Getting Preapproved for a Mortgage

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Purchasing a house is a rather extensive process and sometimes may even seem tiring. Even after you have found the house of your dreams, you will have to go through a number of steps before you actually get to the part of moving in. First of all, you will need to apply for a mortgage and prove that you qualify for one. Once you are done with that, there is one very important procedure you must go through, which is getting your mortgage preapproved Most people are unaware of about this second step of processing a mortgage and usually confuse it with qualification for a mortgage.

To avoid any problems in mortgage processing, one must know the difference between being qualified for a mortgage and getting a mortgage preapproved. Qualifying for a mortgage means that lender will analyze your financial reports to decide how much money are you qualified to borrow. On the other hand, while getting a mortgage preapproved, the lender will re-analyze your finances to decide how much money they will actually lend you.

IMPORTANCE OF GETTING PREAPPROVED

The step of getting your mortgage preapproved is rather important because of the following reasons. If your mortgage is not approved by a bank, most sellers will refuse to make a purchase deal with you. Agents will reject any offers you make for the houses they show you as there will be no guarantee that you will get a mortgage. And in short, you will not be able to purchase a home until you get your mortgage preapproved.

HOW TO GET PREAPPROVED

Since now you know the importance of getting your mortgage preapproved, you must also know the steps involved in getting preapproved. You will need to provide the following information to your lender while applying for a mortgage preapproval:

Choosing Type Of Home To Buy

The first step towards buying a suitable home for yourself is to make a list of your requirements. Think about the type of house you want such as a condo, townhome, duplex, or single family home. Your decision will also depend on your financial capacity, requirements for space, lot size, location, number of rooms, lawns and patios.

PROOF OF INCOME:

You will need to provide proof of your income source which you will use in the future to pay off the loan. It includes documents that prove you have a permanent source of primary income and that your secondary source of income, if any, is constant as well.

Guarantee of Resources-You will have to provide bank statements that prove you have enough financial reserves to pay the down payment and mortgage closing costs when needed. While purchasing a house, you may need to pay up to 20% of the price which will not be accepted if it is loaned.

VERIFICATION OF EMPLOYMENT:

You will need to provide written proof of being employed. It can be your signed employment contract with the person or company you are working for. The lender will also use these to verify that the amount of salary or primary income you have aforementioned is true. If you are self-employed, you will need to hand out additional paperwork that validates the project or personally owned business you are working on.

FINANCIAL HISTORY AND CREDIT:

You will need to provide a good financial history to present yourself as a credible mortgage applicant. In addition to that, you will also need to give your lender access to your bank credit reports, for which you will need to provide them with certain personal details including your name, social security number and signed statement of access.

MORTGAGE PREAPPROVAL PROCESS

Having a mortgage preapproval can help jump start your search in buying the home of your dreams. Consulting with an experienced real estate agent that can help determine how much house you can afford could be the first step in the home buying scene. The mortgage preapproval process is necessary in evaluating the specific loan amount that will be granted by the lender. Once you have provided your potential lender with the above information, it will pave the way for obtaining a swift mortgage preapproval.

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