There are many questions prospective home buyers have when getting ready to buy a new home… from the home selling and buying processes, to staging your existing home to sell, to your new mortgage plus more. One of the most common questions about your mortgage and the home buying process might be about the pre-approval letter and what is necessary for this document. If you have bought a home before, you might remember applying for your pre-approval letter. But often, even if you have bought a home before, procedures change. Let’s take a look at mortgage pre-approval letters and what’s involved with one.
What is a Mortgage Pre-Approval Letter?
A mortgage pre-approval letter is a document given to a prospective homebuyer from their mortgage officer, providing evidence to real estate agents and home sellers that you have been approved for a mortgage loan and the dollar amount you’re approved for. This pre-approval letter will provide assurance to home sellers and their real estate agent that you are serious about your pursuit in buying a new home, and show them that the amount you are applying for is in the range of the home that is for sale.
Honestly, it’s best to have this document in your possession before you even start touring potential homes to buy.
How Do I Use a Pre-Approval Letter?
Once you have decided on your home buying budget, contact your mortgage broker, you can ask them to begin the paperwork for a pre-approval letter. In order to pre-approve you for a mortgage loan, your mortgage broker will require certain records and paperwork from you. Once you have been pre-approved, you will receive a letter from them. This will most likely be an online or emailed document.
From here, you can send your pre-approval letter on to your real estate agent. Many real estate agents will require this type of form before they will work with you. It proves to them that you are serious about your new home pursuits and verifies the best home buying budget for you. Everyone’s time is valuable including yours, so it’s best to make sure you’re pre-approved before starting the home shopping process.
Pre-Qualified vs. Pre-Approval
You will hear many terms in your home buying and selling process. Two of them will be pre-qualified and pre-approval. Not all mortgage companies will work with both of these options, and sometimes you’ll hear these terms used interchangeably. Pre-qualifying is considered the first step. This first document will give you an idea of the type of loan you’ll likely qualify for and give you an idea of the home price range you can start to look at. It’s a good idea to know this so you can base your decision on whether now is a good time for you to move or not.
Once you have decided now is the time to get more serious and move forward buying a new home, a pre-approval letter is what you need.
Your Mortgage Pre-Approval Letter Contains 4 Things
- Proof of Income
- Proof of Financial Assets
- Your Credit Score
- Verification of Employment
Collecting these documents early, before reaching out to your mortgage officer, will make the process go quicker. They will likely ask for a variety of other items as well like your social security number and driver’s license. Being prepared will prove quite helpful when you have many other tasks on your list during your busy day. Keep any documents you gather in one place to provide them again, as necessary.
How Many Mortgage Pre-Approval Letters Do You Need?
You will ultimately only need one pre-approval letter to present to your real estate agent. However, don’t hesitate to talk with a number of mortgage professionals and get information from each of them in regards to what you could qualify for. You might find a lower interest rate or fees charged for services elsewhere.
Your Knowledgeable Memphis Area Real Estate Agent
When it’s time to sell your existing home or buy a great new place, turn to a highly-regarded and well-informed local real estate agent. You want a real estate agent that will guide you during both your local home selling and buying process. You want someone that you can trust to give you the best advice and know-how for this area. Check out my other great articles to help you through your home selling and buying experience here in Memphis.
And, take a minute to learn more about me and how I can guide you with your house sale, new home purchase, or buying a great parcel of land. With over 15 years of providing top-notch service for my clients, I want to help you with your home selling or buying process as well. I know how important selling your current house and buying your new home is; contact me at (901) 828-8919 or drop me a quick note firstname.lastname@example.org and we can speak in person about your plans and options. I look forward to speaking with you today!
Angie Kelley, Crye-Leike Realtors
(901) 828-8919 or (901) 756-8900