re you searching for a home and would like to have a pre-approval letter in hand before you try to finalize a deal with the seller?
Shopping for a home can be exciting and fun, but it can also be stressful. To ease some of that stress, don’t forget to get a pre-approval letter so the seller knows that you are serious about buying the house. Also, having a pre-approval mortgage gives you an advantage over other buyers, as sellers prefer selling to those who already have a pre-approval. This is particularly valuable in today’s highly competitive real estate market.
To ensure that your mortgage pre-approval goes smoothly, we have brought you all the details on what a pre-approval mortgage is and the easiest way to obtain one. Let’s discuss!
What Is a Mortgage Pre-Approval?
A mortgage pre-approval includes a document or a letter issued by the lender when you confirm the mortgage. This letter contains all the details, including the amount you are approved to borrow to purchase a new home. When you present the pre-approval mortgage letter to your real estate agent or homeowner, they will know that you are financially stable, and it is safe to start working on a deal with you.
Keep in mind that a mortgage pre-approval letter process will only be approved if you have good credit scores along with a stable financial situation.
How to Get Your Mortgage Pre-Approval?
Before you go out for your mortgage pre-approval, make sure you have the following:
1. Proof of Income
Before buying a house, you will have to produce proof of income to ensure that you have a reliable flow of money. Along with the proof of income, you will also have to include social security numbers and current employer address to cross-check with the real estate agent or homeowner. Don’t forget to add your W-2 tax form, additional income sources, and pay stubs for further details.
2. Credit History
As the lender also conducts a credit check, request copies for your credit history to check for any errors or disputes in the documents. If you find any errors, make sure to sort them out before the lender conducts your credit check.
3. Proof of Assets
You will also have to show the lender that you have stable assets to know that you have enough funds for the down payment and closing costs. If you receive the amount from someone else for the down payment or closing costs, you will have to prove that the amount is a gift and not a loan.
4. Debt to Income Ratio
Don’t forget to calculate your debt to income ratio, the percentage of your monthly income that goes into various expenses. These expenses include student loans and credit card payments. You can use an online calculator to ensure that your debt to income ratio is up to the mark before you try for pre-approval.
How Long Does It Take for a Pre-Approval Letter?
Depending on where you live, it can take a few days or several weeks for you to get a pre-approval letter for your mortgage. If you have provided your lender with all the necessary details, there’s no need to worry about not getting the letter.
Contact a Reliable Financial Advisor to Discuss Your Needs
Contact a qualified Lancaster refinance company to discuss your options if you need help getting preapproved for a mortgage.