What Is Mortgage Pre-approval?

A mortgage pre-approval will provide you with an idea of the kind of home loan you can get from a lender during the homebuying process.

Lenders will look at your financial situation to help determine which loan and how much you can qualify for so you can buy a home. When you find a home you would like to make an offer on, you can show the seller your pre-approval. Many sellers and real estate agents see those with pre-approvals as serious buyers.

Getting a pre-approval before starting the homebuying journey can be helpful as it will show potential buyers how much home they will be able to afford. This will help you focus on homes in your price range and make your offers more competitive. And when you find a home, you won’t need to wait to get a mortgage.

You will also be able to plan for your monthly expenses as a pre-approval will show you the terms of the loan you could qualify for.

Pre-approvals tend to last about three months, giving you ample time to find a home before needing another pre-approval.

To get your pre-approval before joining the housing market, you can begin by starting an application online with a trusted lender.

Pre-approval and pre-qualification are terms that people use interchangeable, but they could be very different, depending on your lender.

Pre-qualifications give potential homebuyers an estimate of how much they can borrow when buying a home. Lenders don’t do a dive into borrower’s credit history or financial situation with a pre-qualification.

Potential homeowners will have an idea of how much they can borrow from a lender from a pre-qualification.

However, pre-qualifications tend to just be an estimate for borrowers to see and cannot always be used to make an offer on a home. Your pre-qualification could be very different from the loan you end up getting.

When you apply for a mortgage pre-approval, you will have to provide information to help give lenders a full picture of your financial situation. Lenders will consider all this information when determining your pre-approval. Here are some of the documents you will need to provide that lenders will review.

• Proof of income: Recent pay stubs or W-2 forms from the past two years will verify your employment and income history. This also is important in proving you will have the necessary funds to make monthly mortgage payments.

• List of assets: Bank statements, retirements funds and investment accounts are some of the assets that can show lenders you can make a down payment.

• Debt-to-income ratio: A debt-to-income ratio (DTI) is a percentage of how much a person’s income is tied up paying off debts. This will let a lender see how much a borrower can realistically spend on a monthly mortgage.

• Credit check: This will determine your creditworthiness, or how good you are at making your necessary payments. Credit checks can cause a slight dip in score.

You can get pre-approved with a trusted lender online in as little as five minutes.

Completing your online application will show you the terms and loan you qualify for. It will also connect you with a professional Loan Officer who can explain your pre-approval and answer any questions you may have.

Make sure you have all necessary information listed above to help smooth the application process.

Once you are pre-approved, you are ready to make an offer on your dream home. Getting a pre-approval before you enter the housing market puts you in a great position to plan for your future and find a home within your budget.

Knowing the terms of your loan allows you to more accurately plan for your future during the life of your loan. A pre-approval allows you to make a budget for each month, including the amount you will have to set aside for your mortgage.

This way you won’t end up getting a mortgage after finding a home and risk realizing your loan amount won’t cover the price of the property or end up being outbid as you wait for your loan.

To take advantage of everything a pre-approval offers, you can start an application online today!

^{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.}