Everything You Need To Know About Mortgage Pre-Approval
Posted by Justin Havre on Tuesday, October 3rd, 2017 at 4:08pm.
When you make an offer on a home, it's important to be as financially prepared as possible. Understanding the pre-approval process, how mortgage pre-approval can help you purchase a home and what you can do to get pre-approved can help you make a competitive offer when it's time to buy a home.
Difference Between Mortgage Pre-Qualification and Mortgage Pre-Approval
When you start working with a lender, one of the first things the lender may ask is whether or not you would like to be pre-qualified or pre-approved. Knowing the difference between these two statuses can help you make a smart decision.
Mortgage pre-qualification is a fast, easy process. To become pre-qualified, the buyer supplies the lender with financial information like income, money in savings, debt and so on. The mortgage lender uses this information to produce an amount that the buyer would be qualified to borrow.
Pre-qualification is not a promise for a mortgage. Some homebuyers get pre-qualified, make an offer on a home and later discover that they are not qualified for the loan amount that their lender originally stated. This can disrupt the home buying process and is a common reason that home purchases fall through.
Mortgage pre-approval is a longer, more thorough qualification process. To get pre-approved, the buyer may need to supply the lender with paperwork to back up their financial claims, including information about their credit, their income, and how much money they have saved for a down payment. The lender may also run a credit check. If all the information provided at the time of pre-approval remains true by the time the deal closes, it's much more likely that the buyer will be approved for the mortgage when the deal is finalized.
Why Get Pre-Approved
Buyers who go through the pre-approval process are often more competitive than buyers who are only pre-qualified. Because they are much more likely to get a loan, buyers who are pre-approved have an advantage over other buyers. This can be especially important for buyers who are on a tight budget and who don't have much room to negotiate.
When To Get Pre-Approved
Getting pre-approved helps home buyers determine several factors including:
- How much they can afford to pay for a house.
- Approximately how much their monthly payment will be if they do borrow the maximum amount.
In fact, knowing how much you can plan to spend on a house allows you to start looking at homes in specific neighborhoods at specific price ranges. For this reason, pre-approval is best done at the beginning of the home buying process, before looking at properties.
How To Get Pre-Approved
The first thing a home buyer must do in the process of getting pre-approved is to find a lender. Many people who search for a lender start by interviewing candidates one at a time. When you do this, ask potential lenders the questions you have about getting a mortgage for your future home, in Altadore Garrison or elsewhere. You may have questions pre-approval, documentation requirements, loan qualifications and other factors. Choose a lender who can answer your questions thoroughly and with whom you can communicate clearly.
Once you've found a lender, you'll need to supply your lender with information from a variety of sources. Having your paperwork prepared, like information about income and savings, can help you save time int he pre-approval process. Once you're pre-approved,
Contact Your Real Estate Professional
Real estate professionals can advise home buyers on the best actions to take to get approved for a mortgage. If you're a home buyer and you're thinking about taking the first steps to getting a mortgage, talk to your real estate professional for advice on getting started.