When you get pre-approved, your lender will estimate how much you can borrow based on the financial information you supply them with. They can give you an idea of what kind of mortgage you can apply for, but they won’t actually verify your information.
When you get pre-qualified, the lender is typically ready to make you a loan once they verify your information, after which you can complete an official mortgage application. The letter says that once you submit the necessary documents and make an offer on a home, your loan will be approved.
Before you fall in love with your dream home, you should probably find out if you can actually afford it. Pre-approval takes the guesswork out of searching for homes when it comes to your budget since you’ll receive, in writing, the exact loan amount available to you.
Getting pre-approved will not only help you discover the maximum that you can borrow, but it will also help sellers take you more seriously in a competitive market. Sellers will be more likely to negotiate a sale with you if you prove to them that your finances are already in place.
Since you’ll need to provide this information to your lender, it’s a good idea to check your credit score and report prior to your pre-approval appointment. The scores will help your lender provide you with the different kinds of loans available to you.
You can get a free credit score and report on sites like CreditKarma.
There are quite a few documents you’re going to have to bring with you to your pre-approval appointment for your lender to verify:
- W-2 forms (from the past two years)
- pay stubs
- bank account statements
- investment account statements
- tax returns
- other sources of income (side job, bonuses, etc.)
In addition to your financial information, your lender will also need personal information like your driver’s license and social security number, so be sure to bring those along, too.
What does sorting out the conditions mean?? Well, once you have all the information you need, the underwriting system should deliver your pre-approval letter in a matter of minutes with one of four conditions: approved, approved with conditions, suspended, or denied.
If there are more conditions that still need to be met, it probably means that there’s some missing information that they need in order to complete the process. If it’s denied, it might mean that your financial situation isn’t currently sufficient enough to take on a home loan, or maybe you need to work on your credit score.
It’s okay if you have a bit more work to do before getting the letter in hand—your lender will be able to provide you with some advice to help you meet any existing conditions.
Things change, including your financial situation. A typical pre-approval letter will only be valid for 60-90 days after getting it, but since the time frame varies, be sure to ask your lender about it when you apply.
More tips include to start saving early & when you get this pre-approval, it will let you know ow much you can afford. Explore mortgage options. Research first-time home buyer assistance programs. Compare mortgage rates and fees. & choose a real estate agent to meet all you real estate goals.
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Take advantage of these FannieMae provided financial calculators whether you’re seeking a mortgage now or planning for one in the future.
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