What’s a mortgage pre-approval?

Pre-approval refers to the process of knowing how much money you can borrow from your lender to buy a home. To get pre-approved, your lender will assess your income, credit score, and assets to determine how much mortgage you can be approved for and at what rate.

Difference between Pre-approval and Pre-qualification


Both pre-approval and pre-qualification are used in the mortgage sphere but they are not the same. To get pre-qualified, your lender will not require much information regarding your finances, assets, credit score, and debts. The lender only gives you a loan estimate based on a few financial elements. Therefore, it means that the final mortgage amount and interest might change in the future once the lender reviews your full information.

Mortgage pre-approval is more in-depth compared to mortgage pre-qualification.  Your lender will require you to provide recent financial statements, credit score reports, and other personal details. Once the lender has reviewed your financial muscles, you are given a pre-approval letter so that you can start your home hunting process. 
When you find your dream home, the final mortgage approval is only done once the lender is satisfied with the home appraisal value, condition, and ownership documents.

What are the benefits of mortgage pre-approval?


Why would you want to get a mortgage pre-approval? Although getting pre-approved doesn’t guarantee that you will get a mortgage, there are many benefits that come with getting pre-approved. They include;

• You understand how much you can afford. Once you know the amount of loan you can qualify for, you will start looking for homes that are within your budget. This will save you a lot of time and give you confidence in your home search journey. You will avoid unnecessary heartbreaks of falling in love with a listed home only to realize later that you can’t afford it.
• A pre-approval letter also shows the home seller that you are serious about your home buying bid offer. The seller is certain that your finances are in order and they are likely to give your bid offer the first priority, thus helping you beat your competitors.
• A mortgage pre-approval also fast-tracks the home closing process once you make an offer since the lender has most of your details.

What are the mortgage pre-approval requirements?


Because mortgage pre-approval is more thorough than pre-qualification, your lender will require you to provide more documents for scrutiny. Some of the key details that the lender will ask for include;

• Personal identification documents
• Social security card number
• Credit score report
• Employment verification
• Proof of income
• Income tax returns report
• Assets including bank statements

How long does mortgage pre-approval take?

If you have all the necessary documents ready, the process is short and you can get your mortgage pre-approval letter within a day of visiting your preferred lender. If you have a low credit score or previous foreclosure cases, the process can take a few more days.  Therefore, if you are out of debt and you can raise the required down payment, you should go ahead and get a mortgage pre-approval and actualize your homeownership dream!

If you like to get more information on how to get pre-approved for a loan or would like to speak to one of our preferred mortgage brokers for more information, please contact us at 305-204-3585.

We look forward to helping you with your home loan process.

Jester Nino
Broker Associate
Oscar Teran Group | C5 | EXP Realty

1. Determine how much you can afford

Before you can begin your home search, the first step that you need to take is to determine how much you can afford. Start by checking your credit score and your income. These two factors will play a great role in your home buying process. Lenders will always review your credit score and financial history before agreeing to give you a loan. Ideally, your housing expenses should not exceed 28% of your gross income and your total monthly debt payments should not go beyond 36%.
You will also understand how much you need to save for a down payment so that you can qualify to purchase your dream home.

2. Get pre-qualified for a mortgage

Once you have determined how much you can afford for a home, you can then approach different mortgage lenders or brokers to get an estimate of how much mortgage you can qualify for. The estimated loan amount should give you an idea of the home price range and the types of homes that you will concentrate your search on. You will also understand the different types of mortgages that you can qualify for and their payment terms. Later, you will get pre-approved for the mortgage if you will meet all the lender’s requirements. 

3. Hire a real estate agent

Working with a real estate agent will make your home buying process smooth as it will help you avoid making costly mistakes. Realtors hold valuable market information on homes for sale including their private listings and the best neighborhoods that can fit your dream home and lifestyle. At EXP Realty, agents always put homebuyers’ interests first and they use their vast industry experience to negotiate for the best offers. 

4. Search for the perfect home and make an offer

A perfect home start with an ideal location. You will need to select the right neighborhood that supports the kind of lifestyle you want to maintain. Amenities such as roads, schools, and security are important factors that you need to consider before picking a specific neighborhood. Once you have settled on a certain neighborhood, the next step is to have a checklist of the type of home and features that you are looking for. A real estate agent will help with home search and making a winning offer.

5. Home inspection and Appraisal

Once the seller has accepted your offer, the next step is to pay a deposit with the escrow agent and organize for a professional home inspection and appraisal. A home inspector will inspect the home that you are about to purchase to identify if there are any major repairs and renovations that need to be done. 
Once you get an independent report from the home inspector, your agent will negotiate with the seller or their agent for a new appraisal that includes the new renovations recommended so that you can arrive at the final sale value.

6. Home closing

If the seller agreed to make the recommended home repairs, your agent will do a final walkthrough to ensure that everything is perfect and the renovations were done as agreed. Once you are convinced that everything is in good condition, you move to the final stage of home closing. Home closing takes place in the escrow agent’s office. Your agent will help you complete the final payment so that the seller can transfer the property title to you. You will also get the key to your new home to become a proud homeowner.

As your Miami real estate specialist, I am always ready to help you realize your homeownership dream. Feel free to contact me at 305-204-3585 for personalized support.

Jester Nino
Broker Associate
Oscar Teran Group | C5 | EXP Realty