Why Pre-Approval Matters
You may have heard it’s important to get pre-approved for a mortgage at the beginning of the homebuying process, but what does that really mean, and why is it so important? Why Pre-Approval Is Key When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range and how much money you can borrow for your loan. Pre-approval from a lender is the best way to do this. Here’s how it works. According to NerdWallet , pre-approval is a letter that: “. . . states the amount and type of mortgage the lender is willing to offer, along with the terms." To get this written confirmation, you’ll need to provide information about your financials, including your income, employment information, your credit history, and more. NerdWallet explains: “Preapproval requires you to provide proof of your financial history and stability. The lender will verify your income, employment, assets and debts, and will check your credit report. You'll provide information in the form of W-2s, a current pay stub, a summary of your assets and your total monthly expenses. . . .” While it may sound like a lot of documentation, the right professionals will make the process easy for you. Your pre-approval will help you know not just what you can borrow, but it’s also a great tool to help you set a budget and really understand your financial options. This way, you can begin your home search with a clear picture of what you want to look for.
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