There are a lot of factors you’ll need to consider when searching for a home…
Why is getting pre-approved for your California mortgage so important? Well, there are a number of reasons why. The main one is that in this hot market, a pre-approval helps make the process of getting a mortgage smooth AND makes your offer more competitive.
What is a Pre-Approval?
First, let’s back it up a little bit and talk about what a pre-approval is. A pre-approval is not the same thing as a pre-qualification.
A pre-qualification is just a simple look at your overall financial picture based on the info you provide—your income, your debts, and your assets. You can get an idea of what you might be able to afford with a pre-qualification. However, it’s not very robust because a lender doesn’t look at your credit or verify any of the information you provide.
A pre-approval, on the other hand, is a much more involved process. You’ll complete an actual mortgage application, and the lender will verify your credit and financial details. At the end of the process, you’ll receive a pre-approval letter, which is a conditional commitment to lend.
Reasons to Get a Pre-Approval for Your California Mortgage
While getting a pre-approval before you shop is always a good idea, it’s especially important in our hot housing market. Here’s why.
Helps You Make a Confident Offer
Knowing you have a lender on your side makes it a lot easier to write an offer on a home because you know you have a lender to back that offer up. If you haven’t even talked to a lender yet, you’ll probably feel a little hesitant about committing to buying.
Having the knowledge that you can afford the home you’re putting an offer in on will help you feel a lot better about moving forward. You’ll also be able to prevent possible unpleasant surprises in the process of getting a mortgage and, potentially, buyer’s remorse.
Shows What You Can Afford
We all do it—look at things that are more expensive than we can really afford. It’s kind of like deciding where to go for dinner. Although it might seem like there are never-ending possibilities, in the end, you’ll still need to stick to your budget.
The trick is to not even look at the homes you can’t afford in the first place. And how do you know what you can afford? That’s right—your pre-approval letter will let you know what you can afford and help you stick to the homes that are in the right price range.
Going house shopping without a pre-approval is kind of like going out to dinner without knowing how much money you have in your wallet.
Makes Your Offer More Competitive
Having a pre-approval can help your offer stand out and show that you’re serious about buying a home. This will especially help in a hot market like ours where homes often receive multiple offers. If your offer is identical to another one but you’re the person with a pre-approval, well, it’s a no-brainer to go with the buyers who have already been vetted by a lender.
Getting pre-approved can help negotiate a better price or a more advantageous offer on the home you want.
If you don’t get all your paperwork in a row before you put in an offer on a home, you’re going to be playing catch-up the entire time, and that could delay closing,
When you apply for a pre-approval, you and the lender start getting all of your ducks in a row before making an offer. This gives you a chance to address any potential issues that may cause financing delays. It also allows you to move faster when the right home comes up.
How to Get Pre-Approved
In order to get pre-approved for your California mortgage, you’ll fill out a loan application. This will include details like names, birth dates, social security numbers, phone numbers, addresses, employment history, income documentation, asset information, and current debt (for credit cards, mortgages, car payments, alimony, child support, student loans, and more). It will also include documentation of any bankruptcies or foreclosures.
You’ll also give the lender authorization to run your credit so they can get an idea of creditworthiness, as well.
If you’re ready to get started on your own pre-approval, we’re here to guide you through it! We promise, it’s not too hard, and at New Way, we’ve made it just about painless. Just go here to get started.