Shopping for a home is a serious matter that takes time, planning, and dedication. You have probably heard that you should get pre-approved for a loan if you want to buy property, pre-approval being an essential step in the process.
Getting pre-approved early will go a long way in providing you a host of benefits while helping you find the home of your dreams.
Pre-Qualification Is Not Pre-Approval
When you begin your search you need to remember that getting pre-qualified is not the same as getting pre-approved for a home. Getting pre-qualified means that you have received and estimate of how much you can afford and documents such as your credit report. It is not as thorough or official as a pre-approval.
Shows How Much Your Lender Is Willing To Lend
When you begin the process of pre-approval, you will be submitting your financial and personal information to your lender so they can thoroughly investigate your creditworthiness and ability to perform on the contract.
Documents you will need to provide to your lender include, but are not limited to:
- Bank statements
- Federal tax returns from the past 2 years
- Credit report
- Rental information
- Valid driver’s license or other valid identification
- Income information such as W-2 forms and paystubs
Pre-approval today can take as little as 24 hours if you have all of your documents and information available to provide to your lender.
Pre-Approval Helps You Stay Within Budget
Because you know how much a lender is willing to lend you, pre-approval can help you stay within your budget. Staying within your budget will help you manage your expectations and focus on homes that you know you can afford.
When you combine your pre-approval with a homeownership budget, you can get a better idea of how your monthly costs will get broken down and how much you need to budget for. That way, you can save up enough money to not only cover your homeownership expenses and any emergencies, but daily expenses like groceries and bills.
Makes You A More Attractive Buyer
Another great benefit to getting pre-approved for a home loan is that your desirability as a buyer is increased. Getting pre-approved for a home loan shows the seller that you have the approval of a lender and are a serious buyer, not a casual shopper.
In fact, realtors and sellers can and will refuse to sell to a buyer who makes an offer without pre-approval so make sure you get one!
When shopping for a home, the team at Eric Merchant can help guide you through the process and help you prepare to take your first, second, or third steps into homeownership. Our experts are knowledgeable in their field and will be able to answer any questions you may have.