If you are planning to buy a home soon, getting mortgage preapproval is an essential step in the process. Not only will it save you time and money, but it can also make you stand out from competitors.
Tips and Best Practices with your Mortgage Preapproval Letter
Whether you’re purchasing or refinancing a home, having a mortgage preapproval letter is an essential step to guaranteeing you can get the loan amount needed. A lender will review your credit history and other financial info to assess how much you qualify for, including the amount of down payment and interest rate that fits within budget.
Before applying for a preapproval, be sure to have all necessary financial documents such as bank statements and pay stubs ready. The sooner you submit your paperwork, the faster it will be processed.
The time it takes to obtain mortgage preapproval varies based on several factors. If all your information is ready, approval should take only a few days; however, if additional paperwork needs to be provided, this process could take up to one week or longer.
When to Get Mortgage Preapproval
It is essential to get mortgage preapproval before beginning your house hunting. Doing this will give you a better idea of how much you can afford and which houses within your price range you might realistically look at.
This will give you the assurance to begin your house hunt knowing that you can buy the home of your dreams without having to fret over not being able to secure financing once you find it.
If you decide to search for a home while your lender approves your loan, don’t be afraid to shop around for lenders who offer lower rates and fees. To do this, contact several different lenders and provide them with all of your application paperwork.
Preapproval letters are typically valid for 30 to 60 days, though they may have an expiration date so be sure you’re ready to start house hunting before requesting one.
Before applying for a mortgage preapproval, be sure to understand your credit history and debt-to-income ratio. The lender will also examine your income and expenses to determine how much you can afford. If there are any major credit issues such as past foreclosure or bankruptcy, these could impact approval; thus it’s best to address them before beginning the search for a home.
If you can’t find the ideal house within the timeframe needed to obtain preapproval, speak with your lender and request them to adjust the letter accordingly. It could be that a home costs more than what your letter indicates or that the seller wants more money than you can comfortably afford.
