Get Pre-Approval For Your Next Home

When you’re searching for real estate, getting pre-approved before you start perusing the listings only makes sense. But what is loan pre-approval, and what does it entail? Read on to find out.

The Advantages of Pre-Approval For Your Next Home

Loan Pre-Approval offers the following benefits:

• Ability to know how much house you can afford
• Ability to know how much cash will be required for your down-payment
• Simplification of the entire pre-approval process.

Having a pre-approved loan amount in place before you start shopping around for your next home allows you to focus in one the homes that are right for you, and avoid wasting time on the ones that aren’t.

Items Considered In a Mortgage Pre-Approval

When you decide to obtain a Pre-Approval, the following items will be taken into consideration:

Credit Rating: It’s important to have a credit rating that appeals to lenders, (650 and higher) as well as to know what your credit report contains. Several sites offer free credit reports, and you should obtain one before your lender does. This way, you can correct any errors before you receive your loan pre-qualification.

Employment History: Whether or not you are currently employed, as well as your employment status for the past few years can have an impact on the pre-qualification amount that you qualify for. This doesn’t mean that unemployment is a penalty just that lenders want to make sure that you are a stable, committed person, since job stability often translates into stability in other areas.

Your Monthly Income and Expenses: Your monthly income, minus your monthly expenses, is a quick way for lenders to determine how much home you can afford, and allows you, as well, to see how future mortgage payments will impact your existing budget.

Before you start your search for your dream home, speak with your mortgage lender and real estate agent about obtaining a pre-approval. Once you’ve been pre-approved, you can search smarter, knowing that once you find one that you like, you will be able to afford to finance it.