Mortgage pre approval is a process lenders use to assess how much you can borrow for a home and the loan terms they might offer you. It involves a more thorough investigation of your finances than prequalification, including an extensive hard credit check and other verification processes.
Be Preapproved with Multiple Lenders
Getting preapproved with more than one lender can help you find the best interest rate and fees. Plus, it gives you a chance to learn more about each lender and their staff so you can make an informed decision on who best meets your needs.
Mortgage preapproval can take several weeks, as your lender verifies your income and debts to guarantee you can afford the home. Once approved, you can begin looking for properties and making offers.
Your Financial History Will Be Verified
Before applying for a mortgage, you’ll have to provide personal information including employment history and assets. In addition, the lender will pull your credit report in order to confirm the accuracy of this information and that you can demonstrate proof of income.
Your credit score* will also be reviewed to help your lender assess how likely you are to pay off your mortgage on time and in full. If it’s low, it’s essential that you improve it before applying for a mortgage so that they feel more secure lending you money.
Additionally, you should clean up your credit history and delete any inaccurate information that could hurt your chances of receiving a mortgage. Doing this will boost your credit score and increase the likelihood that you will be accepted for one.
If you’re a first-time buyer, it’s especially essential to do this since you may not know how much you can afford. By doing so, you will be able to shop smarter and make stronger offers when searching for your dream home.
Once You’re Preapproved
Once approved, you’ll be given a letter that can be presented to potential sellers. This letter confirms that you have secured financing for your purchase and gives the seller confidence in knowing you are serious about completing the deal. Furthermore, having this document handy could expedite the process considerably.
Your letter should indicate how much money you have available for a down payment on a new home and give your real estate agent some insight into what price range to look in for houses that fit within budget. Once they know this information, they can begin searching for properties within that price range that best meet your requirements.
Getting Preapproved for More Than Your Target Home Price
With your preapproval letter in hand, you can begin looking for your dream home. Just make sure that the price range you set when receiving the letter remains within it; otherwise, your lender may be disappointed if you select a house that costs more than what was approved for.