How & Why You Should Get Pre-Approved for a Mortgage
There are many steps involved in the home-buying process. First-time buyers should be aware of what they need to do to prepare in order to make their purchase successful. It is recommended that all home buyers get pre-approved for a mortgage. This process allows buyers to understand more about how much home they can afford and helps them narrow down their choices. It can also help speed up the buying process since the buyer has already been approved for their mortgage.
What is a Mortgage Pre-Approval?
A mortgage pre-approval is proof in writing from a lender who states that a buyer has been qualified to be eligible for a home loan of a particular amount. The results are based on the information provided to the lender. This information includes the buyer’s income and credit information. Most mortgage pre-approvals will last anywhere from 60 to 90 days, which provides plenty of time for home shopping in the Austin area.
Why Should I get Pre-Qualified for a Mortgage?
There are several reasons why you should get pre-approved. One of the most important is the fact that if they get approved early enough, they will have a better understanding on what their home-buying budget is. This will ensure that they only become interested in homes that are within their price range. A pre-approval letter from a respected lender can be beneficial throughout the buying process. When a buyer can make an offer on a home with a pre-approval, they will be taken seriously by the seller and will be more likely to close the deal on the home of their choosing in a fast and hassle-free manner.
What Documents Will I Need to Complete the Process?
There are several documents that will need to be viewed by the lender during the mortgage pre-approval process. These can include recent
- W-2 forms
- Pay stubs
- Tax returns
- Checking or savings account statements
- Statements from other assets such as stocks
- Bonds or retirement accounts
- Your landlord’s contact information or current mortgage documents
- Business tax returns for self-employed individuals
- A divorce decree, if applicable
What Should I Do If I Do Not Get Approved?
If a buyer is unable to get pre-approved for a mortgage, they should not give up hope. It is still possible for them to move into a new home; however, it may take a little longer to complete the process. Those who are denied a mortgage pre-approval should check their credit report for any errors and work on raising their credit score. This can be done by paying off delinquent bills or settling debts that are past due. Buyers should also concentrate on improving their debt to income ratio, or consider increasing the amount of their down payment so that they can qualify for a lower mortgage.
Getting Pre-Approved for a Mortgage
Anyone interested in buying a home in the Austin, TX area should get in contact with their lender to find out more information on how they can better their chances of being pre-approved for a mortgage. Having a solid credit history can help, but there are also other things that can help improve the odds. The better prepared a buyer is before they dive into the home-buying process, the more successful their outcome will be.