If you’re sure about buying a new house, it’s ideal to make the time to get a mortgage pre-approval. This is usually the next step in determining how much house or loan you can afford. Prequalification may give you a potential loan estimate, but a pre-approval has more bearing, as this indicates that you are approved for a certain mortgage amount.
Better Buying Chance
You will have better chance of buying a house with a pre-approval, as the seller does not have to worry that you’ll be rejected for the loan. Altius Mortgage Group and other mortgage companies in Salt Lake City note that it is still important, however, to find a property that fits your budget. It is good to know that a home loan pre-approval can save you time, especially in the underwriting and closing process.
The Pre-approval Process
Applying for a pre-approval is much like a mortgage application. You will need to submit income information and other documents to assess if can take a home loan payment. It’s good to know your credit score, as it can influence the amount the lender will let you borrow. A high credit score can make it easier for you to qualify for a loan and get better rates.
Some of the documents you might need in application/pre-approval include:
- W-2 statements (for the last two years)
- Proof assets
- Employment verification
- Recent paycheck stubs
- Bank statements (last few months)
- Proof of other income and investment income
Know about Loan Options
It pays to have an idea of what type of loan you want. A 30-year fixed-rate loan is common, which has interest and monthly payments that will stay the same for 30 years. There is also the 15-year option, ideal if you want to pay the loan faster. You may also choose an adjustable-rate mortgage (ARM) with interests that change after a specified time. Be sure you understand how your chosen loan works.
If you want to be an attractive buyer, take time to learn about your loan option and get an approval. This can also make you feel confident when you want to make a bid.