Putting It Together
With your decision made and the groundwork laid, it’s time to put all the pieces of documentation needed to move forward into closing.
Getting the “green light”
Just like you wouldn’t dive into a pool without knowing how deep it is, you wouldn’t want to house hunt without knowing how much you could afford. That’s why once you have decided buying a home is your best option and you’ve examined what your finances will allow, it’s a good time to talk with your PrimeLending Loan Officer about being prequalified or preapproved.
In a prequalification letter, the lender has been provided the buyer’s financial details and, based on verification of these details, agrees to give a loan to the buyer. A credit report is not required at this point.
Knowing how excited many homebuyers can be, it can seem frustrating to add a step before the house hunt. However, there are several advantages to being prequalified/preapproved that can make it worthwhile.
- Credit challenges or problems that might prevent qualification are discovered and addressed early in the process.
- You will be able to house hunt with confidence knowing that the financial backing that is available to you.
- Home sellers typically see more strength in offers from prequalified buyers.
- For self-employed or commission-based buyers, a prequalification letter can demonstrate financial backing for buyers whose incomes may fluctuate more than those of salaried buyers and therefore possibly demonstrate more risk.
- Prequalification letters show that the lender is willing to move forward with the loan for first-time homebuyers even though they may lack a credit history that demonstrates their ability to make monthly mortgage payments. It helps equalize their offer with similar offers made by previous homeowners.