Are you considering buying a new home or applying for a second mortgage? If you’ve never bought a home than the whole process is quite new to you, but you should learn the ins and outs before you start house hunting.
Pre-approval is an important part of the process and should really be the first step you take. However, in 2014 less than 10% of homebuyers actual completed this vital step. This is acutally quite shocking if you think about it. It’s like going shopping without money to pay. So, if you’’re a serious homebuyer ready to dive in, it won’t be fun to window shop and see the home of your dreams, just not to have the approval you need to buy it.
Without a pre-approval on your mortgage, it will be hard to make an offer that can stick, since you don’t have the money to back it up. Most sellers just won’t bite if they come across situation. This is why it’s imperative that you get a pre-approval. Some sellers may even have their agents contact your broker or lender to see if and what information they have verified during your pre-approval.
Knowing the Difference Between Pre-Approval & Pre-Qualification
Don’t be confused with the term pre-approval, it’s not the same thing as pre-qualification. During a pre-approval your mortgage broker will check your information and paper documents in order to make a determination about the amount they will consider lending to you.
Document Requirements for a Pre-Approved Mortgage
Whether you’re applying for a mortgage or a mortgage pre-approval, the documentation requirements are the same. You may be requested to produce:
- Latest pay stubs
- T4’s
- Income tax returns
- Banking statements
- Credit report and/or score
One of the most common misconceptions that homebuyers make which deters them from seeking a pre-approval is that it would be considered a loan commitment. This is not the case, having a mortgage pre-approval is actually a great benefit in itself. It helps to speed up underwriting, the actual loan approval and closing of your home.
Afraid of Loan Rejection?
Do you fear your loan application will be denied? Well don’t be, there is little to fear! Don’t shy away based on the fear of not being approved. Just because you haven’t been approved doesn’t mean it won’t happen for you. By sharing your personal information with your mortgage broker without reservations, they will be able to fully assess your financial situation, and present you with best mortgage rates and options.
Why You Should Get a Pre-Approval First, and Shop for a Loan Second?
Your time is valuable, so it only makes sense to get pre-approved before you apply for the actual loan. First, you increase your chance of loan approval in the future. Secondly, you have an estimated idea of your price range. Lastly, more seller will consider your application, and lastly you’ll have extra time to clear up any unexpected debts that may show up on your credit report before you find your mortgage solution.
Don’t let other buyers get the advantage over you, make sure you get your pre-approval today to increase the chances of being approval for your mortgage loan and approval from your new home’s seller. Contact us or apply online today.
When we say Yes, we stand behind our promise!