Why You Should Get Pre-Approved for a Home Mortgage Loan?
If you are looking for a home, whether it is your first home or your tenth, you
will need to deal with a home mortgage loan sooner than later. Since you have to deal
with getting a mortgage anyway, it is a good idea to get pre-approved for the
mortgage you need before you begin shopping for a home.
The advantages of getting a pre-approved home mortgage loan
One major advantage of getting pre-approved for a home mortgage loan is that it gives
you a firm idea of how much you can borrow (or if you can borrow at all
especially after the subprime loan crisis, it is
harder
to obtain a home mortgage loan now). If you know how much you can borrow
and how much you have for a down payment, you can easily set a maximum price as
you search for a home. You will not waste countless hours looking at homes, only
to find out afterwards that you cannot afford the mortgage.
In addition, the real estate agents will be willing to spend more time assisting you
in your home search if they know you are pre-approved for a mortgage loan. Sellers
will also be more motivated to work with you if they know you are able to afford
their asking price. Sellers will also take any offer you make more seriously if
they know you are pre-approved for a mortgage. Pre-approval is a big help to the
seller and the realtor, as well as the potential home buyer.
Steps to obtain a pre-approve home mortgage loan
During the pre-approval process, the potential buyer will speak with a mortgage
lender about his or her financial situation, as well as any special circumstances
or concerns he or she may have. The mortgage lender will need to verify all income
information provided by the home buyer, so it is important to bring along tax returns,
pay stubs and other information to support the income you are claiming. The mortgage
lender will also want to see W-2 forms for the past two years, pay stubs from the
last three months and bank and brokerage statements from the last three months.
The mortgage lender will use the financial information provided by the borrower to
obtain approval from a lender up to a specific loan amount. The mortgage lender
will provide the potential home buyer with information about the monthly payments
on the mortgage loan and any closing cost information.
It is important for the potential home buyer to start the pre-approval
mortgage loan processing as
soon as possible. One reason for allowing extra time is the importance of credit
reports in the pre-approval and mortgage loan process. Unfortunately, it is not
unusual for credit reports to contain inaccurate information, and a mistake on your
credit report could mean that you are charged a higher interest rate than necessary,
or even cause you to be turned down for the loan. It is a good idea for the borrower
to get a copy of his or her credit report before starting the pre-approval process.
That way the borrower can find and correct any problems before the mortgage loan
process even begins.
The mortgage lender will review the mortgage loan application with the potential
home buyer. The application form will ask questions related to the borrower's
current residence, employment status and salary, marital status and other relevant
information. The loan application will also contain a number of disclosures the
borrower is required to sign.
After the home mortgage loan application is reviewed and signed, the mortgage lender will submit
the paperwork through the "Automated Underwriting" process. With this
automated process, an answer to the loan application is typically received within
minutes of submission. Once the paperwork is approved, the mortgage lender will
issue a pre-approval letter which outlines the terms of the mortgage approval. The
real estate agent will request a copy of this letter before they begin showing you
properties. A copy of the pre-approval letter will also be provided any time the
potential buyer makes an offer on a property. Get your free and best mortgage
rate quotes from multiple lenders, and
start your pre-qualification process now!
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