Getting pre-approved for a mortgage is a crucial first step in the home purchasing process. Sellers often want to see a pre-approved letter before taking their house off the market, designating for you to purchase it. A home loan approval gives you a snapshot of how much money a lender will extend to you based off your financial health.
Most mortgage pre-approve letters are good for 90 days. The pre-approval letter will detail the interest rate based off your credit, the terms of the loan whether it’s 15 or 30 years, and will be on official letterhead from the lender who’s making a commitment of lending to you.
How To Get A Pre-approval?
During the process of achieving a pre-approval, a lender will look at :
- Your credit
- Employment and income verification
- Income tax history
- Total assets
- Down payment and desired mortgage amount
Mortgage pre-approvals one take a few minutes to complete and can be done online, in person, or over the phone, it your choice of preference.
When Should You Apply For A Pre-Approval?
First things first, before you start looking for a home, get a pre-approval so you would know exactly where you stand. This way, you can plan your purchase more effectively and be ready to make a serious offer on the home of your choice.
Interest rates, payments estimates, down payment and loan amounts are among the most critical pieces of information you’ll receive with your pre-approval.
What’s the Difference Between a Pre-Approval vs Pre-Qualification?
A pre-approval is a complete look at your financial history where documents for approval are submitted.
A pre-qualification use basic income information and credit history but not as detailed as a pre-approval. A pre-approval cannot be guaranteed because there are no documents submitted.