Most people would start their house hunt with a call to their realtor, but in reality, they should call a mortgage professional first. Only a professional can help you find a right deal. Interestingly, they can also help you with a mortgage pre-approval. By obtaining a mortgage pre-approval, you will be in a much better position to shop for the property because you would know how much a lender is willing to loan you for your mortgage.
Mortgage pre-approval is basically the process through which a lender makes sure that a borrower meets their guidelines for a home loan. It is worth mentioning that many people confuse a mortgage pre-approval with a mortgage prequalification. You have to understand the difference and know that a mortgage pre qualification is usually a cursory look at your current financial standing.
It is equally important to understand that mortgage pre-approvals are not created equal, which is why it makes sense to educate yourself about the guidelines set by a lender. Nevertheless, you will improve your chances of obtaining a pre-approval by paying attention to the following important points:
- You are likely to get a pre-approval without having to go through a lot of hassle if you come with all verifiable information, especially a letter that states your income. You do not have to worry about down payment verification if you can provide a proof of your income. If the lender thinks you have satisfactory income, they might be willing to offer a pre-approval with fewer conditions.
- Work with the mortgage broker and ask them to check your credit history and ensure that there is nothing that they would like to be changed. It is true that most lenders are not going to check your credit history at the time of pre-approving your mortgage but they will eventually do it at the time of final mortgage approval. Therefore, it makes sense to have it done as early in the process as possible. At this stage, you may also be able to get important advice from your broker to build your credit history, if of course, you do not have any. You can take a number of steps during the soft stages of buying a home to improve your credit score.
- Stay away from making any lavish purchases while looking for a mortgage. Many people do not realize that running up credit cards or making lavish purchases can have a direct impact on how much amount they can qualify for. Your lenders will feel much better when they know they are dealing with a financially responsible person. Similarly, it is going to hurt you if you change your job often; in fact, it can affect how much money you can get if you change your job in 6-8 months of buying a property.
Therefore, you should consider all these points when go out looking for a mortgage preapproval to increase your chances of finding a right deal.