When you’re shopping for a mortgage you’ll receive offers from a variety of lenders. Each mortgage lender has a process that allows them to determine the following; know the amount of a mortgage you’ll qualify for, estimate your mortgage payment, and lock in an interest rate for a period of time.
Pre-approval of a mortgage can be important for many reasons especially when it comes down to determining your budget. The specific details of your mortgage pre-approval process will depend on where you receive your loan, but typically have the same core steps.
Keep in mind pre-approval is generally a rate hold for a certain period of time, usually 120 days and generally to give you an idea maximum you can qualify based on the information provided.
The most important step in getting your mortgage approved is shopping around for the plan that works best for your needs. It’s easy to compare rates with any number of leading mortgage lenders.
Next comes the estimation on your future mortgage payments, understand the maximum amount of a mortgage you’ll be approved for, and lock in an interest rate for a period of time depending on your lender. During this process, the lender looks at your credit, as well as some crucial documentation to determine the maximum they’ll allow you to have, as well as your interest rate.
Before giving you a pre-approval, your mortgage advisor will need to take a look at a couple things:
Later on, your lender will have you provide recent financial statements from bank accounts and investments in order to determine the legitimacy of your goals of paying for your mortgage.
Additionally, they will be looking for a certain level of documentation from you. These documents will include but not be limited to:
At the end of the day there are many things to consider during the pre-approval process. While this helps you understand the maximum you may get for your prospective mortgage, it doesn’t guarantee it. The approved mortgage rate will depend on the amount of your down payment paired with the value of the property. So though there's possibilities of getting a higher mortgage, you have to also account for additional fees that come up when purchasing. Additional fees to plan for are:
Welcome to the adventure of buying your forever home!