Getting pre-approved for a mortgage loan is possibly one of the best things you can do to help ensure you get the best shot at getting the home you want.
First things first; you’ll need to shop for a lender. You’re going to disclose a lot of personal financial information to your lender and you are going to rely on them for their guidance throughout the home process. You want to connect with a good lender who will take the time to explain each process and someone who understands your specific situation.
Your mortgage pre-approval sounds more complicated than it really is. It’s basically a promise from the lender that you qualify to borrow “X” amount of money at a specific interest rate that is subject to a property appraisal and other requirements.
When you are pre-approved it shows that the lender is confident that you can make a necessary down payment and your income is sufficient to cover mortgage payments.
Pre-approval is contingent on the value the property offers so the lender feels they have sufficient collateral in relation to the loan amount. Basically, the lender wants to assure that the home is appraised for an amount more than, or equal to, the purchase price.
Although a pre-approval letter is not necessary, it helps a seller feel more confident in moving forward with you.
The difference between the pre-approval process and the pre-qualification process is, during the pre-approval process the lender looks closely at your credit and verifies your income. During the pre-qualification, your information is not verified.
Keep in mind, though, that just because you have been pre-approved it does not guarantee your loan will be approved. Also, be aware the pre-approval letter is generally only valid for 60-90 days.
Before you do anything, check your credit report. This step gives you an idea of the type of loan you qualify for and more importantly if you find any errors on your report, you’ll have time to clear them before you start home shopping.
Obtaining pre-approval is quite simple, all you have to do is provide your lender the documentation that they require, which may include:
To help keep yourself organized, using document storage software like Google Drive or Dropbox will save you time when the lender asks you to send over your documents.
Having your finances in order removes a lot of risk from the home buying process, not just for the lender, but for you as well.
The home-buying process can be a bit confusing and the more prepared you are with organized files, pre-approvals, and pre-qualifications the easier the process will be for all parties involved.
Please contact us if you would like us to help you with your financing needs.
The Certo Team
55 N. Arizona Place Suite #103
Chandler, AZ 85225
602-429-6789