A credit score will affect many of your decisions regarding your financial life and influence how banks and other financial institutions view you.
Buying a home can be a simple process if you have approval for a loan. The home-buying process does not start in the real estate office but the lender’s office. According to the NAR (National Association of Realtors), almost 90 % of first-time home buyers get a loan approved to pay for their first home. So, rest assured, you aren’t the only one in that boat.
What is Pre-Approval?
Pre-approval is the process of getting your credit files reviewed by a loan officer and obtaining a letter of pre-approval that states your qualification for a certain amount of loan. This letter can be quite helpful when bidding on a house that you’d like to buy before actually getting a loan approved. The letter tells the seller that you are financially capable of paying the price of the house and your bid stands more of a chance of being accepted than if you have no proof of your financial strength.
So, How Do I Get Pre-Approved?
If you are already working with a real estate agent or a realtor, they will probably be able to guide you in this process. For example, at First Choice Realty, we take potential home buyers very seriously because we know this is a life-changing decision and make sure we refer them to the best lending agents in the city.
The first step will be contacting one, or more, of these lenders to get a pre-qualification. Whether suggested by your realtor or found through other sources, make sure the lender is someone trustworthy and reliable. It is very important to find someone who is knowledgeable and dependable enough to give you a realistic estimate instead of someone who will give you what you want to hear. You will probably end up working with more than one lending officer in order to get a more realistic estimate of your loan strength.
The number provided by the lending officer completes the pre-qualification process.
The next step is providing the lending officer’s underwriter with all the necessary documentation. The faster you provide the underwriting department with all the necessary paperwork the closer your pre-approval will get.
They will then go through all your documents, your credit history, and any debts (such as car financing or student loan payments) in order to assess your mortgage paying ability.
After this process, they will also provide you with a credit score, sometimes for an additional fee. A score above 720 generally means better mortgage rates.
Depending on the lending officer’s schedule and the availability of your documents, the process of screening and verifying all your documents and then providing you with a specific number to denote your loaning power will take anything between 24 hours to 2 weeks.
Once you receive your pre-approval letter, you’re all set for the most exciting part of your home-buying process: finding the home of your dreams.
For any questions regarding the pre-approval process or finding a new home in Boston, please call us at 617-734-8200, email us at email@example.com or join us on Facebook and Twitter.