One of first questions home buyers ask as they start shopping for a home loan is, “How much money can I expect to qualify for?” The nightmare is for you to find the home of your dreams, only to later learn that it’s out of your price range.  The mortgage approval process can take time, these days – lots of paperwork and documentation to provide – and you don’t want to wait until the process is over to find out how much money you can get.  Thus, the mortgage pre-approval was developed.

Mortgage Pre-approval is a process for lenders to review your financial information to determine how much they can lend you – BEFORE you settle on a home to buy. Once this process has been completed, the lender can provide you and your realtor with a letter of qualification.  This letter should accompany your offer to purchase a home… it’s evidence that you can afford to make your offer.

Home sales are tricky because they don’t simply involve two parties exchanging money for goods, like most trades. In the case of a home sale, one party is offering their money, along with the money of a third party – the mortgage lender. As such, an unscrupulous buyer could offer just about any amount of money and a seller would have no confidence in the buyer’s ability to make good on the offer.  The resulting wasted time could cost the seller a chance to sell their property to a better-qualified buyer.

What Lenders Look at During Pre-Approval

During the pre-approval process, a lender will be looking at your finances to determine how much money they can loan to you, with reasonable risk.  Lenders are looking for you to prove that you are the type of person who can be trusted with money.  To accomplish this, the lender will require documentation of your finances and credit history. Some of the documents that a lender will review include:

  • Tax returns
  • Bank statements
  • Credit score
  • Contact information for your place of work
  • Credit report for a review of outstanding debts and history or repayment

Keep in mind that the better documentation the lender has, the more accurate your pre-approved loan amount will be, so be as complete as possible with what you provide.

An unfortunate, but common, misconception is that mortgage pre-approvals are binding or set in stone.  Pre-approval is simply a snapshot in time of your complete financial picture.   Any changes in your situation – for better or worse – will impact your qualification at the actual time of purchase.  For example, reduced income or added debt could cost you your qualification.

On the other hand, increased savings or a financial gift from a family member could help you qualify for even more home!

HomeBridge and The Optimal Service Group make the Mortgage Pre-Approval process as smooth and easy as possible with APPROVAL EXPRESS!  Beginning with a 3-minute, online application that will be reviewed instantly, a checklist of documentation tailored specifically for your scenario is provided.  The resulting pre-approval will be speedy and meaningful.

Now, you can shop for homes and make offers with confidence!  You can zero in on the homes that are within your budget and price range…and HomeBridge has already given its initial blessing on your finances.  Your offer will carry more weight than competing offers because of the power of your approval AND the speed with which you can close!  YOU are in the driver’s seat!

Once you and your Realtor have successfully negotiated for the purchase of your dream home, you are already well down the road to final approval, having already provided most of the financial documentation that we’ll need!   Closing is right around the corner!

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