The Advantages of Pre-Approval

When buying a home, being pre-approved for a mortgage can help ensure that the homebuying process proceeds smoothly.

By being pre-approved, you will know how large of a mortgage you can afford, so you can shop for a home that’s in your price range. Otherwise, you may waste your time looking at homes you cannot afford.

The pre-approval process can also help identify potential problems. By addressing these issues, you can avoid delays when you need a mortgage, and you will be better able to negotiate the purchase of a home that meets or exceeds your needs.

During initial conversations with the lender, you can also identify the best mortgage for your needs. For example, a 30-year fixed-rate mortgage may be the best choice if you’re purchasing your forever home, while an adjustable-rate mortgage is often desirable if you expect to move again in a few years.

Pre-approved vs. pre-qualified

Pre-qualification is the first step in the mortgage process. The pre-approval process is more in-depth, but far more valuable.

To be pre-qualified, you don’t need to provide financial documents that validate your income, debt, and assets. Being pre-qualified will provide an estimate of how large of a mortgage you can afford, but it serves no other purpose. Pre-qualification does not guarantee that you will be approved for a mortgage.

The pre-approval process will provide a fully underwritten review of your income, assets, and credit. Once your documents are approved by a Mortgage Underwriter, you will know the exact amount of the mortgage for which you qualify and will have official mortgage approval.

The review will determine your mortgage rate and provide an accurate report, not just an estimate, of how much you can afford to spend. Be aware that the mortgage rate and the amount for which you qualify are subject to change until the mortgage is closed.

Pre-approval will also identify whether your credit score needs a lift. Lenders typically require a minimum score of 620, but FHA (Federal Housing Administration) loans sometimes accept lower scores. Taking steps such as paying down high balances and disputing any credit report errors can provide the boost needed for a better home.

What’s needed for pre-approval

To be pre-approved, you will need personal identification, proof of income, asset verification, and a list of current debts.

Documents needed may include a government-issued photo ID, such as a driver’s license or passport, pay stubs from the past 30 days, W-2s and 1099s from the past two years, and two years of federal tax returns.

To identify and prove your financial assets, you will need statements for the past two months for any checking, savings, and investment accounts, including retirement accounts. In addition, the lender will seek your consent to run a credit check.

Pre-approval will reduce the stress of buying a home by providing you with the information you need to purchase a home that’s just right for you.

The HUNT Mortgage Pre-Purchase Commitment

Our HUNT Mortgage Pre-Purchase Commitment Program delivers a fully underwritten commitment, subject to collateral conditions.

We back our commitment with a $7,500 guarantee. If you are unable to close on a transaction because your mortgage application is denied, HUNT Mortgage will pay the seller $7,500.

This guarantee distinguishes HUNT customers from other buyers a seller may be considering, and has no cost and no obligation to you or the seller. Terms and conditions apply.

To learn more about the Pre-Purchase Commitment and to get started on your homeownership journey, contact one of our HUNT Mortgage Consultants today.

 

The information above is accurate at the time of posting, but is subject to change based on market conditions.