A pre-approval from a mortgage lender has gained more importance in real estate transactions than ever before.
There are many reasons that reward you, not punish you, for making the effort toward mortgage loan pre-approval.
It is a wise move to start your loan pre approval and home search early.
You do not have to update your pre-approval status if your circumstances to not change, and the effects of a lender verifying your status while you shop for a mortgage will have little impact on your credit score.
A formal loan application for a loan on the property you ultimately chose, subject to financing, is the only other time you will have to circle back.
Lenders have different criteria in determining buying power, so that pre-qualifying will go a long way toward a positive experience.
Here are the key benefits of pre-qualification:
1) You know in advance what you can afford.
2) You save time not looking in the wrong price range.
3) You get the lender's perspective of the local marketplace.
4) Your future agent will see your pre-approval as a positive sign you are serious.
5) A source of financing can influence the seller's reaction to an offer.
6) It can lead to a more efficient and faster closing.
7) You may learn about the financial alternatives available to you and have time to consider them.
After you have been pre-qualified and found the right home, you will have to fill out an application and submit the information you initially collected.
Depending on when you buy, underwriting will most likely request updated and additional information from you.