There’s nothing more frustrating than falling in love with a home and then discovering you can’t afford to buy it.
Consulting with a mortgage lender is the first step you should undertake in the home buying process. Almost all first-time buyers need a mortgage to finance their home purchase, so get prepared before you look.
When you’re armed with the knowledge of what you can afford, it focuses your search and allows you to make a move when you find a home you love.
What Is a Mortgage Pre-Approval?
Lenders offer borrowers either a pre-qualification letter or a pre-approval letter, but most REALTORS® recommend you get a pre-approval letter before you start home shopping.
A pre-qualification letter states the amount a lender thinks you’ll be able to borrow based on your income and credit profile without any actual documentation.
However, mortgage lending standards have tightened since the housing crisis, and all mortgage loans now require full documentation and verification of income and assets—so most sellers will only accept an offer from a buyer with a full pre-approval letter based on verified information.
Your home hunt will benefit with a pre-approval for two main reasons:
First, you’ll have completed the credit check and paperwork requirements for a mortgage, so you’ll know your ability to finalize a home purchase. If the lender finds a problem with your credit or an error on your credit report, you’ll have time to fix it before making an offer.
Second, since your documentation will already be in place, a mortgage pre-approval will likely speed up the process once you make an offer.
What to Expect From Your Mortgage Lender
The best lenders take a collaborative approach with borrowers and explain all your loan options. When your lender checks your credit report, they should give you feedback on how to improve your credit profile.
They should also offer recommendations on how to handle your money between the time you apply for a loan and settlement day.
Your mortgage lender should provide advice about when to lock in your loan rate and discuss the pros and cons of various loan programs.
What Your Mortgage Lender Expects From You
Your lender needs you to be honest about your finances and responsive to all requests for additional information, no matter how unimportant it may seem to you.The more cooperative you are with a lender, the easier the loan process will be.
You should be prepared with tax returns, W2s, bank statements, employer names and addresses, and your current landlord’s information.
Your lender will generate a mortgage approval based on your debt-to-income ratio and credit score, but you should also consider your budget and your own comfort level with the payment amount.
There’s no need to borrow the maximum amount you qualify for, particularly if you know you plan to spend money on items that don’t show up on your credit report. Your careful planning and preservation of your emergency fund are important for responsible, long-term homeownership.
If you or someone you know would like more information about the Pre Approval process, give me a call. I am here to help.
Source: Michele Lerner at www.realtor.com
Author:Cari Schwisow Phone: 360-878-5401 Dated: April 16th 2015 Views: 2,255 About Cari: I am pleased to be with RE/MAX Northwest, a highly respected and innovative real estate firm in Olym...
View our latest blog posts in your RSS reader. Click here to access.
RE/MAX Northwest real estate brokerages employ full time, highly productive, experienced and educated brokers focused on serving their real estate clients and communities at the highest possible level to create the best possible result...even in these rapidly changing times and economy. We provide accurate, detailed information, data and advice so that our clients make informed decisions. We're committed to life long relationships founded in integrity and mutual respect. We're here to help...at all stages in all situations.
It can be a little scary to check the markets right now, wouldn’t yo
"Cari helped us find our ideal home in Olympia in 2013. It took almost 6 months but she was very patient, helpful and insightful. 6 months! That was a lot of properties to drive to and see, a lot of houses in many different conditions. Cari never pushed a sale. She would just stand back and let us see things for ourselves, while being always there to answer questions or get answers for us. That, by itself, is invaluable help.
Now, in 2015, we were ready to sell and she helped us sell our house in record time. That meant the price she suggested was right on and the logistics she did (description, listing, flyers, marketing) superb. She also handled all the negotiations and other issues that arose, greatly reducing our stress levels. All the while, she was very professional and maintained her wonderful sense of humor through all the fray. She promised, she delivered, and we're very grateful"