The Importance of Getting Pre-Approved for a Mortgage

The Importance of Getting Pre-Approved for a Mortgage

When preparing to finance the purchase of a new home, odds are you’ll come across the terms “mortgage pre-qualification” and “mortgage pre-approval.” Both can give you an advantage in buying a home, but what is the difference and how do they benefit you as a home buyer?

The first option is a pre-qualification letter. It refers to a written opinion of your lender regarding your ability to qualify for a home loan, and incorporates an assessment of your debt, income, and savings. The main difference between a pre-approval letter and pre-qualification letter is that when getting pre-qualified, no income or asset documents are required. For this reason, pre-qualification may take less time and is sometimes referred to as “conditionally approved”, because it is subject to further credit and property approval.

Conversely, mortgage pre-approval requires demonstrating financial worth and income stream. When a lender is creating the pre-approval, he/she reviews your income, down payment amount, job history, full credit report, and asset verification. By getting pre-approved for a mortgage you have the advantage of being confident in your budget. The seller is also more likely to view your offer as a serious contender.

“Getting pre-approved for a loan gives buyers peace of mind by knowing their budget when searching for the home of their dreams.” Will Ruemmele, Senior Loan Officer of Diamond Mortgage in Lake Geneva explains, “It also shows the home seller that you’re a serious buyer and will help you stand out in a competitive market, where sellers sometimes may receive multiple offers.”

A pre-approval letter from your lender will indicate you can qualify for a loan of a certain amount based on assumptions about what the interest rate will actually be at the time the loan is made and will provide estimates for property taxes and insurance. Once the lender issues a pre-approval letter it is sent to an underwriter, which guarantees the customers assets.

Bottomline:

Getting pre-approved for a mortgage can help show sellers that you’re a serious contender when submitting your offer. For a seller to confidently accept your offer, they’ll want to know that you’ll be approved for a mortgage and the home sale will close. A pre-approval letter can help demonstrate that you have a good chance of being approved for a mortgage for the amount that you’ve offered on the home.

If you’re in the market for trusted mortgage services contact Diamond Residential Mortgage in Lake Geneva, WI at 262-203-5106 or visit https://lakegeneva.diamondresidential.com/. Diamond Mortgage has access to a variety of low-down payment loan options and will work to determine which option is best for you.