Do you have a mortgage pre-approval yet?
So you’ve made the decision to purchase a home, called up a Realtor to schedule a time to see it, and the first question they ask is, “Do you have a mortgage pre-approval yet?” A mortgage pre-approval is what you will receive once you have completed an official loan application and submitted your financial documents for review. The pre-approval shows Realtors and home sellers that not only are you serious about buying a home, but that you are also already qualified to do so.
Mortgage Pre-Approval Example Letter:
Congratulations Mr./Mrs __________________! You have been pre-approved for a new mortgage in the amount of $________________ based on a purchase price of $__________________. Blah blah blah, etc.
Why do I need a pre-approval?
A mortgage pre-approval isn’t just proof to show the seller that you can afford the home, it also serves a ton of other purposes.
Mortgage Pre-approvals…
give you an estimate of your new home payments.
Without an idea of what loan programs you may qualify for and how much your monthly payments will be, it would be nearly impossible to narrow down your home search. There are hundreds and thousands of homes for sale, you’ll want to narrow it down as much as possible or the search can be overwhelming.
let you know what price range you can safely afford.
Sure we’d all love to drive around in a Ferrari and live in a mansion. What’s the biggest thing stopping us? Affordability. Without ensuring that you can actually afford that dream home you are making an offer on, you could be setting you and your family up for financial disaster. A mortgage broker can work with you to determine your safe payment range and make sure you aren’t getting in over your head.
identify any potential approval issues up front, to ensure a successful home purchase.
You wouldn’t believe how many real estate transactions end up not closing, mainly because of the buyers having problems getting approved for a mortgage. A lot of times, had they received a proper mortgage pre-approval, they would’ve been able to work around the issue preventing them from getting the loan…and eventually moved into their dream home. But instead, lack of due diligence leaves these potential homeowners frustrated and out thousands of dollars in expenses for a home they may never own. Trust me, you’ll want to prevent this at all costs by having all of your info checked up front.
help save you time and money.
During the mortgage pre-approval process, your mortgage broker should request your recent bank statements and income documentation (W2s, pay stubs, tax returns, etc.). If done properly, when you finally do find that perfect home, you will be able to close much sooner thanks to a thorough pre-approval. Oftentimes, sellers will be willing to accept a lower price in exchange for a faster closing, especially if the are in foreclosure or have other extenuating circumstances.