Moving into a new home can be exciting and money-consuming. However, the thrill of owning a property feels good. Everyone should experience it. Nowadays, houses are expensive, so an excellent way to get your dream home is via a mortgage. But how do you get mortgage preapproval fast? You need to follow some steps to guide you in getting your dream home.
It is common to confuse mortgage pre-qualification and mortgage preapproval, but they are different. While the pre-qualification starts your path to homeownership, preapproval shows you are ready to be in it for a long hurl. Having a preapproval letter helps you find a home faster because agents are now officially aware of your intentions.
How is pre-qualification different from mortgage preapproval?
Sometimes, buying a home can give you cold feet. You might face some financial barriers on your path to your dream home. With an informal evaluation of your finances, you can get a mortgage pre-qualification. Your lender helps with an estimate for a mortgage and with information on your debit, credit, income, and assets. This information can also help determine how much you’re eligible to borrow.
What happens next after pre-qualification?
If your pre-qualification works, then you can head to preapproval. Here a lender assesses your documents and credit score to check your debt, income, and assets. It is possible to skip pre-qualification if you’re financially buoyant enough. You can start preapproval immediately if you’re confident about your finances.
With a mortgage preapproval, you get a loan offer from your lender for a specific amount, and this puffer expires after some days. Sometimes it can last up to 90 days but with some terms attached to it. Nonetheless, with preapproval, you might not get the loan. You need a home appraisal to help check the worth and ensure nobody is overcharging. Make sure that your finances stay upright within all these verifications to avoid mortgage denial.
Mortgage Preapproval letter
Your mortgage lender will offer you a preapproval letter to confirm your preapproval. This letter carries information about your loan type and your preapproval amount. This document will help real estate agents understand that you’re in the market for a home. You can add your preapproval letter to any offer you make to home sellers.
Proven steps to get preapproval or a home loan
- Analyze your credit score: always check your credit score before contacting a lender for a home. Ensure you get a score of at least 620. If you have a higher score of 740 and more, you can quickly get better mortgage rates.
- Check your credit history: before applying, do your homework and ensure that you don’t have delinquent accounts. You can seek help from creditors to solve any issue before applying.
- Check your debt to income ratio: DTI is the percentage of gross monthly income you put into debt payments. This doesn’t exempt your student loans, car loans, and credit cards. Find some online calculators to help with this estimate. Most lenders will favor borrowers with a 36% or lesser DTI. So check if yours is within the approved rate.
- Get your personal information and financial account: document your Social Security numbers, employment details, and current address. Then add your bank statement with proof of funds. Add your W-2 tax form and 1099s if you earn money somewhere else. If you’re self-employed, you’ll need two years of income tax returns. Those who get a down payment gift need to submit a legal paper trail for this. However, employed workers need to have two years of continuous work record.
- Reach out to more lenders: an excellent way to get better offers is via window shopping. If you want a 30-year mortgage, you can contact more sellers and check their rates. Since mortgage preapproval doesn’t affect your credit score, you should confine them to a 30-day time frame too.
Owning a home is a big dream for so many people. But to avoid time-wasting and hope-crushing situations, you must do your research. You need to secure a mortgage preapproval before you can shop for homes. But so many factors play a role in this preapproval. Sometimes you need to get a pre-qualification letter first, while you can jump straight into a preapproval other times.
Nevertheless, you can get the home you need with a good credit score and other financial backings. But an excellent mortgage agent will help fast-track all this process. Start today; connect with us for more information on your dream home.