Why Being Pre-approved is so Important

You may have heard the term “pre-approved” or even “pre-qualified” but they each mean something different and can be so important when considering purchasing a home. Anyone can go to a mortgage calculator on any real estate site and see how much their mortgage payment would be from a certain house price. But this is only the preliminary overview to see how much home you would be buying. There are sites out there that walk you through a simple layout plan of how much income you make verses how much outgo or debt you may have. But this too only gives you an impersonal overview of your finances. No one has actually “approved” you for a loan yet. Programs are designed to tell you that you probably can get a loan given what information you have provided but this is not what lenders look at when deciding whether or not to actually let you borrow money.

Being pre-approved is a much more in-depth process and one you definitely should pursue before even looking at homes. To go about the process of pre-approval, you will need to gather certain documents and sit down with an actual mortgage  broker or lender and go over all your finances with a fine tooth comb. This can be done in person, over the phone or online depending on where you are getting your mortgage. Feel free to shop around for the best loan, rates and fees but remember that each lender will need all the information necessary to give you an informed decision.

The lender will look at your credit history, financial background, loans, debts, income, assets and liabilities. With all the income and outgo recorded, the lender can make a firm decision on how much home they let you buy. They want to be certain you are a good investment for them and not a high risk buyer. If you have too low a credit score, or too many debts, the lender may feel either to raise the rate on your loan or not accept your application at all.

But if you are approved for borrowing money from whichever lender you choose, that lender will issue you a pre-approval letter for you to keep. If they don’t
volunteer one, ask for it. A good suggestion is to take the figure you have been given and find a home you love. Once you do, have the lender write the pre-approval letter for the exact amount you are offering. The seller’s don’t have to know you may be approved for more especially if you are offering less than full asking price.

These are just some of the details of buying a house. Having a pre-approval letter in hand when submitting an offer shows the seller you are a serious buyer and have done your homework ahead of time. This shows responsibility for the seller as well. For more tips on buying visit the experts in Yakima homes and real estate. They are professionals in helping people buy and sell Yakima real estate.