There are many reasons to get pre-approved for a home loan. During the home loan pre-approval process, the lender will look at your credit, review assets, and determine the right loan program for you. While some people may be intimidated or scared to know the truth about their finances, the reality is that you don't need to have perfect credit to get approved. In addition, getting preapproved for a home loan gives you as a home shopper important information you need to find the right home for you. You'll know what kind of budget you have for your home, and will avoid wasting time looking at homes that are out of your reach. Why wait? Start a home search with an idea of what you can budget for.
What to Expect
If you are reading this, you’re likely researching how to prequalify for a home loan. Your lender will walk you through the process step-by-step, but it helps to know what to expect. The pre-qualification process for a home loan is relatively simple in an age where many important documents are available online or digitally. You may be able to submit most all of your requisite documents electronically, or you may prefer to meet face-to-face with a loan officer. During this exchange you can expect to submit current and recently past financial documentation, complete some preliminary personal information, and then the lender will report back to you with a loan amount and program that will suit your scenario.
What The Loan Lender Will Need
The home loan pre-approval process entails submitting several documents to your lender who will take a preliminary look at your financial snapshot and report back with a figure for the amount of the home loan you can afford. Before shopping for a home, you can streamline the process by collecting W2s for two prior years, a month's worth of pay stubs, tax returns for two years' prior, and bank statements for two months on all of your accounts. Make sure to include checking, saving, and even 401K accounts. The lender will need your social security number as well for checking your credit.
Why You Should Get Pre-Approved
Getting pre-approved for a home loan is not a guarantee of loan qualification but serves as a very good benchmark so that you have a starting point for searching for a new home. In addition, when you find the home of your dreams, realtors and sellers will give more credence to a buyer who has a letter citing their pre-qualification amount. They know that this means you have proven yourself financially capable of purchasing a home at that particular price point and that you are serious about the home buying process.
Now that you know how to prequalify for a home loan, it’s time to get started. If you haven't applied already, why not? Are you scared your income, credit score or payment will fall through? Don't be afraid. The Deibler Group is here to help and we have programs to many budgets and home buyer profiles.