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Pre-Approval Letters

Why Should I Get Pre-Approved For A Mortgage?

after the Pre-approval of young happy couple buy homeA pre-approval for a mortgage means a lender has determined what loan programs you may qualify for, how much you can borrow and the interest rate you qualify for. This assessment is based on things like credit score, income, debts, and employment history.

Typically a lender will provide a written statement stating this information, which can then be used by your Realtor to give sellers confidence that you’ll be approved for a loan after they accept your offer. Most pre-approval letters are good for 60 to 90 days.

How Do You Find a Lender to Get Pre-Approved?

If you don’t have a lender yet, we have a list of lenders that we can provide you. It is your choice on who you use to finance your next home purchase and we are here to help. Ask the Realtor you are working with for a list of Banks and Mortgage companies in the area who can best server your needs.

Does A Pre-Approval Guarantee a Loan?

No. Even if you receive a pre-approval letter from a lender you connected with through Home Team of America, you may not get a loan from a lender and you are not guaranteed a specific rate or loan term. Pre-approval letters are subject to modification or cancellation if your financial situation or other conditions change. A pre-approval letter is not an offer to lend, a commitment to make a loan, or a guarantee of specific rates or terms. It is is not an application for credit.

The pre-approval is the first step in the home buying process. Once you are pre-approved and you find the home you want, then the loan process begins. Regardless of pre-approval, a lender may require additional income and asset verification, as well as the satisfaction of other conditions, before extending you a loan. See How Much You Can Afford

What If You Can’t Get Pre-Approved?

Not everyone will get pre-approved for a mortgage, but there are a few things you can do to improve your current position:

  • Work to improve your credit score. Your credit score is impacted by payment history, outstanding debt, the length of your credit history, recent new credit inquiries, types of credit used, and more.
  • Correct any errors on your credit report, which could help to raise your credit score.
  • Decrease your overall debt and improve your debt-to-income ratio. In general, a debt-to-income ratio of 36 percent or less is preferable; 43 percent is the maximum ratio allowed. Use our debt-to-income calculator to determine your debt-to-income ratio.
  • Increase your down payment amount in order to qualify for a larger loan.