Do you know that 42% of homebuyers go shopping for a house without mortgage pre-approval? Before you go on buying a house, unless you have enough cash, getting a pre-approval for mortgage is a must.
Pre-Qualification vs. Pre-Approval
Pre-qualification and pre-approval are topmost keys steps for the mortgage application. Although the two are different, people often confuse them and use them in interchangeable meanings. But as a homebuyer, it is important to understand how pre-approval is different from pre-qualification.
Pre-qualification comes before pre-approval. Before getting a mortgage, you must know how much loan you are qualified enough to get. Pre-qualification tells you this. Pre-approval usually comes next, which is crucial to grant you access. Where pre-qualification is the necessary and first step for a mortgage application, pre-approval is indispensable for the home buying process. Pre-approval gives many benefits that pre-qualification alone does not have.
How necessary is pre-approval for a mortgage?
The mortgage pre-approval process helps you strengthen your credibility in front of the seller. Real estate experts will always tell you to get a pre-approval first before shopping for a home.
After pre-approval, you have a defined range for buying a home. This saves you time, as you do not have to consider houses of different ranges of prices and decide which to settle on. This allows you to devote your time and energy on other important details and examining the right home.
Sellers these days are difficult and pickier, especially when it comes to negotiations. A pre-approval gives you an upper hand on the competition. With a mortgage pre-approval, you can make an offer with confidence and show the seller that you are a serious buyer.
Here is a sum-up of how pre-approval reduces the challenges of buying a home.
- Getting a pre-approval will give you a clear idea of the price range which is affordable for you.
- Without a pre-approval for mortgage, realtors and sellers will not take you seriously.
- With pre-approval, your mortgage process will go smoothly and quickly.
What to do before getting pre-approved for a mortgage
When applying for pre-approval for a mortgage, you need to provide all the necessary documents, especially your recent pay stubs. You also have to include copies of your recent tax returns and W-2 returns. In short, the lenders need proof of your good income, assets, and a strong credit score before approving your mortgage application.
Setting a pre-approval is necessary for the mortgage process to go more easily. But remember that pre-approval for a mortgage is the first and basic step of buying a house. Lenders are not going to hand you thousands of dollars right after your mortgage is approved. You need to take care of other considerations to get a mortgage for buying a new house. Most importantly, it is the time and patience you need.