Getting pre-approved for a mortgage is a crucial step when you’re planning to buy a home. It not only simplifies the process but also empowers you to find the perfect home with confidence. In this article, we’ll guide you through the four simple steps to get pre-approved for a mortgage.
Understanding the Importance of Mortgage Pre-Approval
Before we dive into the steps, let’s understand what mortgage pre-approval entails. A mortgage pre-approval is the initial phase of buying a home. It provides you with the necessary information about the mortgages available to you and the amount you can afford to spend on a house.
For mortgage lenders, pre-approvals help them assess your financial situation, determine the maximum purchase price, anticipate the mortgage interest rate and monthly housing payment, and estimate closing costs. In fact, Freddie Mac suggests that getting pre-approved can save you money in the long run.
Step 1: Determine Your Monthly Payment
The first and most important step is to determine your comfortable monthly payment. It’s vital to ensure that you can afford the mortgage payment without straining your budget. While a mortgage lender may pre-approve you for a larger monthly payment, it’s crucial to stick to your budget to avoid financial stress down the line.
Step 2: Find a Mortgage Company To Pre-Approve You
Finding a mortgage company to pre-approve you is easier than ever before. Many mortgage websites offer free pre-approvals with no obligation to proceed. Remember, the critical part is to secure your pre-approval, as it is necessary before you can buy a home.
Step 3: Gather Financial Documentation
As part of the pre-approval process, the lender may ask for supporting documents such as bank statements, W-2 statements, pay stubs, tax returns, and student loan statements. You don’t need to download these documents in advance; just ensure you know where to find them when asked.
Step 4: Get Pre-Approved
Getting pre-approved can be done either online or in person. The simplest and fastest option is self-service pre-approval, which can be completed in under three minutes. Homebuyer.com offers a convenient self-service pre-approval process that gives you instant answers 24/7.
The Difference Between Pre-Approval and Pre-Qualification
It’s essential to understand the difference between pre-approval and pre-qualification. Pre-approval is backed by lenders, including credit verification and an assessment of monthly income, making it a reliable proof of your ability to buy a home. Pre-qualifications, on the other hand, lack these verifications and are considered less reliable by home sellers.
The Ideal Timing for Pre-Approval
The best time to get pre-approved for a mortgage is at least one year before you plan to purchase a home. Pre-approvals are for your benefit, so there’s no such thing as too early. Early pre-approval gives you an advantage by uncovering any errors in your mortgage application and setting your price range.
The Impact on Your Credit Score
Getting pre-approved may temporarily lower your credit score by about five points. However, this change is negligible considering credit scores range up to 850. In fact, pre-approvals can even help increase your credit score by identifying and correcting errors in your credit report.
The Duration of a Pre-Approval
Mortgage pre-approvals are generally valid for 90 days. However, if mortgage rates change significantly, it’s advisable to get a new pre-approval. Expired pre-approvals can be renewed online or in person at any time.
Potential Reasons for Mortgage Denial After Pre-Approval
While pre-approval provides a strong indication of your mortgage eligibility, it’s essential to be aware that it is not a guarantee of final approval. There are instances where a buyer may get turned down for a mortgage after being pre-approved. This can happen if the buyer’s credit score drops, their income changes, their job status changes, or if the final housing payment exceeds the pre-approved amount.
Our Advice – Get Pre-Approved Today
It’s never too soon to get pre-approved for a mortgage. Pre-approval empowers you throughout the home-buying process by setting your price range, ensuring you can afford the monthly payment, and demonstrating your seriousness as a buyer. So, take the first step and get pre-approved today in under three minutes at ATICE.INFO.
Remember, getting pre-approved is simple and straightforward. By following these four steps, you’ll be well on your way to finding your dream home with confidence. Happy house hunting!