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Getting Pre-Approval
It is a good idea to get pre-approval for a loan. Pre-approval is a formalized process that can facilitate the loan application process.
Pre-approval is a commitment on the part of the lender to provide you with a specific loan amount, however, it is not tied to a specific house. The lender will perform a detailed review of your current financial status, and you will need to provide the lender with documentation on income and debt-related information.
If you are pre-approved, it means that the lender has thoroughly reviewed your financial history, evaluated your risk, and decided that you have the ability to pay back the loan.
While pre-approval is not a requirement, it is advantageous for you to obtain a pre-approval letter from the lender. This makes your case much stronger in the eyes of the seller. In a competitive real estate market, presenting this letter to your real estate agent and to the home seller may assist you in securing a contract on a home. Since the lender has pre-approved you for a mortgage, the seller can be assured that you are serious about your offer and that the contract is less likely to fall through.
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