The first step in the mortgage process is mortgage pre-approval. During the pre-approval process, you’ll sit down with your mortgage advisor to assess your personal finances and contrast the type of home you want to buy with what you think you can afford.
Once your mortgage advisor reviews your financial information, you’ll receive a Good Faith Estimate (or GFE), which details the loan type, interest rate and closing costs. This pre-approval doesn’t mean you have an actual loan. It just means that you have been considered to be a good risk to a seller in a certain price range.
What advantages will I have once pre-approved?
You’ll be certain about the price range that’s best for you. You’ll know how much cash you’ll need to close, and you’ll know your maximum monthly payment. Understanding your limits will help you negotiate with confidence. Plus, since sellers like a sure thing, you’ll have an advantage over buyers who may not have been through the process.
How long is the pre-approval valid?
Your pre-approval is typically good for the “shelf life” of the documents used. These will include a credit report, pay stubs, bank statements, W2s, tax returns, etc. The usable life of these documents will vary, yet it’s usually safe to say that your approval is good for up to three or four months. During this time, it pays to file all important financial documents so they’re readily available for future updates.
What if I change my mind?
That’s perfectly fine. There’s no obligation to purchase a home or use a particular loan program once you’ve been pre-approved. In fact, pre-approval simply helps to assure you know exactly what’s involved, that you are comfortable in a particular price range and that you are truly ready to make your move.
The process of purchasing a home is easier when you have financing in place before you make an offer. We’re here to help get you started, and it’s never too early to do exactly that. Give us a call when you’re ready.