Getting Pre-approved for a Home loan

[Jude Cineas]

Getting pre-approved for a mortgage is an important step in the home-buying process, as it gives you an idea of how much you can afford to spend on a home and can help you stand out in a competitive market.

Here's how to get pre-approved for a mortgage:

Check your credit report: Your credit score is an important factor in determining your eligibility for a mortgage and the interest rate you'll qualify for. Review your credit report and address any errors or issues before applying for a mortgage.

Gather financial documents: You'll need to provide several documents to your lender to verify your income and assets, including pay stubs, tax returns, bank statements, and investment account statements.

Choose a lender: Research lenders and compare their rates and fees. Consider working with a mortgage broker who can help you compare options from multiple lenders.

Complete a pre-approval application: Your lender will ask you to complete a pre-approval application, which will include information about your income, employment, assets, and debts. Be prepared to provide detailed information and documentation.

Wait for a decision: Your lender will review your application and determine whether to pre-approve you for a mortgage. If you are pre-approved, your lender will give you a pre-approval letter that states how much you can borrow.

Shop for a home: With your pre-approval in hand, you can start shopping for a home with confidence, knowing how much you can afford to spend.

It's important to note that pre-approval does not guarantee that you will be approved for a mortgage. Your lender will still need to verify your information and approve your loan application once you've made an offer on a home. However, getting pre-approved can give you a better idea of your budget and help you move quickly on a home you're interested in.

[Andrew Sophocleous]

Not all pre-approvals are equal. I work in some competitive markets where bidding wars are still very much a thing. If you're in a competitive market, consider asking your lender if they'll do a fully underwritten pre-approval, where they aren't just calculating your income, viewing your bank statements, and looking at your credit score/monthly debts, and putting parameters into an automated underwriting system. A fully underwritten pre-approval will go a step further by processing your file and then having an underwriter condition your file. Once you work on clearing the conditions, you've got a fully underwritten pre-approval. This will not only save you time when you get into contract on a property because you've done most of the work that's typically done after you've made an official loan application, but you can position yourself as just as competitive as a cash buyer because you can waive your mortgage contingency, due to the fact that all of the conditions of your loan have already been cleared.