Pre Approval is just one of the many steps of buying a home. It is one that is often skipped but is very important to the home buying process. Most people assume they need a perfect credit score and thousands of extra dollars to put down, but that is simply not true. You can get approved for loans with nothing down, and credit scores near the 600 range. Sometimes these two factors don’t go hand-in-hand and if you have a lower credit score, you may need to put a small percentage down on the home.
Pre Approval is just what it says, you’re getting pre-approved for a loan on your new home. The pre-approval process is vital to those with lower credit scores and/or those who are looking to get a home with little to no money down. The pre-approval process allows a mortgage broker to sit down with you, review all of your paperwork such as pay stubs, and your credit score, and to tell you which loan options you are eligible for. The pre-approval process is great for figuring out not only what you can afford, but what loans are available to you. This process can be beneficial to those who are unable to be pre-approved as well because the mortgage broker can point you in the right direction of what you need to do to qualify for a home loan.
Many people who skip this step simply go into looking at homes first without knowing which loan they qualify for, how much they can afford, and how much they’ll need to put down. Those who do this may be looking at homes they cannot afford or won’t be approved for financing for. Others may be looking at homes that they think fits what they can afford when they can afford much more than they think. Either way, pre-approval should be the first step you take when you consider buying a home.
The next step in the home buying process after pre-approval is what’s called underwriting. This process essentially means that the mortgage broker will work to figure out if you’ll be able to repay your loan or not. They look at things like your credit score, bank statements, pay stubs, and tax returns during this process. Once the income is verified, your broker will be able to tell you which loans are available to you. At this point, you would have been searching for your new home with a realtor, so you’d make an offer on the home that you love. Once the offer is put in, appraisals and inspections will need to be done. As those are being completed, they may affect whether or not you can receive a loan. For example, if the appraisal comes back that the house is worth $20,000 less than the listing price, but the sellers won’t budge on the price, your broker will not want to lend you the money for the investment if the home is worth less than the loan amount. Assuming all goes well with the inspections and appraisals, the next step is the title search process.
This process includes the broker and their team searching for the ability of the title to be transferred to a new owner. Things like liens will affect this. Once everything is verified that there are no financial or legal holdings on the home, an insurance policy will be issued for both the lender and the new property owner. This is the last step before the actual closing process. During the closing, your application and all paperwork will be reviewed and you will receive a decision from the brokerage on whether or not they will finance the mortgage. Assuming all goes well, you will sign the papers for your new home. This is when the broker will begin the loan for your home, and the sellers will be paid for their home. After this, you are ready to move into your new home.
To get pre-approved, or if you have any questions, give us a call today. 816-396-6001.
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