For anyone who has gone through the process of trying to buy a new home, you know it can be a little frustrating at times. But there are a few things you can do that will streamline the process so you can get into that home of your dreams just a little sooner. One of those things is to get a mortgage preapproval.
Prequalification Versus Preapproval
As the names would imply, a “pre” qualification and “pre” approval is something you do before you close on your home. However, while some people might use these two terms interchangeably, there are differences between the two.
Prequalification is a very early process where a lender takes some basic information with the goal of giving you an idea of how much of a loan you can qualify to get. They won’t do an in-depth review of your finances, but it helps homeowners to know they’re shopping for houses in the right range. It can also help you and the lender figure out what type of home loan would work best in your situation. For prequalification, all you need is:
- Current income information
- Quick credit check (the lender performs this, and it won’t hurt your credit score)
- Basic bank account balance information
- Estimated down payment amount
Preapproval, on the other hand, is a more in-depth process that you would go through when you’re getting closer to choosing the home you want. You will provide more detailed information and the lender will get you pre-approved for a specific mortgage loan type and amount, which means you can confidently put in an offer on the home you want. You need:
- Copies on your most recent pay stubs showing the past 30 days of income
- An in-depth credit check (again, this won’t hurt your credit score if you’re actively shopping for a new home)
- Bank account information that includes account numbers and your two most recent statements
- Proof of the down payment you plan to make
- The amount of the mortgage loan you plan to get
- Tax information, including W-2 statements and/or tax returns for two years (if you own a business or are self-employed)
Benefits of Preapproval
With all this information, your lender can give you information about exactly how much of a mortgage you can quality for, and the seller knows you are a serious buyer. This is particularly helpful in a competitive market, where the seller may have multiple offers; they’re more likely to accept an offer from someone they know can qualify for a loan.
Ready to take the next step in your homebuying journey? Talk to Integrity First Lending today to find out what it takes to get preapproved and go put in an offer on the perfect home.