Pre-approval is a term used by the mortgage industry to describe the initial process of qualifying for a mortgage. When a buyer is pre-approved, it means a lender has agreed to let them borrow up to a certain amount for a home.
To get pre-approved, the borrower needs to submit basic financial information and provide access to their credit report. Pre-approval results in a hard inquiry on a credit report, so consumers shouldn’t go this route unless they’re seriously interested in buying a house right now. Thankfully, this won’t negatively affect your score too much if you already have a solid credit history.
The pre-approval offer from a lender usually lasts between 90 and 120 days, which should be enough time to find a home. If you need more time, the lender can extend the offer – but it will cause another hard inquiry on your credit report.
So, Why Get Pre-Approved?
- It helps you to shop for homes within your means. Nothing is more disappointing than finding your dream home and then finding out you don’t qualify for it. Save your time and your heart and get pre-approved before you shop!
- It shows the seller of your dream home that you are a serious buyer. Especially in a competitive market, sellers want to know that you have your “ducks in a row”. Having your pre-approval in hand puts you towards the top of the class when a seller is looking at multiple offers
- Getting pre-approved establishes a relationship with a lender. You don’t want to rush this in a panic when you find your dream home. You get to choose someone who will guide you honestly and get you the best rate and terms. Do your homework now.
- Even if you are not able to be approved now, you will have learned good information to chart a course for an approval in the future. You will learn what income, savings, assets and credit score you need to make your home buying dreams come true.
- Lastly, it’s the next step in taking your dream of owning a horse property to making it a reality. Quit dreaming and start moving!