Are you looking for pre-approval for your mortgage? You will probably find out that you can borrow money in two different ways:
You must, however, remember that these are not the same things and have their own set of differences. Usually pre-qualification for mortgage happens in the early stages where you will get a fair idea of how much you are qualified to borrow. You need to provide information on income, debt as well as the downpayment figure and the lender should be able to tell you how much mortgage you can be approved for. This process is very short and simple and can easily be done over the phone and then you can you can start off with the other paper works.
Pre-approval for mortgage
The next step with mortgage is pre-approval and it is a much deeper process than the pre-qualification. Here you will be given an amount for pre-approval for your mortgage and you will also find out that getting pre-approved is the key to your home. In fact, lenders want individuals to be pre-approved to be able to determine whether or not they are loan worthy. They take this as a very serious step in the lending industry and will consider the offer only when you have the pre-approval. As a buyer, you may need to be prompt because the real estate market is very competitive and you could lose out on a good offer if you don’t act fast enough. If you do not have pre-approval for a mortgage and someone else does, the good offer goes to that other person who has the pre-approval.
The process is not complex and you can mostly get it done within 24 hours. All that you need to do is to keep your paper works in place and start applying. There are companies that will pre-approve online too. This can be really faster when compared to getting it done on person.
Benefits of mortgage pre-approval
The main benefit of pre-approval lies in the fact that you know exactly how much money you can borrow for your home so that you have no misconception regarding the amount. This is mostly beneficial because you may be looking up houses but may not be pre-approved enough to buy them. You could be approved for a much lesser amount and you would have wasted all your time looking at the wrong house all this while.
With mortgage pre-approval you could also identify certain problems that you may have. In other words your credit score may not be very good which will definitely come up when they consider approval. You can find these issues and take care of them while you still have the time.
If you are pre-approved for mortgage chances are that real estate agents will be more willing to work with you and showing you properties that you can afford.
Sellers of properties will also take you more seriously if you have a mortgage pre-approval because they will trust your intentions of buying a house. If you were to sell a house you too would want a buyer who is pre-approved because you know that the person can give you the money for the house. This is the same with other sellers.
Getting pre-approved for mortgage also helps you narrow your search results because you can look any at those houses that you can afford to buy. This way you will not be wasting your and any of the seller’s time.
Regardless of any pre-approvals, it is your responsbility to make sure you an afford your mortgage. Let’s not forget about the housing crash just a few short years ago, and the millions of people who took on too much house. Do yourself a favor and run the numbers through a mortgage calculator in order to determine your optimal home buying price.
Documents required for mortgage pre-approval
Some of the documents that are required for mortgage pre-approval are:
- Income proof: Your lenders will ask for income verification (usually two of your recent pay slips) for mortgage pre-approval.
- Verification for employment: This should contain the list of your employers in the last couple of years with their names, addresses and phone numbers.
- Residence proof: You will be required to provide complete address for the place you have lived in for the last 2 years. You may also come across lenders who will ask for more addresses going back several years.
- Bank Account: You may need to provide details of your bank account, balance, savings as well as checking accounts for a mortgage pre-approval.
- Tax documents: W2 statements and tax returns for last 2 years are required.