If you are planning on getting a mortgage to purchase a home, getting pre-approved is a good idea.
It’s important to note that a pre-approval is not the same as a pre-qualification letter. A pre-qualification letter is simply a rough estimate of how much you can afford based on a quick review of your finances - it is not a guarantee that you will get approved for a loan.
The pre-approval process involves completing a mortgage application, either online, over the phone or in person with your mortgage lender. You will need to provide your social security number so a credit check can be performed. You’ll also need to provide your lender with a variety of information regarding your credit worthiness: a list of assets, any debts, proof of income and employment history, past addresses, and other critical details. A pre-approval is more valuable than a pre-qualification letter because, to home sellers, you are a more serious buyer with your finances already in order.
One advantage of getting pre-approved for a mortgage is the possibility of locking in your interest rate and the terms of your loan. Another advantage is the ability to search confidently in the right price range. Knowing exactly how much you can finance will eliminate the heartbreak of falling in love with a home you can’t afford. Additionally, the loan process often moves faster. The closing can usually happen more quickly because the lender already has most of your information in their system. Once you’ve found the home of your dreams, and signed a purchase and sales agreement with the seller, an appraisal is ordered and your file moves to underwriting for final loan commitment.
If you are unsure if you will qualify for a mortgage, going through the pre-approval process in advance of a serious home search can help you identify any issues with your credit and give you time to fix them. Otherwise, because a pre-approval is typically only valid for 60 to 90 days, you should wait to apply until you are ready to begin your home buying journey.
If you need help selecting a lender, I can provide you with several lender names so that you can choose the one that best fits your needs. Contact me today to get the process started.
