Home Buying Made Easier
Hooray! You’ve finally decided that you’re ready to buy your first home, but did you know that getting mortgage pre-approval is one of the most important things you can do? You have a good idea where you’d like to live, how many bedrooms you want, and even the approximate square footage your new home needs to have. But before you begin searching for that perfect home, before you even start making out your list of “must haves,” your first step should be talking to a mortgage specialist.
There’s a lot to consider when buying a home; some of it can be downright confusing. That’s where a friendly, down-to-earth mortgage lender can help. Someone like Zachery “Zack” Adam of GoPrime Mortgage, Inc. . (Prime Mortgage Lending and Equity Services, Inc.) explains the process in simple English. He’ll listen to your story and tell you straight if he can help you buy your first house. If not, he’ll connect you with other options.
Regardless where you turn, your best bet is to visit a mortgage specialist before you even begin house-hunting. Getting pre-qualified or pre-approved for a mortgage loan lets you know how much house you can afford. There’s no sense falling in love with a house you can’t buy.
Pre-Qualification vs. Pre-Approval
Pre-qualification involves a cursory look at your finances. Determining if you pre-qualify — and for how much — is a fairly straightforward process, although you still need to produce some documentation. Your mortgage lender reviews your income, debts and assets to give you a “qualified yes” to a loan, meaning nothing’s guaranteed. Based on the numbers, you get an estimate of how much you can afford in monthly payments, which, given an interest rate that’s not locked in, translates to an amount you could borrow.
Pre-approval, on the other hand, is a lengthier, more detailed process that requires much more paperwork. Your lender collects all the required documentation to decide if you’re eligible for a loan. It’s worth it, though, because it provides:
- A loan commitment
- A speedier solution to a faster closing
- A confirmed amount the lender is willing to let you borrow
Being pre-approved is an advantage when buying your new home, too. A pre-approval means you can bid with confidence, without contingencies. If you are pre-approved before you hunt for your first house, you and your Realtor have a much clearer idea what you can afford. Sellers also favor pre-approved homebuyers.
It’s Better to Be Prepared
Pre-approval gives you an upper hand if you’re bidding on the same home as other homebuyers. With pre-approval, sellers know you have the money nearly in your hand, so accepting your offer means less risk for them. Other advantages of being pre-approved include:
- Identifying potential problems early. When a mortgage lender takes a close look into your credit history, potential problems come to light while there’s still time to fix them. Your credit score may have taken a hit due to an outstanding bill or too much credit card debt. Becoming aware of your situation leads you to take the necessary steps to repair it. If you can raise your credit score, good things follow: a lower interest rate, for example, or better terms.
- Budgeting for homeownership. Once you’re pre-approved, you not only know how much house you can afford, but you should have a good idea of your budget after you’ve bought your home. For some first-time home buyer programs, you can roll in your down payment, closing costs and pre-paid items into your monthly budget.
- Saving time. Being pre-approved saves time for everyone involved with the sale of a home. Pre-approval helps all parties know that the money is available for the home purchase. Having your paperwork completed before your search accelerates the transaction.
When Should You Get Pre-Approved?
In all cases, the earlier you get pre-approved, the better. Mortgage lenders like Zack Adam agree that you should get pre-approved before you begin searching for a home. Budgeting early for your new home can be difficult without knowing just how much you can borrow. Instead of focusing on homes that might fall outside your price range, you and your real estate agent can concentrate on the ones that you can comfortably afford.
Pre-approval helps Realtors be more effective in finding you the best home for your needs. When you have a solid budget, you can shop confidently, knowing that you have the money to make an informed decision. Being pre-approved before you shop puts you in the driver’s seat and in control of your home-buying experience.
The Pre-Approval Process
Pre-approval does require a bit of work and a lot of patience. But remember, if you want a mortgage loan, you’re going to have to pass through this process eventually, so getting it out of the way early makes your home buying experience much smoother and more pleasant. When getting pre-approved for a mortgage, you’re required to submit the following:
- Proof of income. Past W-2 statements, pay stubs and other documentation to show your earnings and your monthly income.
- Employment verification. Past and current employment verification to prove your source of income. Your lender looks for a stable employment history.
- Bank account. Bank account and other financial statements that ensure you actually have the money needed for a down payment, if that’s applicable in your case.
- Past residences. Addresses of your past residences. Often, this is a check to ensure you’ve paid your rent or past mortgages on time.
- Credit history. Credit report, credit rating and history to check for delinquent bills, outstanding loans or other potential red flags. Your credit plays a big part in determining whether you get approved for the mortgage loan.
Your lender reviews your documents, does any other research necessary and makes the decision whether or not you meet the requirements to receive the loan. This process doesn’t guarantee you get the loan, but it does assert that you’ve met the qualifications to borrow a specific amount. For all these reasons, begin your journey to homeownership by getting pre-approved.
Contact an independent mortgage lender like Zack Adam of GoPrime Mortgage, Inc. . He helps make the pre-approval process as easy as it can be. And once that’s out of the way, you can focus on the excitement of buying your new home.