Why is it important to get a pre-approved mortgage before purchasing a property?
A pre-approval letter is a document issued by the mortgage company suggesting that the buyer meets the lender guidelines and can purchase the selected property. It gives a rough estimate of the monthly payment that the borrower needs to make. Most financial institutions issue such letters after checking the applicant’s credit score, debts and assets, and the overall income. For securing mortgage pre-approval, the applicant needs to submit pay stubs for two years, tax returns for the same period, bank statements and investment account statements for 12 months, as well as divorce decrees in case if the applicant receives or pays for child support. There are several other benefits of getting a pre-approval.
Knowing what you qualify for
There’s no way to find out what you qualify for until you interact with a lender. The applicant might think he qualifies for $650,000 but may end up with approval for $600,000. Thus, it is critical to know what you are eligible for. Having a conversation with a lender will help you understand the monthly mortgage installment amount. Plus, you also need to consider the homeowner’s insurance premium amount, property taxes, HOA fees that you would be liable to pay every month along with the mortgage installment.
Running a credit check
Several home buyers do not opt for pre-approved loans to avoid a credit check. However, experts suggest it is the other way around. Running a credit check offers a full picture. The only way a borrower can know what they qualify for is by running a credit check. If you are seriously looking forward to purchasing a house, you should not worry about a few points on the score. The lender needs to check the total financial picture. If something does not look good, a knowledgeable lender can help you figure out ways to restructure it and suggest steps that can help v you qualify for more.
Checking suitable lender programs
There are lender programs for teachers, military personnel, first-time home buyers, etc. that can be beneficial. If you wish to check the best Homes for Sale in Vero Beach FL, Debbie Bell’s office can assist you with local lenders’ details.
A pre-approval letter needs to be submitted with the offer
If you want to write an offer for a property that you appreciate, submitting a pre-approval mortgage letter is important. If you have all the documents that lenders require, you can get the pre-approval letter within a few days. Sellers often prefer to select offers that have pre-approval letters with the proposal. Put simply, Vero Beach Real Estate sellers may not take your offer seriously if submitted without a pre-approved mortgage letter.
Helps in determining the price range
Lenders approve an amount based on their policies that may vary from one institution to the other. Borrowers who wish to check the amount that they can realistically afford often apply to multiple lenders. It helps buyers to determine which houses can fit in their budget. After all, there’s no point in appreciating and falling in love with a home that’s out of the budget.