What Is A Mortgage Pre-Approval?
When you are purchasing a home in the Delaware Valley, your real estate agent will recommend that you obtain a mortgage pre-approval with a specific lender before you find the home of your dreams. Working with a lender that your agent introduces you to is important as this will make for a smoother mortgage process and ensure you meet all required dates defined in the agreement of sale. You are however allowed to choose the lender of choice but choosing the one your agent recommends could make the transaction a lot smoother.
There are some benefits to being pre-approved before you find a home, but oftentimes, people confuse pre-qualifications with pre-approvals.
So the question many buyers have is what exactly is a mortgage pre-approval?
In a nutshell, it’s when the lender provides you (the buyer) with a letter stating that your mortgage will be granted up to a specific dollar amount.
What Do I Need For Pre-Approval?
In order to obtain a pre-approval for your Montgomery County or Bucks County home purchase, you will have to provide your mortgage person all of the same information you would need to show for qualifying for a mortgage.
This means providing tax returns, w-2’s, bank statements, pay stubs, and other documents that prove your net worth, how much you have saved for your down payment and your current obligations.
What Conditions Are Attached To A Pre-Approval?
Generally speaking, a pre-approval does have some caveats attached to it. Typically, you can expect to see some of the following clauses in a mortgage pre-approval letter:
- Interest Rate Changes – a pre-approval is done based on current interest rates. When rates increase, your borrowing power may decrease.
- Property Passes Inspection – your lender will require the property you ultimately purchase to come in with a proper appraisal and meet all inspection requirements.
- Credit Check Requirements – regardless of whether it’s been a week or six months since you were pre-approved, your lender will require a new credit report. Changes in your credit report could negate the pre-approval.
- Changes In Jobs/Assets – after a pre-approval is received, a change in your employment status or any assets may result in the pre-approval becoming worthless.
Getting pre-approved for a home mortgage in the Montgomery County Or Bucks County area may allow you more negotiation power with sellers and may help streamline the entire loan process.
For more information on getting pre-approved in Montgomery County, Bucks County or Philadelphia, fill out the form below: