If you're thinking about buying a home, the #1 question on your mind is probably, "How much can I afford?". We all love looking at pictures of our dream home online, but the last thing you want to do is fall in love with a home you can't afford. And while a lot of online calculators claim to tell you how much your payments will be and how much home you can afford, the reality is that they are almost always wrong, and are at best broad estimates.
So whats the best way to figure out a realistic budget? One that you can actually afford and more importantly one that you are comfortable with? A Pre-Approval letter from an actual mortgage lender.
What is the Pre-Approval process?
Once you finish the initial application and are Pre-Qualified, your lender will request documentation to verify your income and assets. Typically Pay Stubs, W-2's, Bank Statements and Tax Returns. Your lender will use the documentation to determine your exact qualification and issue a Pre-Approval letter.
Why is a Pre-Approval so Important?The importance of a Pre-Approval cannot be overstated. First and foremost it gives you the confidence to know exactly what you are qualified for. From a strategic standpoint, it provides two very important advantages when home shopping in a competitive market.
1. It allows you to make the strongest offer you possibly can. When a seller (and sellers agent) gets an offer with a pre-approval letter from a reputable lender, they can be confident the buyer's financing is solid.
2. It will allow you the option to do a quick close. In multiple offer situations, sometimes the ability to close quickly will be the difference in having your offer accepted or not. The industry standard for contract to close is over 30 days. Our pre-approved clients regularly close in 14 days, and even less in extreme circumstances.
Bottom line - Getting a Pre-Approval is more important than ever in today's competitive market, and one from a reputable lender will give you a leg up on the competition.