What Is a Mortgage Loan Pre-Approval?
The first step you should take in the home purchase process is to get pre approved for a mortgage. A mortgage loan pre-approval will allow you to know how much you are qualified for and will make the entire home shopping process much more streamlined. Understanding what a mortgage loan pre-approval will guide you in the home buying process.
What is a Mortgage Loan Pre-Approval?
A pre-approval is a preliminary loan approval from a mortgage lender. Pre-approvals have contingencies that must be met by both the borrower and the subject property. You cannot get pre approved for a mortgage if the lender cannot verify the information originally stated on the application or if the subject property does not meet the lending requirements.
What Should You Do With a Pre-approval?
Take the following steps once you get pre approved for a mortgage from your lender:
- Read over all stipulations and conditions of the loan. Make sure you can satisfy all of the requirements listed.
- Begin collecting documentation for you lender.
- Find a realtor and discuss your budget for a house.
- Start looking for houses within your price range.
Why should You Get Pre Approved for a Mortgage?
- It saves time. You don’t want to waste time looking at homes if you don’t qualify for a mortgage,
- You only look at homes within your price range. You don’t want to fall in love with homes you cannot afford.
- Makes a competitive offer. Sellers will take you seriously if you submit an offer with a pre-approval.
- Smaller chance of losing your earnest money deposit. Many buyers lose their earnest money deposit if they can’t find financing and the contract falls through.
- Saves time during escrow. Being pre-approved with a lender will make the escrow process much smoother and help your loan close on time.
A mortgage loan pre-approval is a proactive start to your home search. It will allow you to properly budget for your home purchase. It will also remove the uncertainty and fear that can be associated with buying a home. Get a mortgage loan pre-approval before shopping for houses so you feel secure in your decision to buy a home.