What you need to know about Pre-Approvals
One of the first steps in home buying is getting pre-approved for a mortgage loan. It’s such an important step, so understanding what a pre-approval is and how it works for you is also important.
Basically, a pre-approval allows you to very important information and helps you understand your home-buying options and the amount you may be able to borrow to purchase your new home.
Another added benefit is that a pre-approval can help a seller feel more confident in your offer because it shows you’re serious about buying their house. Being able submit a pre-approval letter with your of offer gives you a better chance of your offer being accepted by the seller.
How does it work?
- During the pre-approval process, a lender will review the finances of the person(s) purchasing the property to determine what lender be willing to loan that person.
- Pre-approval requires proof of employment, assets, income tax returns, and a qualifying credit score.
- Pre-approval is based on the buyer’s FICO credit score, debt-to-income ratio (DTI), and other factors, depending on the type of loan.
- The lender will then provide a “pre-approval letter” to show how much money can potentially be borrowed. Having the pre-approval lets you know your buying power. It’s extremely important to understanding of your numbers before you start your home search or start the contracting process.
- Mortgage pre-approval letters are typically valid for 60 to 90 days
Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase a home in today’s market.