Pre-Approval Makes You a Powerful Buyer!
Shop for the Best Mortgage to Make the Right Decision for Your Financial Future
Why Should You Have A Pre-Approval Before You Make an Offer?
Pre-approval is the first step to home ownership. It allows you to know how much of a house you can afford before you begin shopping. Without a pre-approval, many sellers will not accept your offer on their home.
A Pre-Approval Validates the Offer You Make to a Seller
Your written pre-approval helps to add validity to your offer. It lets the seller know that you have already met with a lender and he or she has approved your loan "pending" an accepted purchase agreement.
How to Obtain A Pre-Approval
If you know a mortgage lender, you can give them a call. If you don’t know a lender, search online to learn about different kinds of loans and companies, and ask friends and colleagues for the names of lenders they trust. Also visit our National Support Services Directory or Local Support Service Directories through our Local Franchise Office web sites for recommended lenders. Make sure you are pre-approved, not just pre-qualified. There is a big difference. Pre-approval means you may qualify for a loan based on the verbal information you provided a lender. Pre-qualified means you have provided your lender with the appropriate documentation for verification and you have been pre-approved for a loan range amount. Your loan officer will provide you with a letter stating you are pre-approval to provide to a seller. The letter normally will not have a specific amount on it to protect your privacy. However, the seller will have the right to call the lender to ask if you are pre-approved for the amount of the sale price of the home you have agreed to in your purchase agreement.
Required Documentation for Pre-Approval
Your lender will ask you for information to validate your financial status for pre-approval for a loan. This will include your address, social security number, date of birth, job history and income information. They will also want to know what price range you would like to be in and what your down payment amount and source will be. Your loan officer will need to verify all of the information you provide them with paystubs, W-2’s, bank statements, etc.
A Wide Variety of Loans and Mortages Are Available
The information you provide along with your credit history will allow your mortgage loan officer to give you the best loan to fit your needs. The main mortgages are "conforming," "government" (FHA and VA), and non-conforming. Before you get a non-conforming loan, make sure there is no way you can get a conforming or government loan, the terms are usually better.
Pre-Approval Does Not Commit You to a Loan
You are not committed to any loan until you sign your closing papers. The pre-approval is a commitment to give you a loan. Make sure you are comfortable with your loan officer and that you understand the loan you are getting. In addition, they should provide you with a good faith statement, truth in lending, and copies of all the documents you signed.
