Getting pre-approved for a mortgage is one of the most important first steps you can do. Purchasing a home is more complex versus renting, purchasing a car or applying for a credit card. The financial institutions have many guidelines they must adhere to when qualifying a buyer for a mortgage. They will review many personal items such as your credit score, credit history, debt, income, student loans, child support payments, part-time versus full-time work, self-employment, or independent contractor status.
A few of the low-down payment programs have income limitations or geographic restrictions. The mortgage professional will use your financial information to determine how much you can qualify for and what the monthly mortgage payment will be using the purchase price, property taxes and insurance. If you are searching for a condo, they will also factor in the monthly homeowner’s association fee.
When a property becomes of interest, most seller’s agents and the seller will want to see a pre-approval letter when deciding to accept your offer or not. If there are multiple bids on the property, having the pre-approval letter will be critical.
Most pre-approval letter can be easily accomplished by simply completing an application from a lender. For those who are self-employed, the process may take longer for the letter to be issued. Once you are pre-approved, the letter is good for up to 90 days. They can easily be renewed.
It’s best to get pre-approved right away. This way you don’t miss out on a property.