How getting pre-approved for a home loan works
Applying for a home loan is a rigorous process that involves multiple steps. Many people do to alleviate some of the stress associated with applying for a mortgage is to get pre-approved. Getting pre-approved for a mortgage means that a lender will review your information to decide if you would be approved or not. Pre-approvals do not guarantee that you will be approved for a home loan.
What Pre-approvals do when looking for a home loan
Pre-approvals are more of a precautionary measure to help you assess what homes you should be looking into. Most sellers are more willing to negotiate prices with pre-approved people. This is just one of the many benefits of getting pre-approved.
If you’re interested in getting pre-approved for a home loan, there is some important information you need to know. Below, we’re going to provide you with all the details about why you should consider getting pre-approved for a home loan.
How getting pre-approved for a home loan works
Before getting pre-approved for a mortgage, there are several things you should do. First, you should always review your current credit score and debt-to-income ratio. This will give you an accurate look into how much house you can actually afford.
Many mortgage lenders want to see a minimum FICO score of 620 before even considering approving your application. The lower your score is, the more down payment will be required upfront at the time of closing. Credit is just one of the critical factors that determine your pre-approval odds.
Here are the other four factors that impact your mortgage pre-approval process:
⦁ Proof Of Employment- before any lenders approve you, they’ll need to see evidence of your employment. You can use W-2 or pay stubs statements to prove your income. The more your income matches your desired loan amount, the higher your approval odds are.
⦁ Proof of Assets- you need to verify your assets before any mortgage lender will take you seriously. You’ll need to provide records of your finance and investment accounts.
⦁ Proof of Income- lenders will want to see your previous year’s tax returns and any other documents that can prove your source of income. This adds even more security for lenders against borrowers who default.
⦁ General Documentation- you’ll need to provide personal information about yourself, like your social security number and driver’s license at closing.
Benefits of getting pre-approved for a home loan
The primary benefit of getting pre-approved for a home loan is that you have set boundaries. Mortgage pre-approvals qualify you for a specific loan amount; without it, you can spend lots of time on loans that you never qualify for in the first place.
Lenders assess all of the above variables when determining whether to approve your loan application or not.
People Also Ask
Q: How long does it take to get pre-approved for a mortgage?
A: on average, it only takes 1-3 days total to receive a decision on your mortgage pre-approval application. The process can take longer, depending on any issues that arise during processing.
Q: What to do before getting pre-approved for a mortgage?
A: Before applying for mortgage pre-approval, you need to follow a few steps. First, get a free credit score and review your debts. Next, organize all of your personal and financial information. Finally, submit your mortgage pre-approval application.
Q: Can a loan be denied after pre-approval?
A: yes, even after getting pre-approved, you can still be denied a mortgage. The pre-approval process is just a pre-emptive measure for you to determine how much house you can afford.
Understanding how getting pre-approved for a home loan works
To make the process of buying your next home smooth and straightforward, get pre-approved. Use all of the information in this article to help go through the entire process. So, you can start living in your new home today! Looking to get approved for a loan? Contact Priority Lending today to get started.
