What is the Mortgage Preapproval Process For a Mortgage Loan?
Mortgage preapproval provides an accurate indication of how much money a lender is willing to loan you, giving you the assurance to start searching for homes within budget and narrowing down your search.
Preapproval, which is valid for between 60 – 90 days depending on the lender, is an essential step in the home-buying process. Not only does it give you a timeline to search for property but it also demonstrates to sellers that you are serious and responsible about taking advantage of any available financing options.
You can get preapproval from most mortgage lenders. Even friends or family who offer financial assistance towards your down payment can help you out; just be sure that you undergo a credit check first and provide all required documentation to the lender.
Mortgage preapprovals come in three forms: prequalification, preapproval and full approval. Receiving preapproved will make making an offer on a home more likely because it makes the seller more likely to accept your offer. Plus, you won’t have to experience the heartbreak of being unable to afford a house you want.
Applying for a mortgage can be challenging if you have little or no credit history. Lenders look at every detail of your finances when making their decision, including any car loan payments made and credit card balances you may have.
This is an extensive process that may take weeks to complete. Once approved, the lender will conduct an appraisal on your property to assess its fair market value. Your lender then confirms all information provided on your preapproval form and issues an official approval letter.
Some lenders base their preapprovals solely on the information you supply, while others go deeper to verify all necessary documents are present. Ultimately, their goal is to guarantee you receive approval for a loan before beginning house hunting so there are no unexpected delays or costs down the line.
You may be taken aback by some of the questions your lender will ask you. This is because they want to verify that you aren’t concealing anything from them or trying to circumvent their rules.
Preparing for the preapproval process is best done by reviewing your credit report and score beforehand, as well as building up a credit profile through credit cards or other lines of credit. Doing this increases your likelihood of getting approved and makes getting an advantageous interest rate on mortgage easier.
In addition to checking your credit, you’ll need to fill out an application and submit all necessary documents. Doing this ahead of time can expedite the process and prevent any potential issues down the line.