Are you in the market for a new home? If so, you’ll want to make sure that you are pre approved for a home loan. This will help ensure that you are able to get the best rate possible on your mortgage. In this post, we’ll walk you through the process of getting pre approved for a home loan. We’ll also provide some tips on how to improve your chances of being approved. So, let’s get started.
Pre-qualification vs. Pre-approval
When you are buying a home, one of the most important things to do is get pre-approved for a mortgage. This means that the lender has looked at your credit and determined how much money they will loan you. Pre-qualification is different; it just means that you have spoken to a lender and told them how much money you make.
It’s important to know the difference between the two, because if you go house hunting and find one you love, only to find out that you don’t qualify for a mortgage, it’s very disappointing.
So what do you need to do to get pre-approved? And how can you make sure that your credit score is as high as possible? Keep reading to find out.
Procedure To Get Pre- Approved Loans
One of the first things you’ll need to do when applying for a mortgage is to get all of your financial documents in order. This includes things like your W-2 forms, pay stubs, tax returns, bank statements, and investment account statements. You’ll need to provide these documents to your lender so they can get a clear picture of your financial situation.
Check your credit score
Your credit score is one of the most important factors in determining whether or not you’ll be approved for a home loan. So, before you apply, it’s a good idea to check your credit score and get a copy of your credit report. You can get a free copy of your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) once per year at AnnualCreditReport.com.
Find the right lender
Not all lenders are created equal. Some lenders specialize in certain types of loans (e.g., FHA loans or VA loans), while others may have more experience working with borrowers who have less-than-perfect credit. So, it’s important to shop around and find the lender that’s right for you.
Submit your application
Once you’ve found the right lender, it’s time to submit your mortgage application. This can be done online, over the phone, or in person. Be sure to have all of your financial documents on hand, as well as any other information that the lender may need.
Wait for an answer
Now comes the waiting game. It typically takes a few days (or even weeks) for a lender to review your application and make a decision. If you’re approved, you’ll receive a loan estimate detailing the terms of your loan. If you’re denied, the lender will usually provide a reason why.
Negotiate the terms of your loan
If you’re approved for a loan, you’re not stuck with the interest rate and terms that are offered to you. Instead, you can try to negotiate a better deal. For instance, if the lender offers you an interest rate that’s higher than what you were expecting, you may be able to negotiate a lower rate.
Once you’ve found the right lender and negotiated the terms of your loan, you’ll need to get pre-approved. This involves submitting additional financial information, such as your income and asset statements. Once you’re pre-approved, your lender will provide you with a pre-approval letter which will show sellers that you’re serious about buying a home and that you have the financing in place to do so.
Start shopping for a home
Now comes the fun part: shopping for your new home! With a pre-approval letter in hand, you’ll be in a much better position to make an offer on a home. And, once your offer is accepted, you’ll be well on your way to closing on your mortgage and becoming a homeowner.
Benefits of having a pre-approved home loan
Final loan disbursal becomes fast and easy-
As a majority of loan verification formalities would have been completed at the time of pre-approval, final loan disbursal usually happens quickly once you select a property.
Higher negotiating power with sellers-
With a pre-approved loan, you can make a stronger offer to the seller as banks have already assessed your creditworthiness. This puts you in a better position to bargain for a lower price on the property.
You know exactly how much you can afford-
Pre-approval gives you an estimate of how much loan amount you’re eligible for. This gives clarity on the budget for your house purchase and prevents any last minute hiccups that may arise during loan processing. In short, it makes home buying a hassle-free experience.
Lower interest rate-
Pre-approved loans usually come at a lower interest rate as compared to regular home loans. This is because when you approach a bank for a pre-approved loan, you are already a low-risk borrower in the eyes of the lender. Also, if you have a good credit score, you can negotiate with your lender for a better rate.
Applying for a pre-approval is quick and easy, and it makes the home buying process much smoother. So if you’re planning on purchasing a home in the near future, be sure to get pre-approved for a home loan first. It could save you time, money, and a lot of headaches down the road.
Getting pre-approved for a home loan does not guarantee that you will ultimately get the loan. However, it does give you a number of benefits, including a better negotiating position with sellers and a clear estimate of how much you can afford to spend on a home. So if you’re planning on buying a home in the near future, be sure to get pre-approved for a home loan first. It could save you time, money, and a lot of headaches down the road.
Thanks for reading! We hope this guide was helpful. If you have any further questions about getting pre-approved for a home loan, feel free to reach out to us at techbexs.com. We’re always happy to help.