Mortgages can be daunting, but getting pre-approval may make your hunt for a new home much smoother.
Want to know the fastest way to land your dream house once you find it? Have a mortgage pre-approval letter ready before your eyes land on the listing.
While getting pre-approved before you buy your house takes preparation and patience, being pre-approved can make you more attractive to sellers and speed up the home-buying process, which is great when you’re competing with other buyers in a hot market.
Most agents require buyers to get pre-qualified to purchase a home — but don’t confuse this process with pre-approval. Pre-qualification is a much quicker process, but you’re given the OK based on information that you provide, so nothing is official when it comes to your eventual loan.
Although unofficial, a pre-qualification letter goes a long way in both protecting the seller in considering offers made by a strong buyer, but also ensures the buyer is aware of their financial position.
A mortgage pre-approval gives you an actual dollar amount that your mortgage is approved for, and might even give you a sense of the interest rate you’ll be charged. The process takes a little longer than pre-qualification and probes deeper into your credit, but it gives you extra time to address unexpected entries on your credit reports.
You’ll also get a conditional commitment to the loan amount, which will give you an advantage with sellers, and you’ll be able to set your sights on homes within your reach. Any offer you make won’t have to be contingent on financing since you’ve already got that covered!
You need to know how much you can spend before spending it. Sellers and brokers want to know you’re qualified to purchase their house or apartment before they will even consider beginning negotiations. The pre-approval will give the buyer a good-faith estimate as to what closing costs will be for the transaction, and these numbers will be used to display the financial picture.
Use Trulia to find a local mortgage lender who can help you get pre-approved. The lender will perform a preliminary review and determine your loan qualifications. The lender will ask many questions and request a variety of documents to build a financial picture. They will focus on your credit score and what impacted that score – do you have any debts? Whether it be a few dollars remaining balance on a credit score or the payments you have left to make on your car, the lender will ask for any and all information, and potentially advise you to close out those debts before proceeding.