Log InSign Up
Log InSign Up

Wondering how much house you can afford?

As a first-time homebuyer, you may be wondering how to save money on your mortgage. The best and smartest way to go is by getting pre-approved for a mortgage before you start looking at homes. If you get approved beforehand, it can save time because when selecting homes for purchase, the potential buyer will only need to see houses within their price range or loan limit. Below is more information about pre-approval and its advantages.

What is the difference between Pre-approval and Pre-qualification?

When you are first getting started with the loan application process, two steps need to be completed. The first step is pre-qualification. Pre-qualification is a rough estimation of how much money a lender is willing to give you based only on the data they have at hand. This includes your income, credit score, and debts or liabilities.

However, this information may not be complete or up to date. You can continue with the second step which is pre-approval. Pre-approval means that your lender has more access to your financial data and is willing to give you a final number on how much money they will lend you for the house purchase. This is based on the information you provide to the lender.

Advantages of Pre-approval

Disadvantages of Pre-approval

Advantages of Pre-qualification

Disadvantages of Pre-qualification

When to Request for Pre-approval?

If you were already pre-qualified with a lender and had been looking at homes from a real estate agent, it is best to request a pre-approval. It can definitely help when you're purchasing a home.

Who Avails a Pre-approval?

Almost all lenders offer this service today, but it can vary depending on which company you choose. You also have the option of applying with a broker who may find a lender who offers pre-approval with lower interest rates and fees.

How to get Pre-approval or Pre-qualification?

The very first step you need to take is to check your credit score. This can be done on a free website. If your credit score falls below the minimum threshold set by the lender, you will have to improve it before applying for a pre-approval.

If you are already meeting the floor price set by the lender, you may proceed to apply. Fill out all required paperwork honestly and completely if you want to improve your chances of being approved.

Requirements for getting Pre-approval

If you want to get pre-approval for a loan, you need to have decent credit. Many lenders will require a FICO score of 640 or higher before they can approve your request.

Also, to be considered for pre-approval, you'll need to prove that you can repay the loan that you apply for. This can include having a steady income or access to funds through another source. The lender may also ask about what your total debt is compared to how much you make monthly.

Pre-approval for a home loan can help you get the best rates, but it also requires more effort than simply applying for prequalification. You will have to prove that you are serious about purchasing by showing steady income and access to funds. This can be difficult for some people to prove, but your chances of being pre-approved increase dramatically if you do it right.

If you are looking forward to getting a loan preapproval or prequalification so that you can buy a home, reach out to us. We are a team of experienced realtors and we will give you professional advice from preapproval to moving into your new home.

 

The Rose Group, with Keller Williams Realty, is comprised of licensed Realtors and a dynamic support staff. They focus on providing trusted, expert representation to buyers and sellers in Real Estate transactions throughout Silicon Valley since 2004.
DRE #01526679
DRE #01422955
CONTACT US
16780 Lark Ave,
Los Gatos, CA 95032
All Offices are all independently owned and operated.
© 2021 All Rights Reserved.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram