It’s the first question every home buyer must address: How can I “shop” for a house without knowing what I can afford? That’s where getting pre-approved for a home mortgage comes in. Getting pre-approved is the process by which you work with your lender to verify your financial information and obtain a loan estimate. This lets you “shop smarter” AND make stronger offers. Let’s take a couple of minutes to look at the process.
Gathering Your Financial Documentation
Since getting pre-approved is basically a home mortgage application, you’ll need to gather up your documentation so you can offer your lender a complete look at your finances. This means sharing with him or her your proof of income, employment verification, proof of assets, credit history, and debt-to-income ratio.
Types of documents you’ll need to share with your lender include W-2 statements, pay stubs, bank statements, your driver’s license, and your Social Security number.
Receiving Your Loan Estimate
After you’ve met with your lender, you generally can expect to receive your loan-estimate letter (documentation) within 3 business days—or sooner if you use certain online lenders. Once you receive your pre-approval letter/loan estimate, you’ll see (a.) if you’ve been approved and (b.) for how much.
Benefits of Your Pre-Approval Letter
If you’re like most folks, you’ll immediately start benefiting from your letter. Knowing what size home mortgage you can reasonably afford will help you put worries and confusion behind, and help you better understand and focus on your best home-buying options.
And there are other great benefits, too. First, many real estate agents will want to see your pre-approval letter before they begin to show you houses. In this way, they ensure they aren’t showing you homes your budget can’t afford. Also—and this is often critical—your pre-approval letter empowers you when you make an offer on a house. By having it ready to show the seller, you ensure that you are seen as a serious buyer—one who won’t have trouble receiving a home mortgage for the amount you are offering.
A Final, Important Word about Pre-Approval
It’s important for you to understand that pre-approval doesn’t last forever. Your pre-approval letter will have a specific expiration date—typically 60 to 90 days after you receive it—and you must keep that in mind as you search for your new home. What happens if you haven’t bought a house by the expiration date? No worries! You can simply request a pre-approval renewal by sharing with your lender up-to-date financial and credit information.
REMEMBER: Here at Maine Source Homes & Realty, we are strongly committed to helping you find the perfect home-buying solution. That includes credit advice and counseling to help you improve poor credit … sharing knowledge of local lenders and banks … and offering you more than 50 years of expertise regarding a variety of loan options.
About Maine Source Homes & Realty
Maine Source Homes & Realty is dedicated to helping you find your perfect home-ownership solution. Whether you wish to buy, sell, or build a home, Maine Source Homes & Realty invites you to benefit from our 51 years of trustworthy experience and expertise.