Applying for a mortgage role can be a daunting task, especially considering the hefty requirements and financial state you need to have. To save on time and money, many prospective homeowners choose to get pre-approvals instead, which is essentially a letter from a lender. Here, the lender claims that they’re willing to lend you a certain amount for a property, albeit a tentative one.
Getting pre-approved, however, is a crucial step most buyers overlook. It provides you with a clear picture of what you can borrow, thereby allowing you to pinpoint exactly what price points you can afford. You’ll also be able to know exactly what needs to be done to improve your chances of getting a mortgage approved, saving you the trouble of rejections.
More importantly, it allows sellers to know that you’re more than capable of affording their property. This sets you apart from the rest of the buyers, ensuring that you have better chances of achieving your dream home.
The question now stands—how do you get a mortgage pre-approval? Thankfully, the process can be quick and simple. Here’s what you need to do:
1 – Gather the appropriate documents
When you’re seeking mortgage pre-approval, you will need to provide certain information to lenders. Before they decide if you’re eligible for loans, they will likely need to verify your identity, financial assets, employment history, income, and credit history.
To get the necessary information, the lenders will likely ask you to fill out a 1003 form or a uniform residential loan application. This form asks for necessary information vital to your application such as your assets, debts and other liabilities, and bank account information.
Lenders will also likely ask for details of your income and employment, as well as the contact information of your employer. They may also ask for additional documents such as bank statements and tax returns depending on your situation.
2 – Research mortgage lenders
Before you employ the help of a mortgage lender, it’s best to do your research about the lender and the loan officer to which you’ll entrust your mortgage. This can help you know who you’ll be dealing with. By researching your mortgage lenders and loan officers, you’ll be able to identify their credentials and level of experience.
You will need to provide the information necessary to complete the pre-approval process after you’ve chosen a lender. After you provide the necessary information, it will be examined by an underwriter. The information will be crucial in determining how much you can borrow. An underwriter will only review your application once it’s fully pre-approved, so it’s best to inquire about the status of your application.
3 – Contact more than one lender.
Offers can be widely different depending on which lender you ask, so it’s recommended that you contact more than one lender. This will allow you to compare their rates and fees, potentially saving you thousands of dollars.
Your credit score will likely not be affected even if you go through the mortgage pre-approval process. However, it’s recommended that you confine your application to a limited time frame, such as 30 days, to avoid hurting your credit score.
The Bottom Line
Going through a pre-approval process is a necessary but often overlooked step towards buying a home. Verifying your financial information allows sellers to determine if you’re capable of purchasing their property, and it also allows you to get a clear picture of what you can afford. It’s a process that benefits all parties involved, so remember to keep the aforementioned tips in mind. In time, you’ll be achieving your dream home.
If you’re on the hunt for the best mortgage lenders in Colorado, Liberty Mortgage Group has you covered. We are a licensed mortgage broker built on expertise, relationships, and superior service. That said, expect to experience only the best mortgage process. Let’s talk—reach out to us today.