Getting preapproved for a home loan online
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3) Mortgage Preapproval: How It Helps A Homebuyer - Bankrate
getting preapproved for a home loan online
Not everyone will get pre-approved for a mortgage , but there are a few things you can do to get better prepared for the financial responsibility of homeownership:
Before you start shopping for a home, you should work with a lender to get pre-approved for a mortgage . Learn how to get pre-approved for a home loan now.
Mortgage » Basics » Hero Images/Getty. Shopping for a home before getting preapproved for a mortgage is the equivalent of walking into a grocery store without …
One of the best things you can do to help ensure your best possible shot at getting the home you want is to get a pre-approved mortgage loan. Mortgage pre-approval is basically a promise from the lender that you’re qualified to borrow up to a certain amount of money at a specific interest rate, subject to a property appraisal and other requirements.
In the mortgage pre-approval process, the lender looks closely at your credit and verifies your income (as opposed to pre-qualification, for which your information is not verified). If you’re granted a pre-approved mortgage loan, the lender gives you a pre-approval letter, which says your loan will be approved once you make a purchase offer on a home, and submit the following documents: the purchase contract, preliminary title information, appraisal, and your income and asset documentation. Keep in mind, though, that pre-approval does not completely guarantee your loan will be approved and is generally only valid for 60-90 days (but this varies and should be verified by your lender).
Pre-approval means the lender is confident you can make a necessary down payment and your income is sufficient to cover mortgage payments . At this stage, only one concern remains. The lender needs to make certain the property’s value offers sufficient collateral in relation to the loan amount. In other words, the home must be appraised for an amount more than, or equal to, the purchase price.
While shopping for a home may be pleasant, serious buyers need to start the process in a lender 's office, not an open house – and by obtaining a mortgage pre-approval . This process, basically an evaluation that determines whether the borrower qualifies for a loan, is important for several reasons.
First and foremost, in today's real estate market, most sellers expect buyers have one, and may only negotiate with people who have proof that they can obtain financing. Second, would-be homeowners learn the maximum amount they can borrow. They can also have an opportunity to discuss financing options and budgeting with the lender. Finally, if there is any problem with their credit, they'll get a heads-up about it. (For related reading, see A Guide to Buying a House in the U.S ).
With pre-approval, the lender checks your credit and verifies your financial and employment information and documentation; this not only confirms your ability to qualify for a mortgage but approves a specific loan amount (usually for a particular period, such as 90 days). (Learn more by reading Pre-Qualified vs. Pre-Approved - What's The Difference? )
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Start with how much you want to spend each month on housing. Most budgets call for earmarking 28% of your post-tax income for house payments, including your homeowners insurance and property tax. For example, if your annual income after taxes is $60,000, 28% of that is $16,800, or $1,400 per month. However, every situation is different. Maybe you have costs in your monthly budget that affect your bottom line, such as childcare, car payments, or student loans – the important thing is to find a monthly payment that you’re comfortable with.Tags: getting, preapproved, for, a, home, loan, online,