Most people don’t pay cash for their houses, so they need to talk to their lender about borrowing enough to buy the home they want. If you’re wondering how to get preapproved for a mortgage, you certainly aren’t alone in your concerns. Getting preapproved for a mortgage is an important way to start your home buying journey off on the right foot. When you walk into a real estate office and want to see houses, your agent will be pleased to see that you have a preapproval letter in hand. It gives you a ber bargaining position with the seller, and some sellers don’t even want to see offers that don’t have a preapproval letter attached. So, how do you get approved? There are several things to consider.
Which lender should you talk to?
Working with a lender is an important part of the home buying process, helping you understand what you can afford and the information you’ll need to provide for full approval. If you already have an established relationship with your bank, they may be the right lender to work with. If you’re new to the area or you don’t feel your bank will offer you the rates you’re looking for, there are other options. Banks, credit unions, and mortgage companies are all places where you can get a mortgage loan, and you may want to talk to more than one lender to help ensure that you receive the best rate and terms possible. What you can get can really vary from one lender to another.
What documentation do you need?
To get preapproved for a mortgage, you’ll need documentation. The lender will want proof of your identity, and will ask you about the job you have, how long you’ve been employed, and how much money you make. Your debts matter, as well. People who make good money but have a lot of debt might not be good candidates for a mortgage, and can have a harder time getting a preapproval. Bring everything you can think of that will help the lender, such as proof of income, bank statements, and proof of identification, like a driver’s license and your social security number. You should also know what property you want to buy, or at least how much money you’d like to qualify for, so the lender has something to go on when it comes to the amount you want to borrow to buy a home.
Does preapproval guarantee that you’ll get the mortgage?
Getting preapproved and having that letter in your hand is a great feeling, but you should remember that it doesn’t guarantee your actual mortgage. A preapproval simply means that you look like a good candidate for the money you want to borrow, based on what you have provided to the lender. There will be much more documentation required before a final approval is granted, and the loan file will have to go through underwriting, as well. There may be conditions or problems that show up at that time, that didn’t present themselves at the preapproval stage. The more you can provide good documentation quickly when your lender asks, the better off you’ll be when it comes to keeping the approval process moving forward.
Do you have high credit?
If you want to buy a home, you should make sure your credit is as good as possible. The lender may or may not check your credit at the preapproval stage. Some lenders do, and others ask you how your credit is and go by what you tell them. In some places that’s called a prequalification, and is different from a preapproval. No matter what term is used, though, you should be prepared for the lender to check your credit. If you don’t know what your credit is like, you’ll want to get your free credit report and see if there are problems. Sometimes credit reports are inaccurate, and if there are mistakes it’s important that you get them corrected before you apply for a preapproval.
How much house do you want to buy?
You want to make sure you know how much home you can afford, so you don’t end up falling in love with something that’s out of your price range. Be honest about how much house you want to buy. You can also talk with the lender about determining the maximum mortgage you can afford. Then you know the price of the house you can purchase, by adding up the mortgage and the money you have for a down payment. If you want to borrow below what you can actually afford, you can ask the lender for a preapproval letter for a specific amount once you find a house you want to offer on. Then the letter will say that you’re preapproved for the purchase price of the house.
No matter how many lenders you talk to or what your credit is like, getting preapproved for a mortgage is a relatively straightforward process. It’s also well worth doing. Not only does it give you peace of mind, but it allows you to show the seller that you’re serious about the house when you put in an offer. That can lead to the seller taking your offer more seriously, giving you a better chance of getting the house. Then you can complete the process of getting your mortgage, so you can close on the house and get moved in.
2 Point Highlight
Getting preapproved for a mortgage is an important way to start your home buying journey off on the right foot.
You want to make sure you know how much home you can afford, so you don’t end up falling in love with something that’s out of your price range.
