Why Pre-Approval Matters
You may have heard it ’ s important to get pre-approved for a mortgage at the beginning of the homebuying process , but what does that really mean , and why is it so important ?
Why Pre-Approval Is Key
When looking for a home , the temptation to fall in love with a house that ’ s outside your budget is very real . So , before you start shopping around , it ’ s helpful to know your price range and how much money you can borrow for your loan . Pre-approval from a lender is the best way to do this .
Here ’ s how it works . According to NerdWallet , pre-approval is a letter that :
“. . . states the amount and type of mortgage the lender is willing to offer , along with the terms ."
To get this written confirmation , you ’ ll need to provide information about your financials , including your income , employment information , your credit history , and more . NerdWallet explains :
“ Preapproval requires you to provide proof of your financial history and stability . The lender will verify your income , employment , assets and debts , and will check your credit report .
You ' ll provide information in the form of W-2s , a current pay stub , a summary of your assets and your total monthly expenses . . . .”
While it may sound like a lot of documentation , the right professionals will make the process easy for you . Your pre-approval will help you know not just what you can borrow , but it ’ s also a great tool to help you set a budget and really understand your financial options . This way , you can begin your home search with a clear picture of what you want to look for .
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