Getting Pre-Approved For A Mortgage
What is Mortgage Pre-Approval?
When beginning your search for a new home, one of the very first steps you should take is to contact your local mortgage broker to determine the maximum amount of mortgage you may qualify for. This is the process of mortgage pre-approval. Mortgage pre-approval serves to give you insight into your buying power and allows you to set a budget, and shop for homes within that budget. In most cases, the mortgage pre-approval process is fairly quick and straightforward; your mortgage broker may collect some financial information in which to base a pre-approval off of. The amount of information collected, and whether financial statements are required as proof, may vary from broker or lender or depend on your financial situation. Many mortgage pre-approvals may also allow you to lock in at a particular interest rate for a set period of time, usually 60 - 120 days and up to 1 year in some cases.
Getting Your Documents In Order
Having your financial documents in order is a must when it comes to home buying, and not just for the pre-approval process. These documents, and updated versions, are often requested multiple times during the home buying and financing process. In the case of pre-approval, a mortgage broker will inquire about your financial circumstances, requesting information about your current assets, income, and other debts, and may or may not request documents to support these statements. Proof of identity will also be required, and you may also need to provide information regarding your current employment, including details about your position, and employment history.
What To Consider
A mortgage pre-approval amount is the maximum loan amount you may get for a mortgage, and it does not guarantee that value. When it comes time for mortgage approval, lenders will take the chosen property, and its value, into consideration and will do a deeper dive into your finances, as a result, the lender may place limitations on the loan amount. When searching for a new home, it is best to use the pre-approval value as a budget guideline, looking to find a home within that maximum, if not well below.
There are also other financing costs involved that should be considered, including down payment, closing costs, moving costs, and ongoing maintenance costs. Much of these costs will be required upon closing of the property, and cannot be included in the mortgage value.
Is Pre-Approval, Approval?
Pre-approvals are not guaranteed, and should never be considered an actual approval. During the mortgage approval process many other factors are taken into consideration, and a more detailed look into your finances will be performed. This, along with the value and condition of the chosen property can affect your overall approved loan value. In the case of pre-approval, it is best to provide as much financial information to your mortgage broker as possible, being honest and upfront about debts, assets, credit score and more. This allows the broker and lender to produce a detailed financial profile and provide an accurate pre-approval that they can have confidence in, ensuring no surprises when you find your dream home.
If you are currently in the market for a new home, and will be looking for a mortgage in the near future, contact Karen Canning and the experts at The Mortgage Group for your mortgage pre-approval today!