How (and Why) To Get a Pre Approved Mortgage

| January 3, 2012

Buying a house is the single biggest financial transaction most families prepare for. These days sellers are wary. Many have seen failed sales on their property and they want to know that you are qualified when you make an offer. They want to know that a reputable company has already looked at your credit and income and made a conditional offer of a mortgage. Having pre approval will improve your chances of getting an acceptance on your offer to buy a home.

The first thing you should do when you are serious about buying a home is to order your credit report and make sure it is accurate. Repairing any errors in your credit report is essential to the process. Because you may need to fix more than one error and you may have to provide proof of payment or documentation to do so this process can take some time to complete. Better to do this before you find the house of your dreams.

Next, do your research and find more than one reputable mortgage company with local offices. Learn what types of loans are available and start the pre approval process with up to three lenders. This process does take time but it is well worth it. You will need to fill out an extensive application and provide a fair amount of supporting documentation. The lender will be evaluating your income, assets and credit history. They will want copies of your tax returns for the last two years in addition to pay stubs and bank statements for the last several months. They are establishing your income and assets and with that information calculating the amount of monthly payment and ultimately the amount of mortgage that you can handle.

What you get out of the process is a conditional offer to loan up to a specified amount. Most pre approval letters are good for about 90 days, so you should be prepared to complete the process in that time frame. When you do find the house you will see what rates and programs each of the lenders will offer and you will then choose the lender that best fits your needs at that time.

Obtaining a pre approved mortgage will ensure that your home buying process will be much smoother. You won’t risk anything and you won’t be scurrying about cleaning up your credit after you have made an offer.

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