Derek McGowan explains why getting a mortgage pre-approval letter matters before you start house hunting. It shows sellers you're a serious buyer, tells you exactly what you can afford, and speeds up the final offer process.
This is Derek with the McGowan Mortgage Team and I'm here today to talk about why you need to have a pre approval Letter before you start looking at homes. You may be wondering what is it like to buy a home? Should you start with your search online? Should you look at homes first or get pre approved first? Wherever you are in your new home search, one of the most important things you will need is a pre approval letter from your lender. So what's a pre approval letter? A pre approval letter is a written letter from a mortgage lender that states you have been tentatively approved for a mortgage and your pre approval letter includes the specific amount you are approved for as well as your interest rate and your loan term. The letter will include the amount of money that you have been approved for and it is what sellers are looking for to make sure that if they accept your offer, you will actually be able to get the financing for the house you're buying. If you're looking for a home, it's important that you know how much you can afford and the sellers feel more comfortable knowing that you've already been approved. How can you get a pre approval letter? To get a pre approval letter you must first meet with the mortgage lender. Like myself, you need to complete the following steps to get a pre approval letter. Step 1 Complete a home loan application not as scary as it sounds, you can opt to complete the application online or over the phone. After the application is complete, we'll pull a free credit bureau report that will show your credit score and credit history. Step 2 Document your income and assets the next step is to send in your supporting documentation that will help determine what you qualify for. This documentation will usually include last two years W2s or 1099s. Last two years tax returns pay stubs for the last 30 days bank statements, Retirement accounts or other asset information Proof of down payment Recent resident history to speed up the pre approval process, it helps to have these documents lined up ready to go before you get started. Step 3 Underwriting this is the last step in the pre approval process underwriting and it is what will happen once you have completed your mortgage application and and sent in your paperwork. Your lender should be able to get your pre approval letter out within 24 to 48 business hours so you can start looking for homes. Most sellers today are asking for a pre approval letter, but some are allowing what is called a pre qualification. Pre qualification is usually easier and faster to get because it doesn't involve submitting all your paperwork and documentation to verify your proof of funds and income. But don't think that just because you filled out a mortgage application on some online website that you've actually got a pre approval letter because you don't and the sellers know the difference. Spend the extra time to actually get a pre approval letter from a mortgage lender like myself. It'll not only help the seller show that you're interested, but it also helps your offer get accepted quicker. When you're ready to buy that home of your dreams. Now could be the perfect time for you to buy a home knowing what you need with the pre approval letter, and it can help you breeze through that process. Thanks for watching. This is Derek McGowan with McGowan Mortgages.
