In home buying, pre-approval is an important step to closely buy a home. It is not a requirement that you should meet to buy a home but it makes everything easier.
As purchasing a home is not an easy thing to accomplish, you’ll need a pre-approval to help make a final deal.
Now let’s learn the pre-approval process in the full review below:
Pre-approval is a period when a lender agrees to lend you a certain amount of money to purchase a home but won’t continue to a full approval. Pre-approval will help to know how much fund you need to know exactly to buy a home. Accordingly, you can negotiate more and make an offer.
The Importance of Pre-Approval
Pre-approval is one of the beginning steps to manage a budget for buying a home. When the lender has approved your pre-approval, you can take steps to hunt the type of properties you are able to buy. Pre-approval can also lead you to a step of purchasing a home no matter you are lack of money.
The Process of Pre-Approval
There are some steps of processing pre-approval. Make sure you can work with your lender to get your financial information verification. This is to get a loan estimate.
- Complete your documentation
A pre-approval process is similar to a mortgage application. This means that the lender must carefully evaluate your financial state. Thus, complete your documentation that includes a proof on income, employment verification, proof of assets, credit history, identification and debt-to-income ratio.
In addition to the documentation, the mortgage per-approval also requires to complete the documents like W-2 statements, pay stubs, bank statements, driver’s license and social security number.
- Schedule when to get approved
It is important to determine or schedule when to get approved. That is to focus on your way of purchasing the home. The schedule will lead you to take further actions. The earlier you get a pre-approval, the earlier you get the picture of your mortgage options.
- Check your credit score
A credit score is one of the requirements to apply for a loan. Thus, before you apply for the loan, make sure you know your credit score beforehand. If you know your credit score you need to apply for the loan, get it approved by the lender and you can move to the next step.
- Receive your pre-approval letter
When your pre-approval is approved, you must receive pre-approval letter. This is to ensure the real estate agents so that they can show you the home.
- Check how long the pre-approval will last. This is due to the fact that the letter will not last forever. Make sure the letter is valid for 60 to 90 days until you successfully purchase the home.
There is an option of getting pre-approval online. The online pre-approval process is as follows:
- Apply online through Rocket Mortgage and have your credit checked. There is no document required to enclose but you have to give information about your details, income and assets, as well as the type of home you want to buy. Sync your application with your bank account to have your down payment and closing costs estimated. As a result, you will get an accurate mortgage rates and solutions.
- Customize your mortgage solutions
The next step is customizing your mortgage solutions. Fit your budget in order that the lender can determine how much to approve for the loan, down payment, monthly payment and interest rate.
- Get your approval letter
Like you do with the former process, the last step to get the pre-approval online is to ask for the approval letter. This letter will be helpful to buy a home.
Once you are done with the pre-approval process, the next thing to start working on how to find the home and make the deal. On the other hand, if you cannot get your approval, you must start solving whatever problems you may have.
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Improve your debt-to-income ratio, save for a larger down payment, resolve your credit score and etc. One of the best tips to get the pre-approval process is to meet all the requirements. When everything is done, you will get approved to proceed the next steps.
Overall, it isn’t hard to carry out the pre-approval process. However, it is challenging to accomplish all the process. Keep in mind that pre-approval is the one-step-closer to your buying-home intention. As you need the approval first, then you can go proceeding the actions including to find a home and pay the monthly payment. The last thing is the result of all; a new home.
Now you may share this article to your friends and families if you think it is very useful to help buy a home.