What is and How Will Pre-Approval Affect Your Home Buying Process?
You may have heard the term pre-approval and maybe not known exactly what that means. It's different than a simple mortgage calculator stating how much your payment will be. It's also different than being pre-qualified.
Simply being pre-qualified for a loan is as basic as taking how much you make and factoring in the mortgage payment to determine how much you can safely spend on a home.
This is a different and more involved process carried out by a bank or a lender. This actually proves to the seller and to the lender your current finances can support a mortgage payment.
You will want to sit down with a lender, this could be a mortgage broker, bank or credit union and layout all your income and debts and have them determine how much you actually can afford. This may be less than a pre-qualification because lenders will factor in such costs and maintenance on the home, liabilities and your current assets. This also means that typically if you don't change anything major on your credit before closing, the pre-approval amount quoted will be guaranteed till you close on your purchase.
You will also want the lender that issues the pre-approval to write up a letter stating you have done your homework and are pre-approved to buy a home. This letter will be submitted to the seller at the time of offer to show you are a serious buyer and have already secured financing for your desired home.
Lenders will need certain documents such as tax returns or W-2's, bank statements and other documents listing assets and liabilities.
For more information on becoming pre-approved, please let us know. We would be happy to answer any questions for you and get you into a new home. We specialize in helping buyers find homes and properties in the Tacoma real estate area.