A Step-By-Step Guide To Purchasing a Home: Step 1

Have your Credit pre-approved

Getting a credit pre-approval means you receive a loan commitment from your mortgage company before you have found a home. This is based on a review of your credit and finances. A pre-approval letter shows sellers that you are a qualified buyer and helps you establish a clear price range.

The credit pre-approval process

The process of applying for a credit pre-approval is the same as a typical mortgage application, except that it excludes information on the property you will purchase. Your mortgage lender collects information on your credit, income, assets, and debts, and sends this information through an underwriting system. If the underwriting process determines that you qualify for a loan, you receive a loan commitment for up to a certain amount, which is contingent on the property meeting certain criteria, such as inspections and appraisal.

Benefits of having your credit pre-approved

There are huge benefits to getting a credit pre-approval before you buy a home:

• It makes your home search more efficient since you will focus only on homes you know you can afford.
• Many sellers won’t look at an offer without a pre-approval letter from the Buyer. It lets sellers know that you can back up your offer, so they don’t have to worry about whether you can get a loan.
• It lets you know early in the process if you will have road blocks in gettina loan, so you have a chance to address problems before finding a home.
• It gets most of the mortgage process out of the way up front, so you can complete your transaction quickly after you find a home.