There’s nothing more frustrating than falling in love with a home and then discovering you can’t afford to buy it. This is why Angel advise's its proven 3-step program to help you become a homeowner.
What Is a Mortgage Pre-Approval?
Lenders offer borrowers either a pre-qualification letter or a pre-approval letter, but most realtors recommend you get a pre-approval letter before you start home shopping.
A pre-qualification letter states the amount a lender thinks you’ll be able to borrow based on your income and credit profile without any actual documentation.
However, mortgage lending standards have tightened since the housing crisis, and all mortgage loans now require full documentation and verification of income and assets -so most sellers will only accept an offer from a buyer with a full pre-approval letter based on verified information.
Your home hunt will benefit with a pre-approval for two main reasons:
- First, you’ll have completed the credit check and paperwork requirements for a mortgage, so you’ll know your ability to finalize a home purchase. If the lender finds a problem with your credit or an error on your credit report, you’ll have time to fix it before making an offer.
- Second, since your documentation will already be in place, a mortgage pre-approval will likely speed up the process once you make an offer.
What Your Mortgage Lender Expects From You
Your lender needs you to be honest about your finances and responsive to all requests for additional information, no matter how unimportant it may seem to you. The more cooperative you are with a lender, the easier the loan process will be.
You should be prepared with tax returns, W2s, bank statements, employer names and addresses, and your current landlord’s information.
Your lender will generate a mortgage approval based on your debt-to-income ratio and credit score, but you should also consider your budget and your own comfort level with the payment amount.
There’s no need to borrow the maximum amount you qualify for, particularly if you know you plan to spend money on items that don’t show up on your credit report. Your careful planning and preservation of your emergency fund are important for responsible, long-term homeownership.
