Are you tired of renting? Are you finally ready to leap into homeownership? Congratulations! Buying a home is an exciting step towards building financial stability and creating a space that truly is your own. However, before you start browsing listings or attending open houses, there is one crucial step that every potential homebuyer should take: getting pre approved for a home loan. While it may sound like just another item on your ever-growing to-do list, this process can save you time and money in the long run. In this blog post, we’ll dive into what exactly pre approval means, why it’s important, and how to get pre approved for a home loan from a lender like American Home Loans.
Mortgage Prequalification vs Preapproval
When it comes to applying for a mortgage, understanding the difference between prequalification and preapproval is critical. While the two may sound similar, there are some important distinctions. Prequalification is essentially an educated guess, based on your finances, about how much you can afford to spend on a home. In contrast, preapproval offers you a concrete figure that lenders are willing to provide you to buy a home. With pre approval, you know exactly how much money you have to work with when shopping for a house, whereas prequalification is just a rough estimate.
How to Get Approved
To get pre approved for a home loan in Utah, you will need to gather financial documents (pay stubs, tax returns, assets, etc) and speak with a lender like American Home Loans. Lenders will then evaluate your credit score, debt-to-income ratio, and other financial factors to determine whether you are eligible for a loan and how much you can borrow before submitting a preapproval letter for a mortgage on your behalf.
Preapproval letters are helpful when shopping for a home as they let sellers know you are a qualified and serious applicant. Taking the time to get pre approved can save you time and stress down the line, as you will already have a clear idea of your precise budget before you begin your home search and meet with a realtor.
Does A Mortgage Pre Approval Affect Credit Score?
Many potential homeowners wonder whether the pre-approval process will negatively affect their credit scores. The good news is that mortgage pull does not affect credit scores.
How To Increase Mortgage Approval Amount
If you’re in the market for a mortgage and found out that you weren’t approved for the amount you were hoping for, don’t fret just yet. There are a few things you can do to increase your mortgage approval amount, though most of them are long-term solutions. First, take a look at your credit score. A better score can more loan options. You could also find a co-signer or co-borrower who has a stronger financial background. Another option would be to boost your income through raises, side jobs, etc so that you show lenders that you can take on a higher loan amount. Additionally, taking steps to lower your income-to-debt ratio and/or making a larger down payment can also increase your likelihood of a higher mortgage approval amount.
How Long Does Pre Approval for a Mortgage Last?
It’s important to note that a mortgage pre approval typically is only valid for 60-90 days. This means that you need to act quickly once you’ve been pre approved to find your dream home.
What Happens If My Mortgage Pre Approval Expires?
If your pre approval expires, simply contact American Home Loans, or your lender, for another letter.
What to Do After Getting Pre Approved for a Mortgage?
Now that you’re pre approved, it’s time to find the perfect home and the perfect mortgage lender. Luckily for those living in Sandy, Utah, one of the best options available is All American Loans. As your mortgage experts, we are committed to helping secure the best mortgage rates for your scenario, even if you have low credit! We understand that buying a home can be daunting, but our expertise makes it a seamless process. Our team of dedicated professionals will assist you every step of the way. Contact us to learn more!