Want a seller to accept your offer? You need a pre-approval!

By Amy Smith, Mortgage Planner

Have you ever purchased something online and when it shows up at your door a few days later thought to yourself, wow, that was easy and painless?!   Well, buying a home isn’t that easy.  It’s a process and it involves a lot of moving parts.  Before you start to shop, you need to make sure that you qualify for a loan.  This is where the importance of getting a pre-approval comes in.  Without one, no good real estate agent will work seriously with you and no seller will accept an offer you make to purchase their home.  Things you should know about a pre-approval:

1.   A pre-approval is based on three basic things:  Income, Assets and Credit.
   
2.   You must supply supporting documentation on the three items above for a true pre-approval.  Pay stubs, W-2’s and Asset Statements are a few of the basic items needed.  Your loan originator will also request information to pull your credit.
3.  A pre-approval is typically good for 60 days.  At that point, a new credit report will need to be run and you will need to send updated pay stubs and asset statements.
4. The pre-approval process should be completed BEFORE you start looking at homes.  This helps to eliminate the disappointment of finding the perfect home only to discover that you don’t qualify for it or that you do, but you can’t get a pre-approval letter in time to compete with other offers. Don’t let this be you!  Be prepared!

There really is no such thing as casually shopping when it comes to buying a home.  Getting a pre-approval allows you to avoid the disappointment of missing out on your dream home. Not sure if you're ready to get pre-approved? Not a problem, feel free to spend some time playing with our mortgage calculators, download our mortgage app or request a copy of our new homebuyers guide. 

Can't Get Pre-Approved for a Mortgage? Here Are Three Tips to Try to Get a Mortgage Approval

Few people in the world can afford to pay the entire cost of a new home upfront, which is why banks and other financial institutions offer home loans. Also known as mortgages, those loans let you make monthly payments to pay off the money you borrow and the interest charged on that loan. If you can't get approved for a mortgage, try using a few easy tips.

Improve Your Credit Score

When you apply for a home loan, the lender looks at your credit history and credit score first. Your credit history contains a long list of all the money you borrowed in the past, but it also shows your total debts, medical bills and if you had a foreclosure or a bankruptcy. Your credit score is a three digit number based on your ratio of debt to credit, any defaults on your account and any issues you had in the past.

If a lender denies you for a mortgage, get your credit score up before you apply again. Even something as simple as paying off more of your debt can increase your score by a few points. Eliminating bad debts and removing any mistakes from your credit report can also help.

Apply with a Cosigner

Applying for a loan with a cosigner is another option for those with poor credit. The lender will put more weight on the credit score of your cosigner than the lender does on your own credit report. You want to find someone with a close connection to you and someone who has a good credit score.

Your cosigner agrees to pay back the loan if you default on that loan. The loan will also appear on your cosigner's credit report, which means you need to find someone willing to take a chance on you.

Look for Cheaper Homes

After applying for a loan, the lender looks at your credit history, your income and other factors to determine how much money you can borrow. Applying for a more expensive home might result in a rejection. The lender can determine that you cannot afford to purchase that home, but applying for a home that costs less might help you get the loan you need.

It's possible for you to obtain a mortgage that helps you pay for the home of your dreams. Applying with a cosigner, improving your credit and looking at cheaper homes might help you get that loan.