The process of buying a home is not one to enter lightly. Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to get pre-approved for a loan early in the homebuying process. By taking this step, you stand out from the crowd. It shows sellers you’re a serious and qualified buyer and can give you a competitive edge if you enter a bidding war.
Mortgage pre-approval is an evaluation of your financial history by a lender to determine if you would qualify for a home loan. It indicates how much a lender would be willing to lend you. If you meet the lender’s guidelines for issuing a loan, you will be issued a pre-approval letter, which states the home loan amount the lender is willing to let you borrow.
Mortgage pre-approvals are usually good for fixed amount of time depending on the lender, and they are subject to your continued good credit. Our advice is to always fully disclose and discuss your plans with your loan officer before you do anything financial in nature.
Most lenders will have you go online to apply for pre-approval. You will be asked to provide documents that help determine how much you are qualified to borrow, including a credit report, W-2 forms, pay stubs, Federal Tax Returns and recent bank statements. The lending specialist will typically ask you to upload the documents through a secured link. Download our loan application checklist here.
Once you have found the property you’re ready to buy and your offer has been accepted, your mortgage lender will help you complete a full mortgage loan application, and talk you through the various fees and down payment options. The application is then reviewed, and the home appraisal and title examination ordered. Finally, the loan is sent to an underwriter, who reviews and approves the loan if it meets compliance.
Once your loan is approved, your documents will be sent to the title company where you’ll sign for the new home and pay any remaining costs. The loan is then recorded, and you get the keys to your new home!
