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When you are thinking about purchasing a home, or are already ready to purchase a home, what is the first thing you should do? Get a pre-approval!
What is a Pre-Approval?
A pre-approval is statement from a bank or mortgage broker letting you know how much of a loan you can take out to purchase a home. During the process, the loan officer will verify your income, assets, credit history, and any debt you may currently have. They will put your financial information through their system to determine how much of a loan you can qualify for. This is different from a pre-qualification. A pre-qualification typically does not include a credit check, employment verification, or automated underwriting. Often, buyers are pre-qualified for more than they are pre-approved for.
Why is a Pre-Approval Important?
It essentially establishes your budget. It help you save time by ensuring that you are only shopping for properties that you can actually get a loan on. Why waste time and money driving around looking at houses, and potentially falling in love with one, only to realize you don't qualify for a loan to purchase it?
A pre-approval is also required to make an offer on a home, so if you happen to find your dream home earlier than expected, and then you have to wait 3 to 4 days to get all of your financial documents in and reviewed, you may loose out on the property. If you think a home is great and is a good buy, likely other people will as well!
There is no obligation to the buyer to move forward with the lender after getting a pre-approval, and there is no cost to get one! Let us know if you would like a recommendation on a loan officer, or how we can help you explore your financial options as a buyer!