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Why You Should Get Pre-Approved Before Starting Your House Hunt
Looking to buy a home? If you want your offer to be taken seriously, then you’ll want to consider getting pre-approved for a mortgage. A letter of pre-approval (not to be confused with pre-qualification) can give you a competitive advantage over other buyers who are also putting in their offers on a house. Read on to find out exactly what pre-approval means, how it differs from pre-qualification, and how to start the process today.
About Pre-Approval
The first step in a mortgage application occurs when the buyer contacts a lender and gives the lender information about his or her financial status. The lender uses this information to determine approximately how much the buyer would be eligible to borrow. This process is known as pre-qualification. When this step is complete, the borrower may request a letter from the lender which outlines the borrower’s potential to borrow money for a mortgage. Pre-approval, on the other hand, is the second step of the mortgage approval process.
To become pre-approved, the borrower must supply the lender with documentation to support his or her financial status. The lender runs a credit check on the borrower, and a formal application is filled out. Once this is done, the lender can supply the borrower with a letter of pre-approval that outlines how much the borrower would be authorized to borrow.
Why Pre-Approval Is Better Than Pre-Qualification
Here are just a few of the reasons why pre-approval is better than pre-qualification:
- Buyers know what they can afford to offer. Although pre-approval is not technically a loan approval, it can be a good representation of a borrower’s ability to get a loan when the time comes. Getting pre-approved enables the borrower to shop for homes with confidence in his or her ability to put down an offer for the house and get a loan when it’s needed.
- Buyers know their budget. Once a home buyer is pre-approved, he or she can know definitively which homes fall into his or her price range, and which homes are too expensive.
- Home sellers may take the buyer’s offer seriously. Pre-approval is an important step in the loan application process. Home sellers may take buyers more seriously if they are pre-approved for a loan. This is basically a necessity in competitive markets if you want to be considered.
How To Get Started With Pre-Approval
To get pre-approved for a mortgage, contact a loan originator. Banks, mortgage brokers and credit unions are all good places to start when seeking a mortgage.
To get pre-approved, you’ll need to supply documentation like tax returns, proof of income, investment information, statements from retirement accounts and other information.
Talk to your mortgage broker to find out exactly what documentation must be supplied to get pre-approved.
Is It Possible To Make An Offer For a HomeWithout Getting Pre-Approved?
It is possible to make an offer for a home without getting pre-approved. However, because pre-approval is so important in the home-buying process, many real estate agents will not work with buyers until they have a letter of pre-approval, and an offer on a home is much weaker without a letter of pre-approval. Getting pre-approved simply makes the home buying process go more smoothly.
Your Loan Officer Can Help
If you have questions, your real estate agent can offer more information about the pre-approval process and the advantages of getting pre-approved.
Ready to Get Pre-Approved Today?
At Loanatik, we make the process of getting pre-approved and into your dream home quick and easy. Simply click here to get started online and show sellers you’re ready to buy in minutes. Or you can talk directly to a Home Loan Specialist by calling 480-588-0397.
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