If you are planning to buy a house, you may have heard of the term "pre-approval". But what does it mean and why is it important? In this blog post, we will explain what pre-approval is, how to get it, and what benefits it offers.
What is a Pre-approved loan?
Pre-approval is a process where a lender evaluates your financial situation and determines how much loan you can afford. It is not a guarantee that you will get the loan, but it shows that you are a serious and qualified buyer. Pre-approval also gives you an advantage over other buyers who may not have it, as sellers and agents will prefer to deal with someone who has a clear budget and financing plan.
How do I get Pre-approved?
To get pre-approved, you will need to provide some documents to the lender, such as your income statements, bank statements, credit reports, tax returns, and other relevant information. The lender will then check your credit score, debt-to-income ratio, and other factors to assess your creditworthiness and loan eligibility. The lender will also ask you about the type of property you want to buy, the location, and the price range.
Once you get pre-approved, the lender will give you a letter that states the amount of loan you can borrow, the interest rate, and the terms and conditions. This letter is usually valid for 60 to 90 days, depending on the lender. You can use this letter to shop for houses that match your criteria and budget. However, keep in mind that pre-approval is not a binding contract and it can change or expire if your financial situation or market conditions change.
Pre-approval is a smart move for anyone who wants to buy a house. It can help you save time, money, and stress by narrowing down your options and giving you more confidence and credibility. It can also help you negotiate better terms and prices with sellers and agents. Pre-approval is not mandatory, but it is highly recommended for a smooth and successful home buying experience.
“El Chapo”
Dale A
Director of Marketing and Operations