Thursday, May 8, 2014

Why you need to get a mortgage preapproval

Typically if you want to buy a car you save up money, find out how expensive of a car you can afford, and then you start looking for cars.  Buying a home should be the same way.  Yet, the vast majority of homebuyers don't even get a loan preapproval before shopping for a home.

If you think about it, not getting a mortgage preapproval before looking for homes is like going into the mall without a credit card or any cash.  It just doesn't make any sense. Obviously home buyers, especially those for their first time, are excited about the process of shopping for a home but that shouldn't be a reason to skip one of the most important steps, finding out how much house you can afford.  What would be more disappointing then looking at a bunch of amazing homes only to find out that they were all out of your price range?

What is a mortgage preapproval?

A mortgage preapproval is a written commitment lenders give to buyers that states that maximum size home loan they can get as well as the likely interest rate.

Get Preapproved for a Mortgage Today

Why you need to get a mortgage preapproval:

Both Loan Officers and Real Estate agents are finding it more common to come across buyers who have skipped the preapproved process.  However, most agents and sellers will not accept an offer from a buyer who has not been preapproved by a lender or a bank first.

The preapproval process tells you vital information about your mortgage and what you can afford.  Most Realtor's won't even agree to show you a home without this letter so it's necessary that you obtain it from the get go.

So what does it take to get preapproved?

A mortgage preapproval requires many of the same documents as if you were getting an actual mortgage. This includes pay stubs, bank statements, last two years W-2's, and law two years tax returns.  A credit check is also required.

It's also important to remember that a mortgage preapproval is not a loan commitment. It will help to speed up the processing and underwriting for a loan approval but it is not a guarantee either.

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