Why Pre-Approval is a Gamechanger
How Getting Pre-Approved Benefits You As A Homebuyer
Steps To Get Pre-Approved For A Home Loan
If you are looking to buy a home, you may have already received pre-approval for a mortgage loan through a lender, or you are just starting out and are not pre-approved yet. If you're not sure what pre-approval is, what it does for you as a homeowner, or why it is so crucial, continue reading as we break down everything there is to know about one of the most important parts of your home search.
Pre-Qualification vs. Pre-Approval
Firstly, before you get pre-approved for a mortgage, you can also get pre-qualified. They sound very similar, but with some key differences that are important to understand as a prospective homeowner. Pre-qualification is far more simple than getting pre-approved and starts with you sharing your debt, income, assets, etc. with your lender in order for them to get an idea of what kind of a loan they would be able and willing to give you. This step requires no proof or documentation, and can be conducted in person, or online. Pre-approval is the next step further and involves you submitting a mortgage application, and then providing your lender the relevant information to conduct a check on your credit, and a thorough review of your financial situation. Once that is complete, you will have a much more comprehensive idea of what kind of home you can buy with a loan through your lender.
Advantages of Getting Pre-Approved
There are many advantages that being pre-approved provides you when searching for houses. Firstly, it provides you with a realistic look at what houses you should be looking at during your home search. Imagine finding a house that you absolutely love, only to realize later that the home is out of your realistic expectations once you submit a mortgage application. Secondly, having a pre-approval helps you out as a buyer significantly when presenting an offer on a home to the sellers. Being pre-approved shows the sellers that you are serious about your offer, and that you have shown the pertinent financial information to prove that you have the ability to buy that house.
Steps to Getting Pre-Approved
So how do you actually get pre-approved for a mortgage? Here are five things you will need to provide to your bank or lender in order to get pre-approved.
- Proof of Income: Firstly, you will need to provide proof of income to your lender in the form of W-2 statements and tax returns, usually from the past two years. You will also need to show any additional income sources.
- Proof of Assets: Next, the bank or lender will want to take a look at your financial accounts like your bank account, and your investment accounts. These will prove to the lender that you have enough assets for a down payment, etc.
- Your Credit Score: Lenders will also want to take a look at your credit history and score, the higher your credit score is, the more favorable your loan will be. Low credit scores will have you dealing with higher monthly interest rates, which will cost you over time.
- Verification of Employment: In addition to pay stubs, your lender will likely call your employer to verify that you are employed, and to verify your salary as well. If you own your own business, you will have to provide additional information about your business.
- Additional Documents: You will also need to provide some personal information and documents when getting pre-approved, like your driver's license, social security number, etc.
What Our Agents Have to Say About Getting Pre-Approved
"Some people simply go back through their current lender when getting pre-approved for their next purchase. It's the best time to check with solid, local preferred lenders to ensure they are getting the best rate and no hidden costs. Usually seasoned listing agents recognize solid local lenders when reviewing offers with their sellers, and that may help give the buyer a leg up when there are competing offers."
"Pre-approval is the foundation of buying a home. It's hard to look for something when you don't know if you can afford it. Also, you don't want to have any surprises on your credit. I'd hate for you to fall in love with a home when you are not sure what your buying power is. "
Contact Us to Learn More About Pre-Approval and Start Your Home Search
When you are looking to buy a home, being pre-approved is one of the most important steps you can take toward homeownership. Another important step on the path to homeownership is working with the right agent. Our team has been in the business for over 20 years, and we know what it takes to win for our clients time and time again. If you are looking to buy or sell a home in the near future, contact a member of the Ask Cathy team by calling us at (816) 268-4033 or by filling out the contact form below!