Getting Pre-Approved

What is a mortgage pre-approval?

A mortgage pre-approval is essentially a lender's conditional commitment to lend you a specific amount of money for purchasing a home. It is predicated on a preliminary review of your financial standing, based on the information you provide regarding your income, assets, debts, and credit history. Importantly, obtaining a pre-approval is not synonymous with securing the loan itself; it's a vital step towards final approval, offering a reliable gauge of your borrowing capacity.

The advantages of getting pre-approved

• ‍Budgetary Clarity: It demystifies the homebuying budget, allowing you to shop within your means.
• Competitive Edge: Sellers are more inclined to favor buyers with pre-approval, distinguishing you from the competition.
• Efficiency in the Mortgage Process: With your application already initiated, the process accelerates once you've chosen a property, as the lender has begun the underwriting process.

What documents do I need for a pre-approval?

An application for mortgage pre-approval goes over basic things like:

• Income Verification: Prepare to disclose your annual gross income, a foundational element of your application.
• Asset Disclosure: Information regarding bank accounts, investments, and other assets will be assessed. (If you do not need these to qualify, you may be able to skip these at this point.)
• Employment: You need to be currently employed and able to show your employment over the past two years. If you have a gap in employment, you may still qualify for pre-approval.

• Credit and Debts: A credit check, conducted with your consent, will review your credit score and debt history.
• Identification: You will need to provide the lender with some form of identification, such as a driver’s license or passport.

Depending on the contents of your application, additional supporting documentation may be required. It is a good idea to be prepared with any documents to support the information shared above.

When would I need a pre-approval?

Obtaining a pre-approval prior to house hunting is wise, as it clearly defines your budget and enhances your appeal to sellers. Even if your home purchase isn't immediate, securing a pre-approval well in advance affords you the time to optimize your credit score, save for a down payment, and collect necessary documents, ensuring you are thoroughly prepared when the right home comes along.

Why would I need a pre-approval?

• It helps you set a budget: A pre-approval gives you a better idea of how much you will be able to borrow, which helps you set a budget for your purchase.
• It gives you an advantage when shopping for a property: It’s common for a seller to require a pre-approval before they will consider an offer.
• It expedites the mortgage process: Once you have found a property you want to purchase, your lender has already started collecting the required documents and reviewing your application.
• It saves you time: Having a pre-approval ensures that you are looking for homes in your price range.
  

A pre-approval is a useful tool when you are shopping for a home or other property, as it can help you set a budget, give you an advantage when competing with other buyers, and expedite the mortgage process.

Do I need a pre-approval to buy a home?

If you are ready to make an offer on a home, you should have a pre-approval in hand. A pre-approval gives the seller confidence that you area serious buyer and that you have the financial means to follow through with the purchase. 

It is important to note that a pre-approval is not the same as a mortgage approval. To get a mortgage, you will need to complete the full loan application process and provide the lender with all of the necessary documents. The lender will then review your application and decide whether to approve your mortgage. 

Overall, while a pre-approval is not strictly required to buy a home, it is a useful tool in the home buying process. It allows you to search for a home within a set budget. It also lets the seller know that you are a serious buyer when you make an offer.

Can I get a REALTOR® before getting pre-approved?

A REALTOR® can help you find properties that meet your needs and budget, and can assist you with the negotiation and purchase process. It is generally a good idea to get a pre-approval before you start actively shopping for a home or other property. And in many cases, that will be the first step after speaking with a REALTOR®. A pre-approval helps the REALTOR® set a budget, which helps them get you into home you’re interested in quicker. 

Overall, it is not necessary to get a pre-approval before working with a realtor, but it is incredibly helpful for both you and the REALTOR®. In fact, it is not uncommon for a REALTOR® to ask you to get a pre-approval before they start getting you into homes.

Is a pre-approval a guarantee of funding?

To get a mortgage or other loan, you will need to complete the full loan application process and provide the lender with the necessary documents. The lender will then review your application and decide whether to approve your loan. Factors that may affect the lender’s decision include your credit history, income, assets, debts, and the property you are planning to purchase. 

A pre-approval is not a binding agreement between you and the lender. It does not obligate the lender to give you the money, and it does not obligate you to accept a loan if offered. A pre-approval is simply an indication of your potential borrowing power. It is subject to change based on your financial situation and the lender’s policies.

What's the benefit of using CapCenter for pre-approval?

Getting pre-approved with CapCenter is fast and easy! Click here to get started! CapCenter is unique in that it's a one-stop shop for anyone looking to make their next move. CapCenter has brought mortgage, realty & insurance services under one roof to streamline the homebuying and selling process while maximizing our clients' savings.
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On top of getting pre-approved, you can speak to one of our local real estate agents, who can get you set up with a custom home search so you will be the first to know when your dream home hits the market. Using CapCenter's mortgage and realty services for your move allows you to maximize your savings and streamline your entire move!