It can take many months of looking to find a home you want to live in. When you find your dream home, it can be crushing to realize that you aren’t going to be able to secure a mortgage for the amount you need. Keep this disappointing situation from happening to you by getting pre-approved for a mortgage loan.
What Does it Mean to be Pre-Approved?
By visiting a mortgage loan officer and having your finances reviewed and your credit report pulled, you’re essentially applying for a loan with no commitment to accept the money. It costs you nothing but a bit of time to get pre-approved and can make your homebuying process easier.
- You know what you can afford. The pre-approval will be for a certain amount of money, so you know what range of homes to view.
- You possess stronger negotiating power. Buyers are more likely to take you seriously when you’re pre-approved.
- You look more competitive. If you are pre-approved and the other buyers bidding on the home are not, there’s a good chance the sellers will find your offer more attractive.
- You can move through the homebuying process faster. Once you’re pre-approved, you may be able to decrease the back and forth of negotiation and set a closing date faster.
Getting pre-approved isn’t terribly difficult if you start out with the right information. Here are the items you’ll need to get pre-approved for a home loan:
- Credit report. The loan officer will pull this for you. Don’t worry if you have a few blemishes, as bad credit homes are available in some instances. However, if you see errors on your report, dispute them immediately.
- Income data. You may need to bring W-2s, pay stubs, and tax returns as proof.
- Valid form of identification. Use a photo ID like a driver’s license or a passport. Make sure it’s not expired.
- Employment verification. Current pay stubs may be enough, or the loan officer may confirm with your employer.
- Proof of any additional income. Adding alimony and freelance income may help you qualify for a larger loan.
- Asset verification. Bring copies of your bank statements and all of your retirement or 401(k) statements.
Sometimes borrowers are able to get pre-approved within a few minutes. Other times, if the loan officer must verify several items, it can take a bit longer. Once it’s ready, you will receive confirmation and the pre-approval will most likely be good for a period of 60 to 90 days.
Taking the time to meet with a loan officer and get pre-approved is a smart move if you’re on the home-buying path. Once you do it, you can have peace of mind that the journey will be a bit easier, and you won’t be wasting your time looking at properties you can’t afford.
