Getting a mortgage preapproval is a crucial step in the home buying process and it is imperative that you prepare yourself to be ahead of the competition! Getting pre-approved before starting your home search allows you to confidently understand what you can afford. Having a pre-approval letter ready to go shows the seller that you are serious about buying a home and that you are qualified to receive funding.
What Does Pre-Approval Mean?
Pre-approval is the initial process of qualifying for a mortgage. When a buyer is pre-approved, it means a lender or bank has agreed to let them borrow a certain amount of money for a home. To get pre-approved, the buyer needs to submit basic financial information to the lender and provide access to their credit.
What is the difference between pre-approval and pre-qualification?
The pre-qualification process is based on customer-submitted information while pre-approval is verified through an underwriting process. Pre-approval holds more weight than a pre-qualification.
How will your credit score affect your approval amount?
Your credit score does not affect the dollar amount you are qualified for, but it determines the interest rate at which your loan will be given to you. Your debt and income determine the dollar amount you are qualified for. Consult with a lender before making major changes to your credit.
What do you typically need to get preapproved?
ID or driver’s license, Social Security number, copy of bank statements, pay stubs, 2 years of W-2 or 1099 tax forms.
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