You Should Get Preapproved Before You Search for a House

It is very hard to get a mortgage nowadays.  But getting preapproved can make things a lot easier for you.  You can negotiate effectively with sellers if you have a pre-approval.  

It makes perfect sense to get a pre-approval before you actively shop for houses. Once you are preapproved, this means that the lender has already considered your financial position.  Your income, credit and assets were evaluated and you have qualified for the mortgage that you are seeking.  A pre-approval indicates that you are really serious about buying a new home.  This gives you enough leverage to negotiate with the seller so you can get a good offer.  

Preapproved is totally different from pre-qualified.  A preapproved borrower has passed a higher level of evaluation by the lender.  In other words, if you are pre-qualified, the lender is saying that you may qualify for a loan.  If you secured a pre-approval, the lender is confirming that you are indeed highly qualified for a mortgage loan.  

Benefits of Pre-approval 

There are several unique benefits if you get preapproved.  First of all, a pre-approval is a good measure to know how much you can borrow from lenders.  This will give you the opportunity to identify properties that you can afford and will greatly simplify your home buying experience.  

Better peace of mind is another big advantage that you can enjoy if you are preapproved.  Because you know that you can surely get a mortgage loan, then there is no need to worry about getting a denial for your application.  Most important of all, it will give you the chance to shop wisely and compare different properties and loan products.  

What You Need for the Pre-approval Process

There are several documents that you need to submit in order to get a pre-approval.  First of all, you need to prepare your tax returns and W-2s for the past two years.  You must also submit your recent pay stubs to show that you are presently employed. Bank statements are also required documents that should be included in your application.  

Other documentations that are needed include other income sources, investments, second job and child support.  You must also provide an authorization letter that will allow the lender to pull your credit report.  Most banks have standardized forms for this kind of letter.  

Once you get preapproved, its terms will be outlined with details about the loan that you have qualified for.  However, your pre-approval will not lock you into any interest rate. This means that the rates that you can get may fluctuate until you get a suitable property to buy.  And because interest rates fluctuate daily, you may get higher or lower rate between the time you secured the pre-approval and the time you apply for the loan.  

You have to remember that a pre-approval is effective only for a specified period.  You should be able to use it within 60 to 90 days.  If you can not use it by then, you may reapply for another pre-approval.  

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