If you’ve read any tips for homebuyers then chances are you’ve heard that you need to get pre-approved for a mortgage loan. It is one of the first steps when it comes to starting your home search if you are serious about finding a place to purchase. The question is – how exactly do you get the pre-approval?
Here are the steps you need to take to get pre-approved for a mortgage loan and the most important facts you need to get you there. In a competitive real estate market, if you aren’t pre-approved for a mortgage loan when you make an offer, then you don’t stand a chance.
What is a mortgage loan pre-approval?
It’s a written statement from a lender stating that you would qualify for a particular loan under your current qualifications and the lender’s guidelines. A pre-approval letter is good for 60-90 days and the loan amount is based on your income and credit information.
A pre-approval letter is not an offer to lend, a commitment to make a loan, or a guarantee of specific rates or terms. It is however an accurate idea of how much home you can afford. And most importantly as a homebuyer, it’s proof to sellers that you have done your homework and are serious about purchasing.
Pre-approval vs. Pre-qualification
Getting pre-approved and getting pre-qualified are two very different things and only the pre-approval holds much weight as a potential homebuyer. A pre-qualification does not go as in-depth into your finances as it does not include an analysis of your credit report. To be pre-qualified you simply give a lender an idea of your debt, income, and assets (no paperwork, just your word) and a lender can discuss your potential options.
Obtaining a pre-approval letter
First and foremost you need to choose a mortgage lender. Keep in mind that each lender has its own standards and processes for determining whether to grant a pre-approval letter. However, in general, you will have to complete an official mortgage application and supply the lender with all of your pertinent information.
Paperwork to present to your lender:
- Proof of income
- Proof of assets
- Proof of employment
- A good credit score
- Personal documentation i.e. copy of your driver’s license, Social Security number, and your signature on lots of paperwork!
If you have more questions about the mortgage loan process or need help finding a lender, team up with a First Team real estate agent. Search for an agent near you to find an expert in your neighborhood and secure your dream home today!