Getting pre-approved by a lender is an important step toward obtaining a mortgage and getting the keys to your new home placed in your hand. It shows lenders and home sellers that you are serious about making this investment. It also reveals how large a mortgage you qualify for, based on the information required by the lender to determine your pre-approval status.
Continue reading to learn more about the pre-approval process and what you need to do to become pre-approved for a mortgage. If you are considering taking the first steps toward homeownership, this is important information for you to have at the forefront of your mind.
First, Get a Copy of Your Credit Report and Score
Your credit report and your credit score are going to be an essential part of the pre-approval process, so you should know what kind of shape your credit is in ahead of time. Request a copy of your credit report from all relevant reporting bureaus and go over each copy closely to examine them for errors. Check everything, including the basics such as your name and address. It’s not uncommon for credit reports to contain errors, which you can then dispute with the bureaus.
Now It’s Time to Visit Your Lender
With your credit report free of errors and your credit score known to you, it’s time to pay a visit to the lender of your choice. The process of pre-approval at this stage is rather simple. Your lender will need to have certain documents verifying your identity, your address, your income and your assets to determine eligibility. Based on the information provided to them, they will then determine how large a mortgage you qualify for and the interest rates that you could expect to be paying.
Pre-Approval is Not a Guarantee
While getting pre-approved is a great step that shows lenders that you mean business, it does not guarantee that you will receive final approval for a mortgage loan of that size or bearing that interest rate. However, pre-approval does mean that you are going to be in better standing with lenders and sellers.
Pre-approval illustrates that the lending institution feels that you can be reasonably expected to pay your monthly mortgage payments on time. This bolsters your position in the competitive housing market but is not a promise of anything. Still, this is a step that you do not want to forego taking. Getting pre-approved could be what sets you apart from other prospective buyers!