July 12th, 2016 5:06 AM by Jackie A. Graves
If you want to stand out from the sea of
other home buyers in a competitive housing market, one surefire way
to do that is to get pre-approved for a mortgage. That means a lender has guaranteed to give you a
loan before you’ve even made an offer—or even before you’ve
seen a home you like! Granted, this may seem like a whole lot of prep
work, but here’s why mortgage pre-approval matters, and how it can give you an
edge when shopping for a home.
What is a mortgage
Mortgage pre-approval is a commitment
from a lender to provide you with home financing up to a certain loan
amount—basically the stamp of approval that you have the money, credit history,
and other credentials to buy a home up to that price.
“Lenders will do a full review of income,
assets, and credit in order to issue a pre-approval,” says Sarah
Valentini, president and co-founder of Radius
How to get
pre-approved: The paperwork you need
Be prepared to offer up a pile of
paperwork to earn your pre-approval. In general, the paperwork you’ll need to
assemble for your lender includes the following:
vs. pre-qualification: What’s the difference?
Mortgage pre-qualification should not be
confused with pre-approval. Pre-qualification is based solely on verbal
information you tell a lender about your income and savings, says
Valentini. So, it shows how much you could theoretically borrow,
but it’s no guarantee—which means these buyers will have to get officially
approved for a loan later on and cross their fingers it works out.
Pre-approval, on the other hand, means the
lender has already done its due diligence and is willing to loan you the
money. Plus, you’ve got an official letter from your lender saying so that
will speak volumes to a seller.
pre-approval helps you buy a home
When sellers accept an offer, they want
the deal to go through. However, if the buyer isn’t pre-approved for a
loan, this can put the whole deal in jeopardy—because if the loan doesn’t get
approved, the buyer will likely be unable to follow through, says Chantay Bridges with TruLine Realty
in Los Angeles.
A pre-approval provides that extra measure of
security to a seller that you are both willing and able to buy the
house. As a result, sellers will likely pick you as a buyer over someone
without pre-approval since you’re a sure thing, and they won’t have to hold
their breath that the deal might not go through.
Bottom line: While pre-approval is a
pain, you’ll have to pony up all that paperwork sooner or later anyway. Why not
do it on the early side and get a head start on the competition and shop for
your dream home with confidence?
By Cathie Ericson - To view the
original article click here