Mortgage preapproval is a common term that you will hear a lot of times when searching for a property in the real estate market in Tucson. But one needs to have clarity around it to get one. Let’s have a deeper insight into what a mortgage preapproval is and how to get it!
What Is A Mortgage Preapproval?
A mortgage preapproval is one of the important things to consider when buying a house. It is an assurance by the lenders in the form of a letter that the buyers are able to get the loan. The mortgage officer will assess your finances and overall profile including your income, credit rating, debt, assets, repayments, etc. They will also tell you how much money you can borrow, how much you would need to pay each month, and what interest rate you can expect. This will clarify your house-hunting budget and your monthly mortgage payment.
Having a preapproval letter for a mortgage significantly increases the chance of getting the best deal. It gives assurance to the seller and the agent that you are serious about buying a house.
Difference Between Mortgage Pre-Qualification VS Preapproval
First, Mortgage preapproval and pre-qualification are not at all the same. Many people have this doubt or misconception as they are similar terms. The difference really relies on the lender’s profiling, assessment, and review. Let’s find out how!
For a mortgage pre-qualification, you have to share your income, debt, and assets with your lender, and your mortgage lender gives you an estimated loan amount. However, the lender does not verify your financial information; he just tells you whether you qualify for a mortgage based on the information provided. Pre-qualification can be useful to compare potential lenders but it is not as strong as a preapproval when you go to buy a house in the housing market of Tucson.
A mortgage preapproval is a thorough inquiry into the borrower’s finances.
Their financial situation is carefully assessed by the lender’s underwriter before the confirmation. The mortgage lender will verify your bank account information, assets, debts, income and employment history, past addresses, and other critical details. Once you get your preapproval letter, you can show it to the sellers to increase your credibility. Having a preapproval instead of a prequalification can help you win a bidding war if multiple people make offers on the same home.
Keep in mind that final loan approval happens when the lender completes their verification on the property itself.
How To Get Preapproval For A Mortgage?
There are basically three key steps to getting pre-approval for a mortgage:
Before starting the mortgage pre-approval process, lenders determine your ability to meet repayments for your mortgage. They would need your detailed information on:
- Proof of income
- Employment verification
- Proof of assets
- Credit history
Here are a few items you should have on your mortgage pre-approval checklist:
- W-2 statements
- Pay stubs
- Bank statements
- Driver’s license or other identification
- Social Security number
Once you have all the documents ready, you should be able to get a pre-approval for a mortgage within 3 business days. It is recommended to have all the documents handy to speed up the documentation process.
The next step is a thorough credit check which determines your payment history, details of borrowing, missed payments, and payment history, including whether you are make your payments in full or make partial payments. It also establishes any history of previous foreclosures or defaults. Sometimes a low credit score or the required credit score for mortgage approval can slow down the process and add some level of complexity in getting a pre-approval for a mortgage. This is why it is so important to start this process immediately. If there are any red flags in your credit history, the lender can help you clear them up so you can buy a home.
Lenders often provide you with a letter or confirmation in the form of an email which you can show to sellers. It is noteworthy that all mortgage pre-approval letters come with an expiration date. It normally lasts for 60 to 90 days. You are required to report any changes such as a change in income, closure of loans, selling or acquiring assets, and more.
There are many mortgage lenders that offer preapproval. It is always recommended to do some research and find the best ones. To make your job a little easier, we have compiled a list of some of the best mortgage lenders
They are as follows:
● Gregg Lindholm
Vice President, Sr. Loan Officer
V.I.P. Mortgage, Inc
NMLS ID #: 1435940
● Chris Lawler
Senior Vice President, Branch Manager
Nova Home Loans
NMLS ID #: 869968
● Sherrie Liebert
30+ Years of experience & great with first-time buyers!
PRMG (Paramount Residential Mortgage Group, Inc.)
NMLS ID #: 198861
To read more about them, check out this link: https://tucsonexpertagents.com/resources/recommended-mortgage-lenders/