One of the biggest purchases anyone can make is a house that will turn into a home. Chances are, however, that you will need to finance the investment with a home loan. A big advantage when hunting for a house can come in the form of mortgage preapproval; in some ways, it is practically a rite of passage that launches the long process of property purchase.
Here is what you need to know about mortgage preapprovals:
What is a Mortgage Preapproval?
A mortgage preapproval is a document or letter that declares exactly how much a lender is willing to lend you so you can pay for the house you are buying. It is a crucial step in the process of buying a home.
Whether you’re a first-time home buyer in Roseville or you have done this before, the preapproval process will be the first piece of the puzzle. Knowing how much you can afford allows you to look for properties within that price range rather than waste time with homes that are out of budget.
Once you have narrowed the list of potential properties down to a few top contenders, it will be time to extend offers. Sellers will be able to see that you have already been vetted by a lender and will thus be able to pay them for the property. That estimate can be used by real estate agents and sellers alike, in order to figure out whether or not you are indeed a serious contender for a house.
How Do Lenders Determine an Amount?
The foundation of preapproval lies directly within your financial situation. Lenders will look into your credit with a hard inquiry in order to determine just how worthy you are of credit. They will request your bank statements and retirement statements to assess how much you have in your bank account. They will request your paystubs and your federal tax returns to check on your income. These 3 items are the main requirements of getting a preapproval letter.
With the information provided, lenders will then be able to calculate a rather fair estimate as to just how much you can afford in terms of buying a house. They will then have the option of preapproving you for a loan amount based on your situation.
Being preapproved by a lender means you have been pre-underwritten and can go shopping for a property. Of course, if your financial situation drastically changes during your search for a home to buy, there is a possibility that your preapproval will get affected.
What are the Benefits of Being Preapproved?
A key benefit of preapproval is that sellers as well as real estate agents will have a clear sign that you are very serious about making a purchase. Moreover, they will be able to tell that you can actually afford the house you are trying to purchase. When you have Interest in a house that moves and you want to make an offer, the pre-approval letter makes your offer stronger than without it. The seller and the realtor will want to make sure that you can actually pay for it and follow through.
When you are able to get a clearer picture of what you can qualify for, what your monthly payment will be and what cash to close will be required; this will help you to decide what price range you can qualify for and want to stay within.
Not having a preapproval could mean that someone who has a lender and a preapproval will be favored over you.
Get Preapproved in Roseville with Steelman Mortgages
Preapproval plays a vital role in being able to buy your new house. Submit the necessary documents and go through the credit check, then go ahead and start your home buying journey! For best results, it is likely best to seek professional guidance on mortgages.
Looking for a mortgage lender in Roseville? Contact Steelman Mortgages at (916) 847-7263! We can’t wait to help you whether you’re a first-time home buyer or someone looking into reverse mortgage and other similar needs.
