Getting pre-approved for a home purchase is an important step in the homebuying process as it helps you determine your budget and shows sellers that you are a serious and qualified buyer. Here’s a step-by-step guide on how to get pre-approved for a home purchase:
1. Check Your Credit Report:
- Request a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion).
- Review your credit report for errors or discrepancies and dispute any inaccuracies.
2. Improve Your Credit Score:
- Pay down outstanding debts (typically they want your balances to be below 40% of your credit limit)
- Make all your bill payments on time.
- Avoid opening new credit accounts before applying for a mortgage.
3. Determine Your Budget:
- Analyze your financial situation to determine how much you can comfortably afford for a monthly mortgage payment.
- Consider additional costs like property taxes, insurance, and maintenance.
4. Gather Financial Documents:
- Lenders will require various financial documents to assess your eligibility. Commonly requested documents include:
- W-2 forms or tax returns (if self-employed) for the past 2 years.
- Recent pay stubs (one month worth)
- We will have you pre-approved within an hour after receiving the above information.
- We will even call the listing agent to discus how good a borrower you are.
6. Review the Pre-Approval Letter:
- The pre-approval letter will specify the maximum loan amount you qualify for, and the duration of the pre-approval (usually valid for 60-90 days).
7. Start House Hunting:
- Armed with your pre-approval letter, you can confidently start searching for homes within your budget.
- Real estate agents and sellers take pre-approved buyers more seriously (I can recommend some great agents as well).
8. Finalize Your Mortgage:
- Once you find a home you want to purchase, work with your lender to finalize your mortgage application.
- The lender will conduct a more thorough assessment, including a home appraisal.
9. Close the Deal:
- We are averaging 11 calendar days for a Clear to Close
Remember that getting pre-approved doesn’t guarantee final approval for a mortgage, but it’s a crucial step in the process. Keep your financial situation stable and avoid making major financial changes until after closing to ensure a smooth homebuying experience. Contact us today to learn more!