Collins & Demac Real Estate



Posted by Collins & Demac Real Estate on 8/25/2016

When youíre shopping for a home, thereís so much to consider. Between the questions of what neighborhood you should live in and what style house you like, you need to think of the most important thing: finances. When you think that youíre financially ready to buy a home, you often will get the notion that itís a good time to just start shopping. Thereís several steps that you must take first before you start shopping for a home. One of the first steps you should consider taking before you make the leap into home ownership is to get preapproved. While buyers still tend to skip the preapproval process, doing this can help you immensely throughout the home buying process. While it may seem an insignificant and kind of boring step, getting preapproved is important for your finances. It may even help you to land in a home that you love faster. Itís actually detrimental to make an offer without a preapproval, because some lenders wonít accept an offer without one. Many realtors verify and require that offers come along with the stamp of preapproval. What Does Getting Preapproved Involve? You may have heard of a prequalification. This is much different from being preapproved. Prequalification involves buyer provided information, just to get a sense of how much they can spend on a home. Preapproval involves credit scores, bank statements, tax returns and more. This process states exactly how much lenders will be willing to give to the borrower. All of the documents needed for preapproval are the same exact documents needed for a mortgage. This helps you as the borrower prepare ahead of time as well. These are some of the kinds of documents that youíll need for preapproval: Pay stubs W-2s from the previous year Federal tax returns from the past two years Two Months of Bank Statements from all of your accounts A credit report While a preapproval is only one step in the long process of buying a home, it speeds up the later steps of securing a mortgage. The process also helps buyers face their financial reality. Donít put off the important process because you fear that you wonít be approved for the amount that you need. Itís also common for buyers to assume that because someone they know has been approved for a certain amount of money that they will be able to get that same loan amount as well. This isnít always the case and another great reason to get preapproved. Errors On Credit Reports Often, there are errors on credit reports. Thatís why you need to check them often. If you have some errors on your credit report, getting preapproved is a great way to check if there are any errors and give you time to fix them before you apply for a mortgage.




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