Buying a new home is exciting, and I'm looking forward to helping you in the process! Before you start looking seriously, it's helpful to contact a lender and get pre-approved for any loans you may need. This way, you'll know from the start what your budget is.
Why is it helpful to get pre-approved?
Getting pre-approved is useful for a couple of reasons, including:
- knowing your credit and being aware of any potential issues that could conflict with your home-buying process
- knowing your maximum spending ability vs. your ideal spending budget
- already having your preapproval letter on hand when sellers ask for it as proof of financing ability
What is the difference between prequalification and preapproval?
A prequalification is simply an estimate of how much you can afford to spend. A pre-approval is an actual loan amount you have been approved to receive from a lender, meaning you can show the seller you've been vetted and approved for that money. (A small caveat: You're not formally guaranteed the money until your final loan approval, which comes after the property appraisal for the property you're buying, but the preapproval amount and the final loan approval amount are generally very close if not the same. Ask your lender if you have questions or concerns here.)
What do you need to get pre-approved?
- Proof of income to prove you can pay an ongoing mortgage
- Proof of assets to prove you can handle the down payment and closing costs for the property
- Good credit so you'll be approved for a larger loan or a loan with a lower interest rate
- Documentation, such as your social security card, to run your credit report
- Employment verification to prove you have a steady inbound cash flow to pay off your loans
Different lenders will approve you for different loan amounts, so it's important to shop around before committing to a particular lender. Please let me know if you need a few recommendations to start out with. I've worked with a number of lenders over the years and have several that I know and trust.
As always, I am here to help with anything you need. I know the buying process can be complex, so please contact me with any questions you have. I am always a phone call or email away!
