It is no secret that many lenders have tightened their credit requirements. Especially for mortgages, buyers may find that while interest rates are low, obtaining a mortgage can be especially challenging. However, with the right documentation, potential home buyers can obtain the credit they need.
Income Verified Mortgage Pre-Approval: Why You Want One
Obtaining an income verified mortgage pre-approval letter can go a long way toward helping you become a home owner. A mortgage service can help you obtain pre-approval online. You can also compare and contrast different mortgage lenders to ensure that you are getting the best possible deal.
Mortgage Pre-Approval Definition
Many people confuse mortgage pre-approval with mortgage pre-qualification. While both mortgage pre-qualification and mortgage pre-approval are helpful tools for home buyers, mortgage pre-approval is preferable. With mortgage pre-qualification, you submit basic information to a potential lender such as income and debts; however, in many cases, the lender does not run a credit check. Therefore, the pre-qualification letter only represents a tentative estimation of what the lender believes you may be able to afford.
On the other hand, obtaining a mortgage pre-approval involves a thorough evaluation of the buyer’s financial resources. Buyers must present proof of income, good credit and verification of steady income, and undergo a credit check. If the results are favourable, the lender provides a letter to the potential home buyer stating that the lender would be prepared to approve a mortgage of a particular amount. While mortgage pre-approval does not represent a firm commitment on the part of a lender, buyers who present mortgage pre-approval demonstrate that they have the financial means necessary to purchase the homes they are viewing. With a mortgage pre-approval in hand, you are prepared to make a firm offer immediately for the house of your dreams.
Establish a Specific Budget
Once you have obtained a mortgage pre-approval, you know precisely how much house you can afford. You won’t waste a seller’s time or risk disappointment by considering homes that are far out of your financial reach. On the other hand, if you have a mortgage pre-approval in hand, you can begin to develop a concrete budget for mortgage payments and other financial aspects of home ownership. You can establish good estimates of your monthly payments and begin to determine how to allocate the resources from your income (and perhaps including the income of a spouse or partner). Going through the process of obtaining a mortgage pre-approval eliminates some of the financial surprises of home ownership, especially for first-time home buyers
If a seller receives several offers for his or her home, selecting a buyer from the various offers can present a challenge. Potential home buyers who obtain mortgage pre-approval present themselves as serious buyers who possess the financial means to see the sales transaction through to a mutually satisfactory conclusion. Potential home buyers who have obtained mortgage pre-approval definitely receive more serious consideration than potential buyers who have only obtained mortgage pre-qualification. Buyers who have obtained neither mortgage pre-qualification nor mortgage pre-approval may find themselves shut out of a competitive home buying market.