Why Mortgage Preapproval is So Important

If you’re planning on purchasing a house, getting mortgage preapproval is always a good idea, but it’s especially important now with mortgage rates higher than they have been in a while.

Here is why:

Mortgage preapproval is when a lender determines that you are qualified for a home loan. You will receive a preapproval letter that shows the maximum loan amount that you can be approved for using the interest rate and length of the loan that is expected. To get the preapproval the lender will need access your financial information in order to determine what they may be able to loan you. Once you have the preapproval letter, you will have a good idea of the true price range of homes you can afford. This will give you the added bonus of knowing if a home is within reach for you financially before you get too attached to the idea of purchasing it. Rising mortgage rates mean that knowing the numbers is all the more important.

Another benefit of getting a preapproval is that It can help you stand out to sellers. It’s a way to show that you are serious about buying your dream home. If there are several offers on a home, you will want yours to stand out among them.

The bottom line is that getting preapproved for a mortgage is crucial.

Connecting with a Local Realtor has many advantages, one of which is they often have relationships with lenders and can point you in the right direction to help you with the preapproval process.  Once you have chosen a lender, you will need to fill out their loan application and provide them with vital information regarding your credit, debt, work history, down payment and residential history. Current Mortgage Rates

Before you start your home search, get all your ducks in a row so that you can apply for preapproval. The lender will need the following documents:

  • Current pay stubs
  • W-2s from the last two years
  • Last two federal income tax returns
  • Bank statements (from all accounts in your name)
  • Credit report
  • Driver’s license or passport

If you are self-employed, it might be a little more complicated. You will need to show some other information that backs up the fact that you have consistent income to pay a mortgage. The other documents might be:

  • Business bank statements
  • Business license
  • Company tax returns

Getting preapproved not only shows sellers you are serious, but also speeds up the process of completing the purchase once your offer has been accepted.

Many people overestimate the down payment and credit score needed to qualify for a mortgage. If you are ready to buy, you may find yourself pleasantly surprised at what you can afford!

If you’re thinking about selling or buying a home in the New River Valley area, contact professional, experienced Realtor and let her assist you with all your real estate needs. Give her a call today at 540-320-1328!

Photo credits: mortgagemarket.com.za, forbes.com, stessa.com

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