How Important is getting Pre-approved for a Home Loan

How important is a mortgage pre-approval when trying to buy a home? The short answer is "very important". Read further to understand the process and importance so you won't be disappointed later by not having done so.  If you take the time to be pre-approved for a home loan, it can give you an edge over other buyers who may be interested in the same home or condo who perhaps aren't financially stable, or are just not ready. If you do therefore take the large step of being pre-approved for a mortgage loan, it's an indication to the home owner that you are serious about buying his / her home and not just bargaining to find a steal!

What you need to do to get a pre-approval for a Mortgage Loan?
The first step is an honest evaluation of your financial situation. Add up a list of all your assets comprising your cash, stocks, mutual funds, bonds, savings, IRAs, and any other investment and then deduct all the loans and payments that you have to make. This amount will indicate what kind of house you can afford.

Remember - there are additional expenses while buying a house. This will give you a realistic picture of just how much you can comfortably borrow and how much you will qualify to borrow. Once you know how much mortgage loan you can afford, you can make offers and when you have an accepted offer in hand, you can revisit the lender and complete the final underwriting process. This will include updating data already provided such as recent pay stubs, bank statements, tax returns, etc. In addition, at this time the lender will order an appraisal, which in most cases you the buyer will pay for. When all the underwriting documents and the appraisal have been reviewed and approved by the underwriter, the lender will allow you to get loan documents for signing which they typically send to the escrow company for you to come in and sign.




ePrequal.com - Home Buying Solutions

ePrequal.com's Automated Underwriting and Loan Offer System "AUTOLUS',  is popular because you pre-approve yourself for the loan you need to buy the home you want. In minutes you have all the answers you need including; A personalized Preapproval Letter with the amount and terms you requested, A Financial Analysis of the transaction showing the assumed purchase terms, the new loan payments, interest rates, detailed closing costs, and the debt to income qualifying ratio analysis exactly as the underwriter will use. You also receive up to 4 loan offers based on your qualifying criteria. AND, ePrequal.com provides a Home Approval Warranty Statement that assures you of getting a loan or any out of pocket expenses up to $1,000 will be reimbursed upon submitting a claim. ePrequal.com is like having an experienced Loan Officer and Underwriter at your fingertips 24/7! All FREE. No waiting and No sales pressure.
That makes it easier for you narrow down the loan and terms you need quickly.

Pre-approved means a commitment from a mortgage lender once you have filled out an application for a home mortgage loan and your details have been verified. These details will include credit report from the three largest credit reporting agencies - Equifax, Experian and Trans Union Corp. Most online applications go through this pre-approval process.

If your credit score is below 640, that does not necessarily mean you will not be pre-approved for a home loan. All lenders will now ask for additional details like your salary statement, bank statements, W2 etc. Also, a willing lender will ask questions about the reasons why the credit score is low and why there collection records in your credit report. Higher down payments or a co-borrower with good credit can often provide the final push to get you to the finish line and be loan approved.


Being pre-approved puts you in a better position as serious buyer and your negotiations maybe considered more seriously than other potential buyer who is not pre-approved for a home mortgage. Usually the pre-approval letter has an expiry date. A lot of times the expiry date for the pre-approval letter could be 3 months.

In conclusion, it is best to be pre-approved for a mortgage loan. Be realistic about the amount of home loan you can afford. It is better to live a little below your means than to borrow more than you can afford. There are additional expenses involved while buying a home so you need to factor that into your house loan. So, be prepared when you apply for home mortgage loan pre-approval.



Your New Home is Waiting for You!

 

The author David Van Waldick, is CEO of ePrequal.com.
He is a 25 year experienced mortgage broker, real estate broker, and home buying expert with over 1,000 successfully closed transactions  nationwide.To discover more about home loan approval, mortgages, home buying solutions, home equity, mortgage rates, mortgage calculator etc. visit www.ePrequal.com.