As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.
If you’re thinking about buying a home anytime soon, getting proof of approval from your lender is a great way to get started. But how do different lenders calculate how much you’re approved for? How accurate is your approved loan amount? Whether you’re a first-time home buyer or an experienced homeowner, these questions are bound to come up.
Luckily, Rocket Mortgage℠ by Quicken Loans lets you get approved online. You can get a real, customizable mortgage solution based on your unique financial situation.
But how does that work, and how does Rocket Mortgage’s approval differ from a preapproval or a prequalification that other lenders provide?
Review: Approval vs. Preapproval or Prequalification
Before we get into the details, let’s review. With a prequalification, you provide some financial information and your credit is pulled, but income and asset documentation isn’t verified and your loan approval amount may not be very accurate. Preapproval is a level above prequalification because it involves looking at your credit report and asking for an estimate of your income and savings.
What Makes Rocket Mortgage So Accurate
Rocket Mortgage’s approval is light-years ahead of a prequalification or a preapproval because it makes no assumptions about your financial profile. Normally, mortgage lenders ask for your monthly income and the amount of savings or funds you have during the preapproval process so they can estimate how much home you can afford. This estimate is often littered with assumptions about your credit profile.
Rocket Mortgage, on the other hand, is more accurate because it lets you share your live bank account balance and income information online in real time. Using our network of trusted sources, you can effortlessly import all the financial information you need. It’s less work than downloading or uploading pay stubs, W-2s or PDFs from a separate website, or entering all that info manually. In this way, Rocket Mortgage verifies your income, assets and credit almost instantly via its direct interface with government underwriting systems, and gives you as accurate a mortgage solution as possible. This can help you be more confident when you’re ready to make an offer on a home and when you get further down the home buying path.
How Rocket Mortgage Calculates Your Loan Amount
Like any mortgage lender, Rocket Mortgage makes a calculation based on the financial information you provide and import to determine the size of home loan you qualify for. This calculation is based on your income, your credit report, and the amount of money you have saved in bank accounts or other types of assets. Good credit, consistent income and plenty of savings will help you meet your target home price – not to mention a nice low interest rate.
But here’s a key detail to know about how Rocket Mortgage works: It also asks you how much money from those assets you’re willing to put toward your purchase. That amount must cover not only your down payment, but also your closing costs, such as taxes and fees for your appraisal and real estate agent.
Like many home buyers, you may think having a lot of money in the bank counts toward your approval amount. But in reality, Rocket Mortgage will only calculate your approval amount based on the amount you’re willing to spend from your assets. If you’re not happy with the home price Rocket Mortgage approves you for, you can always go back and enter a higher amount to see if you qualify for a larger loan.
In general, the more money you’re willing to put toward your home purchase, the higher the loan amount you’ll get approved for.
So whether you already have a home picked out or you’re just getting started in your search, start your approval process with Rocket Mortgage. It’s a fast and simple way to get approved online.
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