Why Get Pre-Approved?
In this blog post, we’ll break down the importance of pre-approval, how it works, and why it’s crucial for your home buying journey. To get a deeper dive into the pre-approval process, check out the video above with my friend, Shannon, a Loan Officer at RiverHills Bank. We discuss the step-by-step process of why getting pre-approved before house hunting is essential.
With my friend, Shannon Loan Officer with RiverHills Bank. We discuss the process step-by-step of why getting pre-approved before house hunting is important.
Getting excited about buying a home is completely understandable! It’s a big step and a thrilling journey. However, before you start dreaming about your perfect backyard or envisioning your dream kitchen, there’s one essential step you should take: getting pre-approved for a mortgage.
Knowing your exact budget will give you a good foundation when house hunting. With pre-approval in hand, you can efficiently search online for homes within your price range. Plus, when it’s time to see homes in person, you’ll save time by avoiding properties that are out of your budget. Don’t waste time driving to houses you can’t afford. The smartest first step in your home buying journey is getting pre-approved.
Find out what makes up a Monthly Mortgage Payment. Shannon states she likes to pre-approve you on what you can afford monthly not only the purchase price, so you can stay within the budget you feel comfortable in.
What is pre-approval?
Pre-approval is essentially a lender’s commitment to loan you a specific amount of money to purchase a home. It’s like having a budget for your house hunt. This process involves providing your lender with financial information, including income, assets, and debts. Once reviewed, your lender like Shannon will determine the maximum amount you are qualified to borrow.
Why Getting Pre-Approved is so important?
Knowing Your Budget: Understanding your price range upfront is crucial. You don’t want to fall in love with a house only to find out it’s out of your budget. Pre-approval gives you a clear picture of what you can afford, helping you focus your search on properties within your reach.
Stronger Offers: When you make an offer on a home, sellers prefer buyers who are pre-approved. It shows you’re serious about buying and have the financial capability to close the deal. Pre-approved offers are often more competitive and can increase your chances of having your offer accepted.
Time-Saving: House hunting can be time-consuming, especially if you’re constantly second-guessing your budget. With pre-approval, you can efficiently eliminate homes that don’t fit your financial goals, saving you valuable time and energy.
Streamlined Closing Process: The pre-approval process involves gathering essential financial documents. By completing this step early on, you’ll have much of the paperwork ready when it’s time to close on your home, making the process smoother and less stressful. Again, check out what Shannon has to say about the process in the video.
Pre-Qualification
Typically, a pre-qualification is a preliminary estimate of how much you might be able to borrow based on self-reported financial information. It’s a less formal process and doesn’t involve a deep dive into your financial history.
Pre-Approval
Pre-approval, involves a thorough review of your financial documents by an underwriter. This process is more rigorous and provides a more accurate picture of your borrowing capacity.
Shannon said she collects detailed financial information, such as pay stubs, W-2s, and bank statements, to build a comprehensive profile. This information is then submitted to an underwriter, who carefully examines the borrower’s credit, income, and debt to determine their eligibility for a mortgage. This creates a stronger offer when you submit a purchase contract for the home. The seller will see you have had an underwriter approve you for a certain amount.
How does the pre-approval process work?
To get pre-approved, you’ll typically need to provide your lender with the following information:
Income verification (pay stubs, W-2s)
Asset documentation (bank statements, investment accounts)
Debt information (credit card balances, student loans)
Your lender will then analyze your financial information to determine your eligibility for a mortgage and the loan amount you qualify for.
Ready to start your home buying journey? Getting pre-approved is the first step towards homeownership. By taking this step, you’ll be well-prepared to find your dream home and make a confident offer.
There are more great videos for home buying and educating you on the loan process. Follow My Channel, YouTube: Sarah Rose Realtor
Remember, buying a home is a big decision, and being prepared is key. Let Me assist you in navigating the process and find the perfect home for you!
