If you’re like most people, whether you’re buying a condo for sale in Alys Beach, land for sale in Seagrove Beach, or a home for sale in WaterColor, you’ll need to work with a lender to get a lump sum of cash to pay the seller.
Taking out a mortgage loan can be a long (and sometimes complicated) process—so it’s best if you get mortgage preapproval before you even begin shopping for houses.
But what is mortgage preapproval, and why do you need it?
What is Mortgage Preapproval?
A preapproval is different from a prequalification letter from a lender. (Prequalification simply means the lender has agreed to look at your finances and thinks you’ll probably be eligible to qualify for a mortgage loan.)
Mortgage preapproval is a way you can prove your credibility to home-sellers, and in order to get it, you’ll begin submitting your financial paperwork to your lender. They’ll want to see pay stubs, tax returns, and other sources of income so underwriters can determine how much money the lender will be willing to give you.
How Does Loan Preapproval Help When You’re Searching for Homes?
When your lender preapproves you, you’ll know exactly how much you can spend on a house—and you won’t waste time looking at homes that are outside your price range or don’t meet your needs.
Your preapproval can also give you an edge when you find a home you love and make an offer. If a seller receives an offer from someone who hasn’t been preapproved, they have no way of knowing whether the buyer is actually going to get a loan—but your lender has already told you that you do, which means the seller can take your offer more seriously than the other party’s.
Closing is typically faster, too, when you’re preapproved. You’ve already started the lengthy process of applying for a mortgage, so you’re already ahead of the game.
ARE YOU BUYING A HOME ALONG 30A?