways to improve their score.

The chart below shows your monthly principal and interest payment on a 30-year fixed interest rate mortgage based on a range of FICO scores for three common loan amounts. Note that on a $250,000 loan an individual with a FICO score in the lowest (620–639) range would pay $1,288 per month, while a homeowner in the highest (760–850) range would pay just $1,062, a difference of $2,712 per year.

FICO Score Range

620-639

640-659

660-679

680-699

700-759

760-850

Interest Rate

4.656%

4.100%

3.670%

3.456%

3.279%

3.057%

$350,000 loan

$1,804

$1,691

$1,605

$1,563

$1,529

$1,486

$250,000 loan

$1,288

$1,208

$1,146

$1,116

$1,092

$1,062

$150,000 loan

$773

$725

$688

$670

$655

$637

At today's rates and over the 30 years of the $250,000 loan, an individual with a FICO score in the 620-639 range would pay $213,857 in principal and interest and a homeowner in the 760–850 range would pay $132,216, a difference of more than $81,000.

An interest rate tool from the Consumer Financial Protection Bureau lets you see how your credit score, loan type, home price, and down payment amount can affect your rate. The tool is updated with current interest rates twice a week.

4. Employment Verification

Lenders want to make sure they lend only to borrowers with stable employment. A lender will not only want to see a buyer's pay stubs but also will likely call the employer to verify employment and salary. A lender may want to contact the previous employer if a buyer recently changed jobs.

Self-employed buyers will need to provide significant additional paperwork concerning their business and income.According to Fannie Mae,factors that go into approving a mortgage for a self-employed borrower include the stability of the borrower’s income, the location and nature of the borrower’s business, the demand for the product or service offered by the business, the financial strength of the business, and the ability of the business to continue generating and distributing sufficient income to enable the borrower to make the payments on the mortgage.

Typically, self-employed borrowers need to produce at least the two most recent years' tax returns withall appropriate schedules.

5. Other Documentation

The lender will need to copy the borrower's driver's license and will need the borrower's Social Security number and signature, allowing the lender to pull a credit report. Be prepared at the pre-approval session and later to provide (as quickly as possible) any additional paperwork requested by the lender.

The more cooperative you are, the smoother the mortgage process.

The Bottom Line

Consulting with a lender before the homebuying process can save a lot of heartache later. Gather paperwork before the pre-approval appointment, and definitely before you go house hunting.

What is the difference between pre-qualification and pre-approval?

Both pre-qualification and pre-approval involve a review of an applicant's credit report. The difference is the degree of credit review. Pre-qualification involves a quick review of one's credit and only provides a potential borrower with a general idea of how much mortgage they could qualify for and under what terms. Pre-approval involves a full credit review, while only offered for a limited time window, provides the potential borrower with a solid offer of credit from a lender with which they can use to make good faith offers on homes for sale.

What factors are considered for pre-approval?

Lenders verify certain borrower information before providing a pre-approved offer. These include verification of employment, income, assets and credit score. A full credit report and credit score are pulled at the time of application vs. a limited (soft pull) credit report that is often used with pre-qualification offers.

Why is it important to get pre-approved?

Getting pre-approved for a mortgage gives a person bargaining power since they have mortgage financing already lined up and can therefore make an offer to the seller of a home in which they are interested. Otherwise the prospective buyer would have to go out and apply for a mortgage before making an offer and potentially lose the opportunity to bid on a home.

Sours: https://www.investopedia.com/financial-edge/0411/5-things-you-need-to-be-pre-approved-for-a-mortgage.aspx
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Rocket Mortgage, 1050 Woodward Avenue, Detroit, MI 48226-1906.

NMLS #3030. Go here for the Rocket Mortgage NMLS consumer access page.

Rocket Mortgage, LLC, Rocket Homes Real Estate LLC, and RockLoans Marketplace LLC (doing business as Rocket Loans®) are separate operating subsidiaries of Rocket Companies, Inc. (NYSE: RKT). Each company is a separate legal entity operated and managed through its own management and governance structure as required by its state of incorporation, and applicable legal and regulatory requirements.

© 2000 - 2021 Rocket Mortgage, LLC All rights reserved. Lending services provided by Rocket Mortgage, LLC, a subsidiary of Rocket Companies, Inc. (NYSE: RKT). 

1Your client’s participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of their credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of the credit request, if the loan fails to close for a reason outside of Rocket Mortgage's control, or if the client no longer wants to proceed with the loan, their participation in the program will be discontinued. If the client’s eligibility in the program does not change and their mortgage loan does not close, they will receive $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. This is not a commitment to lend. Additional conditions or exclusions may apply.

2Overnight Underwrite Verified Approval program is based on an underwriter’s comprehensive analysis of a client’s qualifying information. Client must submit all required/requested loan information by 7:00 p.m. in the client's local time. Failure to qualify for the loan for any reason will automatically terminate participation in the offer. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Client will receive a Verified Approval Letter (VAL) by 9:00 a.m. in the client's local time the next business day. Offer excludes Rocket Pro TPO loans, Charles Schwab products, relocation products, jumbo products and loans for self-employed applicants. Offer expires April 5, 2022. Additional conditions or exclusions may apply. Offer is nontransferable. Offer may not be redeemed for cash or credit. Offer cannot be retroactively applied to previously closed loans or loans already in process. Rocket Mortgage reserves the right to cancel or modify this offer at any time. Offer may not be used with any other discounts or promotions. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. This is not a commitment to lend. Additional restrictions/conditions may apply.

This offer is only available to clients referred by real estate agents using Rocket Pro Insight. The referred client will receive a closing cost credit on their Closing Disclosure of $2,000 for loan amounts between $50,000 and $199,999, $4,000 for loan amounts between $200,000 and $299,999, $6,000 for loan amounts between $300,000 and $399,999, $8,000 for loan amounts between $400,000 and $499,999, and $10,000 for loan amounts in excess of $500,000. Valid on referrals received between April 23, 2021, and October 31, 2021. Cannot be retroactively applied to prior loans in process or to Charles Schwab, Relocation or jumbo products. This offer may not be redeemed for cash. This is not a commitment to lend. Additional restrictions/conditions may apply. Rocket Mortgage reserves the right to cancel the offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. By submitting any referral, you consent that this client has agreed to be contacted by Rocket Mortgage. Not valid with any other discount or promotion.

Sours: https://www.rocketproinsight.com
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Mortgage Pre-Approval Letter: The Complete Guide

What is a mortgage pre-approval letter?

A mortgage pre-approval letter is a document from a lender confirming their willingness to lend you a specified maximum amount of money.

A pre-approval letter impresses sellers and real estate agents because it shows you’re a serious buyer with the financial ability to move forward with a purchase.

Click here for today's mortgage rates.

A pre-approval can ultimately secure your dream home and save you money. An offer from someone who’s pre-approved is more valuable than one from a rival home buyer without a letter. It’s common for a seller to accept a lower offer from a pre-approved buyer over someone with no letter.

And remember, you don’t need to offer the maximum amount your letter indicates you can borrow. You should choose an amount you can comfortably afford to repay.

Differences Between “Pre-Qualified” and “Pre-Approved”

During your home search, a pre-approval letter will be a lot more meaningful to sellers — and a more powerful tool for getting you into your dream home. If you’re pre-approved, it means the mortgage lender has verified the financial information — like your credit history and debt-to-income ratio — provided in your mortgage loan application and confirmed your eligibility for the loan amount.

That’s because a pre-qualification or “prequal” is the lender’s best guess at your approval status based on your answer to a few questions over the phone or online.

Pros and Cons of Pre-Qualification

Pros of Pre-Qualification

Mortgage pre-qualification is a cheap (often free), quick and easy alternative to pre-approval. And it’s certainly better than having no letter from a lender.

Cons of Pre-Qualification

Because the lender takes your word for all the claims you make in your mortgage application and doesn’t verify them, a pre-qualification is no guarantee.

Pros and Cons of Pre-Approval

Pros of Pre-Approval

When you’re making an offer on a house, you’re far more likely to be successful if you’re pre-approved. Because the process for pre-approval is more complex, a seller considering your offer knows that a lender has already verified your financial situation and is prepared to lend you money to complete the purchase.

Cons of Pre-Approval

The process for pre-approval is much more complex. The lender will require supporting documentation from you and will independently verify the information you provide.

Indeed, pre-approval is very similar to a full application process with the exception of evaluating the property since you haven’t found that yet. Because of this, pre-approval gets much closer than pre-qualification to proving you qualify for the loan.

If you’re self-employed or have unusually complex finances, it’s especially important that you take the time to get pre-approved.

Many self-employed people overestimate their income. Lenders will use your adjusted gross income after expenses. For example, if you take in $100,000 per year, but write off $40,000, the lender will only use $60,000 to qualify. It’s better to discover these surprises before you get excited about a home to buy.

What kind of offer do sellers and real estate agents prefer?

There’s more to a home purchase offer than the amount. For sellers and realtors, these are the most attractive types of offer, ranked:

  1. All-cash offers
  2. Offers with a mortgage pre-approval letter
  3. Offers with a pre-qualification
  4. All other offers

If — all other things being equal — you are in competition with another prospective buyer who’s higher up on that list than you are, you may have to sweeten the deal by beating their offer with a higher offering price.

Speak with a mortgage specialist today.

Tips for Getting a Mortgage Pre-Approval Letter

When should you apply for pre-approval?

It’s best to apply for a pre-approval letter when you’re ready to start house hunting.

The Consumer Financial Protection Bureau (CFPB) explains why:

Lenders typically check your credit before issuing a pre-approval letter, and the letter may have an expiration date on it (typically 30 to 60 days). For these reasons, many people wait to get a pre-approval letter until they are ready to begin shopping seriously for a home. However, getting pre-approved early in the process can be a good way to spot potential issues in time to correct them.

In other words, if you’re self-employed or have other characteristics that might take a lender a while to get its head around, you might want to ask for your pre-approval letter early in the homebuying process.

Pre-approval requirements will vary by lender

Every lender sets its own policies for how long a letter is valid or how much it costs to get one.

As a result, you should shop around for your pre-approval letter. Ask lenders upfront what their policies are, including:

  1. How much it will cost (some lenders charge an “application fee”)
  2. How long it will remain valid
  3. Cost of renewing it if it expires before you’ve found your new home
  4. What documents you will need to supply (so you can get them ready in advance)

You don’t have to use the lender who issued your pre-approval letter

Once you’ve found the home you want and have agreed on a purchase, you don’t have to go with the lender who issued your letter. Feel free to shop around for the best available deal.

In fact, you should shop around because the picture might change once the home is known. And the only way to effectively compare loan offers is to get in loan estimates (standardized documents lenders must by law send to all successful applicants) and examine them side by side. Only those provide the level of detail you need to be sure you’re getting an excellent deal.

That said, you’ll probably want a loan estimate from the lender that issued your letter — and it might be the best deal. But a mortgage pre-approval letter does not commit you in any way.

Ready to buy your dream home? Start here.

What’s included in a mortgage pre-approval letter?

Pretty much all pre-approval letters will include the same key information. That includes:

  1. Loan program: Whether you’re getting a conventional, jumbo, FHA, VA, USDA, or some rarer type of mortgage.
  2. Loan type: Is it a fixed-rate or adjustable-rate mortgage (ARM)? Will it last 30 years, 15 years or some other term?
  3. Amount of the loan: This is the maximum sum you can borrow.
  4. Maximum purchase price: The loan amount plus your down payment.
  5. Qualified interest rate: The mortgage rate the lender is willing to charge you.
  6. How long the offer will last: The date on which the letter expires.

It’s important to note that your pre-approval letter isn’t actually a mortgage offer. And there are rare circumstances in which it could lapse even while it remains in-date.

For example, if you run up a lot of expenses on your credit cards, you’ll likely do severe damage to your credit score. Or if mortgage rates suddenly shoot up, you won’t be able to afford to borrow as much.

In those circumstances — and a few others — it’s possible for your pre-approval letter to be rendered invalid. But that happens rarely.

5 Tips to Help You Get Preapproved for a Mortgage

It’s up to each lender to decide what documentation it requires from you to issue a pre-approval letter. But pretty much all of them will require the following, which must be the most recent possible:

  1. Proof of assets. Bank statements for checking and savings accounts, broker statements for investment portfolios, and any other documents that show your assets.
  2. Good credit. You won’t be expected to document this because the lender will run its own checks.
  3. Proof of income. Paystubs, W2s and sometimes tax returns. It’s more challenging for self-employed people to prove their income and they may need to provide a range of documents.
  4. Employment. Your paystubs help but you may require a letter from your employer confirming your length of service and that you’re still on the payroll.
  5. Identification. By law, lenders must confirm that you are who you say you are. A government-issued photo ID may be enough but expect to show more if the lender has any grounds to suspect you aren’t who you say you are.

These are the minimum requirements. A lender can ask for any documentation it wants to satisfy itself as to your suitability as a borrower.

What’s a good credit score to buy a home?

When buying a home, you want a credit score as high as you can get it.

If you’re buying an expensive home and need an outsized mortgage (a “jumbo loan”), you’ll likely need a FICO credit score of at least 700 — and considerably higher if you want a low rate.

But, at the other end of the scale, some lenders require only a 580 score for FHA and VA loans. And if you make a down payment of 10%, you may be able to get an FHA loan when your score’s down at 500. Some other programs and lenders look for minimum scores of 620 or 640.

So “good” credit varies hugely depending on the loan program. But one fact applies across the board: The higher your score, the lower the mortgage rate you’re likely to pay.

Start your home buying journey here.

FAQs

Does a pre-approval letter guarantee a home loan?

No. Even a mortgage offer doesn’t absolutely guarantee one. If your credit score drops dramatically, if you become unemployed or if the basis of your application materially changes, a lender can pull or amend your offer right up until closing.

But lenders want your purchase to proceed smoothly as much as you do so it’s rare for them to pull an offer without very good cause.

Does pre-approval mean I’m committing to a lender?

No, you can and should comparison shop among several lenders once you’ve found the home you want to buy.

Can I buy a house for less than my pre-approval letter?

Yes! Your pre-approval letter shows the size loan that a bank is willing to give you but you should buy a home for a price you feel comfortable borrowing. The pre-approval indicates the upper end of your price range but feel free to shop below that.

Is a pre-approval letter required to make an offer?

Anyone can make an offer, pre-approval letter or no. But your offer is likely to be taken much more seriously by the seller and real estate agent if you have one.

Indeed, the seller might accept a lower offer with a pre-approval letter than from someone with only a pre-qualification letter or no letter at all. That’s because you’re much more likely to be able to close your purchase. Only all-cash buyers are in a stronger position than you.

Is a pre-approval letter binding?

Nope. A lender is required to honor a pre-approval letter and you are free to shop around for loans with other lenders once you’ve selected a house.

Should you get multiple pre-approval letters?

You can but there’s no reason to and there’s probably a cost to get each one.

Also, requesting more letters than you need might harm your credit score because many lenders carry out “hard” credit checks — sometimes called a “hard inquiry” — as part of the process, which inevitably impacts your credit report.

Instead of getting multiple pre-approval letters, talk through your needs with one of your preferred lender’s loan officers. If that lender doesn’t meet your expectations, shop around for better mortgage options.

How long does the pre-approval process take?

Some mortgage companies can turn around a pre-approval letter within a few business days but some of this will depend on you. If you have all your documentation prepared and ready to submit, you’ll receive your pre-approval that much faster. Similarly, if you are responsive to queries from the lender then the process will move quicker.

But even the most responsive applicants can expect the process to take a week or more if your application is less than straightforward. And a few unlucky people get mired in queries and requests for additional documentation for many weeks.

Click here for today's mortgage rates.

Peter Warden

MyMortgageInsider.com Contributor

Peter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.
Sours: https://mymortgageinsider.com/mortgage-pre-approval-letter-the-complete-guide/

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Rocket Mortgage Review for 2021


Rocket Mortgage rates

In 2020 — the most recent data available — Rocket mortgage rates were a little lower on average than some top competitors.

Average mortgage rates at major lenders

Rocket MortgageWells FargoFreedom MortgageUS Bank
Average 30-Year Interest Rate, 202013.20%3.62%2.92%3.61%
Median Total Loan Costs, 2020$4,610$3,370$3,340$3,500
Median Origination Fee, 2020$2,950$1,280$0$1,170

Of course, mortgage interest rates change frequently. And rates vary a lot by customer, too. Your own rate depends on factors like your credit score, down payment, loan type, and home price.

That means you shouldn’t take average rates (or advertised rates) at face value.

Instead, pick 3-5 lenders you’re interested in and get rate quotes from each one. Then compare the interest rates and fees you’re offered to see which lender can offer you the best deal.

Average rate and fee data are sourced from public records required by the Home Mortgage Disclosure Act (HMDA).

Check your new mortgage rate. Start here (Oct 21st, 2021)

Rocket Mortgage review for 2021

Rocket Mortgage describes itself this way: “If you don’t have the patience for banks and want a fast, convenient way to see your mortgage options, you should give Rocket Mortgage a try.”

So, is this all-digital lender really worth it? Its satisfaction scores suggest that current customers don’t have much to complain about.

Of course, we’d only recommend Rocket to those who are comfortable using its online application processes. The lender promises “expert advice when you need it” from its home loan experts. But the whole idea is that the system itself is so expert it will gently lead you through the entire experience.

And it helps if you’re a “safe” borrower — meaning Rocket tends to prefer homeowners with a decent credit score and reasonable debt-to-income ratio (DTI).

Having said that, the website does say this lender will entertain applications from those with scores as low as 580. These borrowers will be directed to FHA loans and may need to make a down payment of 10%.

You might find lower rates elsewhere, but it’s harder to find such an easy-to-use online application or higher customer satisfaction ratings. So if those things appeak to you, Rocket Mortgage just might make your shortlist.

Working with Rocket Mortgage

Rocket Mortgage offers rich online and mobile functionality.

It provides a secure environment where you can communicate with loan officers, upload documents, monitor your loan information, and access your closing documents.

In fact, if you really don’t want to talk to another person, you can opt to communicate via its Talk to Us page. But you always have the option to talk to a real live home loan expert over the phone.

Rocket Mortgage pre-approval

Your journey with Rocket Mortgage — or any other lender — should begin with a mortgage pre-approval.

A pre-approval letter shows real estate agents and home sellers you’re serious about buying and have financing in place to make an offer. Pre-approvals can also confirm your price range by showing how much you could borrow.

Rocket’s pre-approval process happens entirely online. You’ll need to provide some financial information, including your income, assets, and debts, along with supporting documents to verify these numbers.

Rocket’s underwriters will verify your financial information by checking your pay stubs, recent bank statements, and credit score.

This company says it can complete the pre-approval process in just 24 hours.

Rocket Mortgage eligibility

Rocket Mortgage underwriting guidelines aren’t too different from other mainstream lenders.  Your income, assets, credit report, and existing debts will all help determine whether you’d qualify for a mortgage loan.

Expect to need a credit score of at least 620 for a conventional loan and 580 for an FHA or VA mortgage.  

And your credit score isn’t everything.

The company will also calculate your debt-to-income ratio (DTI), a measure of your ability to repay the loan. Rocket suggests your DTI should not exceed 50%.

Rocket will guide you through the process of uploading financial documents including W2s, pay stubs, bank statements, and proof of assets such as IRA balances or other sources of supplemental income.

Mortgage qualifying is never an exact science. That’s why it’s important to shop around with a variety of lenders, especially if you’re a first-time home buyer.

Rocket Mortgage application process

Unlike other lenders — who may offer an online application but quickly transition you to an in-person or over-the-phone loan officer — Rocket’s process begins and ends online.

Rocket’s website or app can guide you to a specific loan product by asking a series of questions. Then it can guide you through the loan application and underwriting process.

You can reach out to a home loan expert if needed, but you could also finance your home without speaking to anyone at Rocket.

Even first-time homeowners who aren’t familiar with the borrowing process should be able to navigate Rocket Mortgage’s loan application. 

Rocket Mortgage customer service reviews

Rocket Mortgage may not always offer the lowest rates, but its customer satisfaction is a huge draw for many borrowers.

Quicken and Rocket have topped J.D. Power’s U.S. Primary Mortgage Origination Satisfaction Study for 11 years running, earning top scores in categories like application/approval process; communication; loan closing; and loan offerings.

In case you’re researching these results, Rocket Mortgage tends to be lumped in with Quicken Loans in customer satisfaction surveys.

Customer service reviews at major lenders

CFPB Complaints, 20204Complaints Per 100 Mortgages, 20205JD Power Satisfaction Score, 20206
Rocket Mortgage3910.03883/1,000
Wells Fargo5540.05840/1,000
Freedom Mortgage2880.04817/1,000
US Bank1580.03848/1,000

Unsurprisingly, Rocket and Quicken’s high satisfaction scores are reflected in low complaints.

Federal regulator the Consumer Financial Protection Bureau maintains a public, online database of consumer complaints against mortgage lenders. And in it, Quicken Loans has one of the lowest numbers of complaints — less than one per one hundred mortgages.

Mortgage loan products at Rocket Mortgage

Rocket Mortgage can offer the following loan options:

  • Fixed-rate mortgages (FRMs) — Most people choose a 30-year fixed-rate loan. But with Rocket’s YOURGage program, you can choose a term anywhere from 8 to 30 years
  • Adjustable-rate mortgages (ARMs) — These can be more affordable than fixed-rate mortgages at first, but they come with the risk of higher rates later. You can fix your rate for a period of 5, 7, or 10 years, after which it will move up and down with the market
  • FHA loans — Backed by the Federal Housing Administration, FHA loans are great for home buyers with imperfect credit and low down payments (minimum 3.5% of the purchase price). But they come with high monthly mortgage insurance payments
  • VA loans — Eligible service members, veterans, and surviving spouses can buy homes with no down payment, lower credit requirements, and no continuing mortgage insurance payments
  • Jumbo loans — Borrow up to $3 million, if Fannie Mae and Freddie Mac’s conforming loan caps are cramping your style

The big things Rocket doesn’t offer are construction loans, home equity loans, and USDA-backed loans.

USDA loans help rural home buyers and require no down payment. If you’re interested in this type of mortgage, you’ll need to check out some other lenders.

Refinancing with Rocket Mortgage

Homeowners who’d like to refinance for a lower rate or a shorter loan term can use any of the products above, assuming they qualify.

There are other good reasons to refinance, too. For example, ARM borrowers may want to refinance into a fixed-rate loan. Or an FHA borrower could refinance into a conventional loan to remove mortgage insurance payments.

Rocket customers can access most major refi programs, including:

  • FHA Streamline — A product designed specifically to help existing FHA homeowners access today’s lower rates without much hassle
  • VA IRRRL — This loan can refinance an existing VA loan into a new VA loan at a lower rate with low fees
  • Cash-out refinance — Replace your existing loan with a larger loan and keep the extra cash for home improvements, debt consolidation, or any other needs

Rocket does not offer home equity loans or home equity lines of credit (HELOCs). But for the right homeowner, cash-out refinancing can serve a similar purpose.

Is Rocket Mortgage the best lender for you?

Rocket Mortgage is one of the most popular mortgage companies in the U.S. That’s probably because it has stellar customer service reviews and a whole host of great online tools.

In other words, if you want to get a mortgage quickly and easily, Rocket is worth a look.

Just keep in mind that rates from any single company aren’t competitive for everyone.

Compare a Loan Estimate from Rocket Mortgage with a few other companies to be sure you’re getting the best possible deal.

Sours: https://themortgagereports.com/47791/rocket-mortgage-lender-review-rates-loans-credit-score
Agent Update - Verified Approval - Quicken Loans

A Guide To Prequalified Vs. Preapproved

When you're getting started with the home buying process, these are three very important points to keep in mind.

The Preapproval Process Is Quick

It doesn't take much longer to get preapproved than it does to get prequalified. And if you’re serious about becoming a homeowner, then you can skip straight to the Verified Approval process. There’s no need to get prequalified first if you know you’re ready to move forward with buying a home.

Getting preapproved is an essential first step, and can help you out in a competitive housing market. A preapproval letter shows that you’re a serious home buyer, and sellers will likely take your offer more seriously.

Plus, getting preapproved shows you the real cost of buying a home. It lets you know what you can realistically afford and what kind of home you can buy.

Save For A Higher Down Payment

If you’re not happy with the amount of money you’ve been preapproved for, you might want to spend more time saving for a down payment. A larger down payment will show lenders that you’re a stronger candidate for a mortgage because you have more skin in the game.

Besides requiring a minimum down payment, another thing lenders consider is your ability to afford the monthly payment, so you may improve how much you can be approved for by paying down debts to lower your debt-to-income (DTI) ratio.

Preapproval Can Reveal Credit Errors

Finally, getting preapproved for a mortgage can reveal any underlying credit issues you weren’t aware of. It can show you any errors that need to be addressed, as well as areas where you can work to improve your credit.

Knowing about and resolving any errors on your credit report is one of the biggest things you can do to help yourself. The reason for this is that depending on the error, your credit may be getting penalized for something that didn’t happen. Correcting errors is a big way to improve your score.

In order to correct errors on your credit report, it’ll be important to look at your report from each of the three bureaus individually. You can get that from AnnualCreditReport.com. Once you’ve done that, each bureau has individual procedures for reporting and handling errors. You’ll be able to start the process online.

Sours: https://rockethq.com/learn/home-buying/prequalified-vs-preapproved

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What Is a Verified Approval Letter—and How It Helps in a Competitive Market

“Congratulations, your offer was accepted!”

Those words are cause for celebration for every prospective homebuyer—and especially so when vying for a home in a hot housing market. Although there are factors when competing with other buyers that are beyond your control, there is one step that will give you an edge: Start your home search process by getting a Verified Approval Letter (VAL), an underwritten offer that shows sellers your financing is verified.

Buyers in 2021 are facing a market with low inventory and lots of competition. Any extra certainty helps.

Thankfully, in a time when buying a house feels daunting, the process of actually getting a VAL is relatively straightforward. With online tools like Rocket Mortgage® by Quicken Loans®, it’s easy to enter your information and connect accounts to share necessary documents. From there, it’s a quick process to connect with a Home Loan Expert who performs a full analysis of factors like credit scores, debt, income and employment status, then sends you on your way with a Verified Approval Letter so you can shop with confidence. Not to mention how helpful it can be to ask questions during a no-obligation conversation with a Home Loan Expert from America’s largest mortgage lender.

I can speak from personal experience with buying a home in a very hot 2020 market. Unlike when my husband and I purchased our first home several years ago in a buyer’s market, our experience in a seller’s market called for us to do more prep work to compete with multiple offers. From our very first meeting with our Realtor®, she made it clear that just being pre-approved may not be enough. She stressed the importance of taking extra steps to show sellers we were serious and ready to buy—before even touring a single home. One level above a pre-approval letter, a VAL signaled we meant business and put us on a more level playing field with prospective buyers who could make cash offers.

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Watch: Here's How You Negotiate an Offer for a Home Amid a Pandemic

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Unlike with a pre-qualification, getting a VAL requires pulling credit scores. However, we knew we’d have to take this step in our home buying process eventually, so the slight ding to our scores was a non-issue when compared to the benefits of the VAL. In a market where moving quickly is key, having these steps done ahead of time meant that there was no down time once we were ready to make an offer. With this pre-approval, we could show sellers, yes, we could afford homes up to a certain amount and, no, our financing wasn’t going to be an issue for closing.

I am grateful we took our agent’s advice to check this task off the list before looking at houses. We soon realized that houses would come and go in a single day in our market. If we found one we wanted, the last thing we needed to do was scramble to get a pre-approval letter. By getting a VAL in advance that is valid for 90 days, buyers can be confident they can be competitive when ready to make an offer.

At the same time, going through the pre-approval process helped us get a clearer picture of what we could afford. Although we couldn’t control the ever-changing mortgage rates and how that would affect our ultimate payments when we purchased a new home, we knew how much we would be approved to spend on a home. It also gave us a chance to assess our real comfort level with our budget, which led us to set our personal “max” below the pre-approval figure. With a VAL, the Rocket Mortgage® app makes it easy to customize your approval amount to match your desired offer amount, or adjust on the fly if this amount changes.

All the while, we were also preparing to sell our home—which, let me tell you, was a very different experience! In this position, we knew we could confidently expect a handful of competitive offers within days of listing our home. Again, our Realtor® counseled us to take into account whether a potential buyer had a pre-approval letter. We knew that if we were looking at two side-by-side offers for the same amount, the buyer who came with a locked-and-loaded VAL would win out.

After practicing patience and having a bit of luck, we were able to confidently make an offer on a home that checked all of our boxes. Even in a hot market, that one offer was all it took: Our bid backed by a pre-approval was accepted!

Although our lender still needed to consider the home’s appraisal value, condition and title before giving us the official approval, we were glad to know our finances weren’t going to hold up the process. When we turned around to list our first house, we were thrilled to get a number of offers within the first few days—and ultimately went with a buyer who had a pre-approval letter.

I can say from experience that buying a house in a competitive real estate market is an exercise in coping with a lot of unknowns. From waiting for the right house to hoping the seller will accept your offer, learning how to take deep, calming breaths is a helpful skill to have. With a Verified Approval Letter, though, you don’t just have to cross your fingers and hope for the best—you can actually give yourself an advantage.

– Emily Glover

Ready to get started? Rocket Mortgage® is ready to help. Tell us a little bit about your goals and we'll help you take the next step.

This content was paid for by an advertiser and created by the realtor.com advertising department. The realtor.com News & Insights editorial team was not involved in the creation of this content.

Related topics:Rocket Mortgage

Sours: https://www.realtor.com/sponsored/verified-approval-letter/


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