Applying for a mortgage can be an exciting and nerve-wracking experience. You’re one step closer…
Think You Can Skip the Pre-approval? Think Again.
Pre-Approval Equals Getting to Home Ownership
First time home buyer (or it’s been so long it seems like you are)? That’s got to be pretty exciting! Just imagine the cute flower pots out front, the colorful welcome mat inside the door, the open concept main floor, quartz counter tops, quiet master sanctuary…and everything else. But there’s one issue. You still have to buy the house!
But is that really such a big deal? After all, once you find the perfect home, you put down the right offer, and presto – home sweet home!
Not exactly. As nice as it would be, th
e process isn’t quite that simple.
Almost every home owner will follow a series of steps, each of which will take you closer to the goal of home ownership. But to get to that finish line a little faster, you might think about skipping a step here and there. I mean, if they are optional, why waste your time with those steps anyway?
One of these steps you may think about skipping is the pre-approval. If you know your price range, why not jump right in?
But no. If you think you can skip the pre-approval, think again.
Why You Need That Pre-approval
Pre-approval: This is the step where a lender reviews your finances – income, debts, assets, and whatnot – to see if you qualify for a mortgage, and for how much. Think of it as a pre-screening before you go out on your house hunt.
So if you skip the pre-approval process, you may know how much you can spend, but you won’t know how much you can actually borrow. That’s a key difference. And think of the disappointment when you find that perfect house, make an offer…and you can’t buy it because no one will lend you the amount you want!
Or here’s another scenario: your offers keep being rejected because you don’t have an official pre-approval letter.
That’s right. When you are pre-approved, the lender will give you a pre-approval letter. This shows the seller that you are serious about your offer, and that you have the potential financial backing to afford that house. This gives you a serious leg up on those buyers who are not pre-approved.
And one more reason to get pre-approved: real estate agents will be more willing to work with you. There are several reasons for this: they know that you are seriously in the market, they know the price range of homes to consider, and there is a better chance that your offer will be accepted because of that pre-approval letter.
You’re convinced. Pre-approval is worth it. So how do you get pre-approved? Here are the basic steps:
- First, you need to contact a mortgage broker. They will let you know what documents you need to collect. These will probably include pay stubs, bank statements, credit cards statements, and tax records. They will also check your credit score.
- Second – you get the required documents!
- If you haven’t already, schedule an appointment with the mortgage broker so that they can review your financial information and give you the low-down on what’s up.
- If everything is in order, the lender will let you know how much you are pre-approved for, and will give you a copy of your official documentation. Isn’t it great when a plan comes together?
- Armed with your pre-approval letter, it’s time to go house hunting. Have fun!
And One More Thing…
Being pre-approved does not necessarily mean you will qualify for a mortgage when the time comes. If, after being pre-approved, you change jobs, take on more debt, or lose an asset, a lender may decide not to lend you the amount of money you hoped for. So after being pre-approved, play it safe! Don’t change a thing, financially speaking.
If you are wanting to get into the home buying market either for the first time, or simply in a long time, contact MBA Mortgage. We have the experience, the know-how, and the drive to help you find the best house with the best terms.