Buying a home is an exciting time for future homeowners. Our job as a lender is to make sure we capture that enthusiasm and help educate our customers on the process and that process starts with a pre-approval letter. A pre-approval letter is a written statement from a mortgage lender that states that you, the borrower, qualify for a loan of up to a certain amount based on reported income and credit information. So, why should you get pre-approved for a home loan? Here is what you need to know.
You might think getting into the nitty-gritty of applying for a mortgage becomes important later on in the homebuying process, but securing a pre-approval letter early actually helps you stand out from the competition. Consider this: it is unlikely that you are the only person looking at a property. It's not just your dream home, especially because housing inventory is at a record low. Holding a pre-approval letter from a mortgage lender therefore shows the listing agent and seller that you are serious about buying the property and that your offer will not fall through due to lack of financing.
Completing the pre-approval process is particularly beneficial for first-time homebuyers. In many cases, this step will reveal any potential problems with your credit report before you place an offer, as well as provide steps to improve your overall credit standing so you can qualify for a larger or lower interest loan. It’s not uncommon to see inaccuracies in your credit report or wage documentation, which is why it’s always a good idea to get pre-approved before starting the homebuying process.
If you are unable to get pre-approved for a home loan, your mortgage lender can help you identify specific challenges in your application. For more information about why you should get pre-approved for a home loan, or to learn more about the homebuying process in general, contact one of our mortgage specialists and download The Ultimate Guide to Homebuying & Financing today.