How Does a Mortgage Pre-Approval Work?

Visiting open houses and scheduling showings make the aspect of buying a new home extremely exciting, but you have to get your ducks in a row with mortgage pre-approval before you buy your dream home.

If you want to get a better idea of what your price range is, work with a mortgage lender to find out what will fit in your budget.

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Learn how getting pre-approved for a mortgage works, in our blog.

Mortgage Pre-Approval

When you work with a mortgage lender, you are able to acquire a pre-qualification letter or a mortgage pre-approval letter. While each will help you determine how much you can afford, realtors suggest that homebuyers are better prepared with a pre-approval letter. The pre-qualification letter lists an amount that the lenders think you will be able to borrow based on a credit profile and your income. This isn’t supported by any documents, however, so it is mainly relied on as an estimate. Mortgage lending standards became stricter after the housing crisis, though, and most sellers only accept offers where the buyer was pre-approved based on actual information that has been verified.

The Benefits of Mortgage Pre-Approval Letters

Since a pre-approval letter will verify your credentials to perspective sellers, it makes the whole process of buying a home much easier. You will have your paperwork and credit check all set up after acquiring a mortgage pre-approval letter, and you will also have time to fix any errors in your credit history before you start submitting offers for a house. Pre-approval letters can also speed up the whole process of purchasing a new home, so making the effort to get everything in order before your first offer on a house will put you one step closer to moving into your dream home.

Preparation

Your mortgage lender will also need a few things from you to help everything move as fast and as smooth as possible. Make sure you are completely honest with your lender and have tax returns, bank statements, pay stubs, and your employer’s information ready for your lender. There is a lot of information to verify, so preparation is of the utmost importance.

Purchasing a new home can be tricky, but working with a company that can offer you its years of experience and expertise will make the process much simpler.

Real Estate Settlement Services from Colony Title Associates

Colony Title has been in business since 1995 and handles more than 2,000 real estate closings per year. If you have any questions or would like to speak to a representative about closing, please give us a call at 410-884-1160 or visit our website for more information.

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