When you’re still in the process of searching for a home, getting your mortgage pre-approved can save you time and energy. Getting your mortgage pre-approved is a relatively simple process while also yielding a multitude of benefits. Not only will this solidify your claim on getting a loan, but this can expedite the process instead of having to go through more hoops.
Most of the time, you’ll need to consult with a lender as a means of obtaining a pre-approval letter. Obtaining a pre-approval letter can help provide better opportunities that can help discuss options in loans and help set aside the proper budget. What makes this especially important is that this can clarify your budget range and the monthly mortgage payment based on your budget.
When you’re planning on getting a mortgage for a potential home improvement project or getting your very first home, you’ll need to be aware of how a mortgage pre-approval can boost your chances of getting a loan. So, how do you get yourself pre-approved for a home loan? When should you get a pre-approval?
Here are some important things you need to know before making the final decisions:
Should You Get Pre-approved?
But before we discuss what the process of getting pre-approved is like, we’ll need first to know when you should get pre-approved for a loan. The pre-approval letter is normally valid for around 2-3 months (90 days) when you’re getting pre-approved. Loan-issuing organizations and lenders will need to place an expiry date on these letters so that they’ll know when it will expire.
When this pre-approval letter gets past the expiration date, you’ll need to fill out another mortgage application form while having the appropriate documents to back it up. If this is the first time you’re getting home, and you might have some trouble getting a mortgage, then a pre-approval letter is one of the best ways to identify your credit score and issues beforehand.
Once you’re now 100% sure that you are in a position to make offers, a seller will ask for a pre-approval letter, as well as proof of your funds. This is especially useful when demand is extremely high, and hundreds of potential buyers are also looking for good deals. Individuals with pre-approval letters will become a priority.
Are you a first-time homebuyer and not quite sure who you can contact to help expedite your mortgage application process? You won’t have to look far since there are reliable home loan services known for catering to first-time homebuyers while also helping individuals secure mortgage pre-approval. Not only are they known for helping new homebuyers, but they have some of the best rates in the real estate market.
But other than that, what are some important factors that you’ll need to consider when getting a pre-approval?
Here are some important things that you’ll need to consider.
- Debt to income ratio – Lenders want to ensure that you can pay off your debt. Looking at your DTI ratio can help them calculate if you have the necessary financial means of consistently paying off debt.
- Credit score – This is known for being one of the most important factors affecting your chances of getting your loan. Normally, you can build up your credit score by paying off previous debt.
- Source(s) of income – Another known major influence on your pre-approval is your income source. If you have multiple income streams and are currently employed in a business, this will help make a good first impression among lenders.
- Employment history – Finally, your employment history will also be a determining factor in getting pre-approved. If lenders see that you have been working in the same job for years, this can positively influence your pre-approval.
As you can see, there are a variety of factors that can affect your pre-approval. Although, you shouldn’t be too overwhelmed with these factors. In general, the higher your credit score is, and the more you earn within a month, the higher your chances of getting a pre-approval and ultimately getting your loan approved.
Just like when you’re shopping for products or getting the best services, you’ll need to spend some time looking into what are some of the best interest rates and deals. When you haven’t made any final decisions just yet, you might want to consider looking for mortgage lenders in the span of around a month and a half. This will give your lenders some time and space to check your credit.
Pre-approval is even more important if you’re thinking of getting home since this can expedite the process while also planning out your financial situation. Still, it’s important to keep in mind that although you might get pre-approved, that does not mean that you are 100% guaranteed the loan. This will ultimately be determined by the financial and employment information that you are giving. Still, being transparent and truthful with your information can definitely help increase your chances of getting your mortgage approved.