Why Mortgage Pre-approval is so Important
When buying a home, getting pre-approved for a mortgage is a necessary step to take in order to ensure a smooth buying experience. It will help establish yourself as a more serious buyer and shorten the closing process.
What is a Pre-approval
A mortgage pre-approval is a document that states how much money a lender is willing to borrow to buy a home. Getting pre-approval shows that the lender is willing to move forward in giving you a loan. The pre-approval process is done by looking at your financial history to decide how much you can afford. Once you receive a pre-approved loan it is typically valid for 60 to 90 days.
It is important to note the difference between pre-approval and pre-qualification. A pre-qualification indicates the loan amount that you will likely be approved for. It is a less involved process, only taking a few business days to complete, compared to the pre-approval process; however, you will still need to provide financial information.
Benefits of Pre-Approval
Establishes Yourself as a Serious Buyer
Getting pre-approved shows home sellers that you are a serious candidate to buy a home. When making an offer, home sellers want to be sure that you will follow through with the deal so having pre-approval proves you are financially capable of closing the deal. If a seller is receiving multiple offers, then choosing the buyer with pre-approval is a lot less risky.
Knowing the loan amount you are approved for beforehand will help save you time when house hunting. You will have a good idea of what you can afford so you can look at homes in your price range.
It will also save you time on the back end since your lender already has your financial information. On average, it takes around 50 days to close; however, if you are pre-approved then you are already a few steps ahead.
How to get a Mortgage Pre-Approved
In order to get a mortgage pre-approved, you must first choose a lender. It is beneficial to shop around so that you can compare rates and lending terms.
Each lender will need to collect specific financial information from you such as your social security number so that they can check your credit. They will also need to look at your income information including your W-2’s and pay stubs. Having this information together before you meet with your lender will further help the process run smoothly.
Buying a home can be an overwhelming process, especially for first-time buyers. Getting your mortgage pre-approved will take some of the stress out of the process. If you are in the market to buy a home, contact The Gilson-Sikora Real Estate Group.