Going through the process of getting pre-approved for your mortgage provides certainty that you will be able to obtain a mortgage to buy a home or refinance your mortgage when you want to. Through the pre-approval process, the lender reviews your personal and financial information, including your credit score, to determine your ability to qualify for a mortgage and assesses what size mortgage you can afford. Because the lender reviews your information in advance of you applying for the mortgage, you eliminate any disappointing surprises, such as a low credit score or high monthly debt preventing you from qualifying for the mortgage.
Understand How the Mortgage Pre-Approval Process Works
Additionally, you gain an understanding of the lender’s mortgage underwriting rules and borrower requirements so you know what to expect through mortgage processing and closing. In most cases, mortgage pre-approval is subject to the borrower finalizing his or her mortgage application as well as the lender’s review of the home purchase contract, property appraisal and other documentation required to close your mortgage. So although getting pre-approved does not guarantee that your mortgage will close, it does provide a significant amount of certainty that you can obtain a mortgage.
Getting pre-approved allows you to move quickly when you find a property you want to buy or if you decide to refinance your mortgage. Because you have completed the initial borrower review process with the lender you reduce the time it takes to process and close your mortgage when you decide to move forward.
Additionally, it will help you get organized for the mortgage process including gathering the personal and financial documents required by the lender. In short, getting pre-approved puts you in the best position to close your mortgage as fast as possible.
If you are in the market to buy a home, getting pre-approved provides you a competitive advantage as compared to other borrowers. From a home seller’s perspective, it shows that you are both qualified financially and serious about the home buying process. In a competitive housing market if multiple potential home buyers place offers to purchase a home, buyers that are pre-approved for a mortgage typically have an advantage over the buyers that are not. Get pre-approved to give yourself the best opportunity to purchase the right home when you find it.
Getting pre-approved by a lender should always be free. If a lender attempts to charge you then you should work with a different lender. From the lender’s perspective, pre-approving a borrower makes it more likely that the borrower will choose the lender for his or her mortgage. This means that the lender should be willing to put in the upfront work for free to develop a relationship with you so that you ultimately select that lender for your mortgage.
Use our free get pre-approved form to get approved and review loan terms from multiple lenders. The form is easy to use, no obligation and getting pre-approved does not affect your credit score.
Being pre-approved by a lender does not obligate you to work with that lender to obtain your mortgage. We recommend that you continue to compare proposals from other lenders to find the mortgage that is right for you. It may be with the lender that pre-approved you or it may be with a different lender. You may find a lender that offers a lower mortgage rate or closing costs in between when you are pre-approved and when you find a property that you want to buy.
Use our Mortgage Comparison Calculator to compare loans with different rates and closing costs
It is important to emphasize that you have absolute no obligation to select the lender that pre-approved you and you should select the lender and mortgage that best meet your needs. Although switching lenders requires you to start the process over, selecting a mortgage with a lower interest rate or fees can save you thousands of dollars.
A key advantage of getting pre-approved is that it enables you to identify and proactively resolve potential issues with your mortgage application before you officially apply for the loan. For example, you may not realize that you have a credit issue that you need to address. Or you may be missing important documents that are required to qualify for the loan.
Finding and solving potential issues before you make an offer on a home helps eliminate surprises that can make make it difficult or impossible for you to qualify for a mortgage. Addressing these issues during the pre-approval process is preferable to addressing them after your offer has been accepted and you need to close your loan to complete the home purchase process.
Mortgage Pre-Approval: http://myhome.freddiemac.com/buy/get-pre-approved.html