Before you even start your home search, it’s a great idea to get pre-approved for a mortgage first. What if you find the home of your dreams, and need to act fast? You’ll definitely want to be prepared to make an offer if the time comes. Getting pre-approved is also an excellent way to show that you’re serious about finding a new home!
But first of all… what does it mean to get pre-approved for a mortgage?
When you apply for a mortgage pre-approval, a lender will conduct an evaluation. This evaluation will say if you quality for a home loan, and if so, how much you qualify for. You will be provided with a pre-approval letter that will be submitted to sellers with your offer.
Is getting pre-qualified and pre-approved the same thing?
While they are similar, there are some differences. Getting pre-qualified is more simple; a lender will take a look at your finances (debt, income, assets), and share with you how much you will be able to afford.
Pre-approval is more official—it’s a bit more involved as well. You will need to provide a lender with financial documents, and from here, a lender can give you a more specific and official loan amount.
Here are a few other things you need to know about getting pre-approved for a mortgage:
Your lender may need to run a credit report as part of the pre-approval process.
It’s possible that a seller will require a pre-approval letter from all potential buyers.
A pre-approval letter can also help give you a better idea of how much you can really afford to spend on a home. And of course, this will greatly affect your home search!
To do this, you will of course need to find a lender! Learn more about how to find a lender HERE.