What Do You Need To Know When Getting Ready To Get Pre-Approved ?

Do you start to feel overwhelmed when thinking of buying a new home? With so many decisions to make, do you even know where to start?  

Well, good news, you’re at the right spot.  Hello, my name is Deborah Benn, one of the partners at Real Estate Hub Spot, and I’ll be your tour guide on the steps when buying a new home.

 When you're ready to buy a home, the first step is to get connected with the right loan officer to get pre-approved for a mortgage. 

Click above to watch the entire video, where Deborah Benn covers the five common questions regarding the first step of getting pre-approved when buying a home in the Chicagoland area.

1. What is pre-approval? 

Pre-approval is an estimate of how much you'll be able to borrow based on your income, your debts, and your credit score. To get pre-approved, you'll need to provide this financial information to the lender.  The lender will then use this information to calculate your debt-to-income ratio and determine if and how much you qualify for a loan. 

2. What are the benefits of getting pre-approved for a mortgage?

There are several benefits to being pre-approved;  one biggie is that it will help you avoid making an offer on a house that you can't afford. Wouldn’t that be awful?  You fall in love with a property, dream about living there, and then find out you can’t buy it because you don’t qualify for a loan.  Let’s avoid that at all costs, deal?

Let’s get back on track. Additionally, Sellers are more receptive to offers from buyers who have been pre-approved for a loan.  In fact, most sellers will not entertain an offer without a pre-approval letter from the lender. Sellers fear wasting their time with a buyer who cannot qualify to buy their home, so this letter shows that you have been approved for a loan up to a certain dollar amount.  I can tell you horror stories of buyers not being prepared when finding the home they love and losing out because of a bad letter.  Did I say bad letter?  Yes, I did!  Ask me about this during our onboarding meeting.  

Ultimately, getting pre-approved for a mortgage is essential to ensure you have a smooth, efficient, and successful home-buying experience; all have huge benefits. 

3. How to get pre-approved for a mortgage? 

Typically, there are two common ways to start the pre-approval process. You can start the application process over the phone with a loan officer:  he or she will ask you questions about your income, debt, and assets, and you’ll answer them.  Simple, right? Or, you can fill out an application form, and the loan officer will give you a call to go over everything and provide your options.  This can be an incredibly efficient way to start the process.  Tip: It is beneficial to work with a local lender rather than an online mortgage company.  If you want us to connect you with the loan officer we love & trust, then let us know, and we’ll get on it right away.

4. What do you need to provide to get pre-approved?

Each individual that plans to be on a loan will need to submit some basic financial information to the lender, and they'll run a credit check.   Basically, four items to get ready for the loan officer are as follows:

1. 1.  Please be ready to send the loan officer copies of your most recent pay stub that shows your most recent 30-day income.
   2. Two most recent bank statements for all accounts.
   3.  Be prepared to discuss the funds available for a down payment amount. Tip:  gather any questions you have regarding this ahead of time, as there are a variety of loan products in the marketplace, with loan products that require as little as 3% down.  Do know the higher the down payment, the lower your interest rate, but don’t necessarily put off buying a home now if you don’t have a higher down payment.  Discuss this with the loan officer and us to make the most educated decision.
   4. Be prepared to provide your W2 forms and personal & business tax returns for the past two years.  Remember that only documented income can be used to qualify for a loan.  Oh, do we have stories surrounding individuals who want to qualify for a higher loan amount but didn’t report income to the IRS.

5. What happens once you’re pre-approved?

The loan officer will provide you with a pre-approval letter. Once you have your pre-approval letter in hand, you can start shopping for homes within your budget. Let’s schedule our onboarding meeting so the shopping can begin. 

Remember that getting pre-approved isn't the same as final approval, which you'll need to obtain before closing on your home. But getting pre-approved is an essential first step on the road to homeownership.

If you have further questions, please do not hesitate to reach out to us; we're hear to help!