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Loan Pre-approval Should be Your First Step Toward Buying a Home
Landing your dream home starts with understanding exactly what sellers want to see, especially when you're shopping in a competitive market. In order to stand out from the pack, you need to show the seller that you're serious, and that you're financially prepared to make an attractive offer. That's one reason why getting pre-approved for a mortgage should always be your first step when buying a house. Our real estate agents have the details on why pre-approval is so important, and what you can do to kick-start the process of getting pre-approved for a mortgage.
Buying a House? Why You Should Always Start by Getting Pre-Approved for a Mortgage
Let's say that you're ready to start shopping for Augusta homes for sale, but you're not quite sure what you can afford or what sellers want to see from a serious, qualified buyer. One of the first mistakes that many buyers make is assuming that they can't afford the down payment for a mortgage, or that their credit score isn't high enough to secure a loan. Getting pre-approval isn't easy, but it is easier than you might think and the results are worth the effort:
- Building a Budget – Without pre-approval, it can be very difficult to pinpoint exactly how much you have available to spend on a home. Going through the pre-approval process will give you a much clearer idea of how much you can expect lenders to offer, so that you can focus on the homes that truly fit your budget. The amount you'll be able to borrow depends on your ability to make payments, your cash reserves, your collateral, and your credit history.
- Showing Sellers You're Serious – The last thing a seller wants is to reach the finish line only to find out that the buyer doesn't have the necessary funds to close the deal. Getting pre-approved for a mortgage shows sellers that you're serious about buying a house, and that you have access to the funds necessary to make it happen. Pre-approval can also help streamline the process once your offer has been accepted.
Getting pre-approved for a mortgage starts with being prepared, and there are some things that every lender will expect you to provide in order to speed up the pre-approval process.
- Proof of Income – This may include your last two W2s, your last two tax returns, and a few of your most recent pay stubs. If you have part-time work on the side or you're self-employed, you'll also want documentation for any income from those sources. Lenders need to know that you're both prepared to make a down payment, and able to make your loan payments in the future.
- Credit Score – While you don't need a perfect credit score to secure a loan, you'll definitely want to make sure that your credit score looks as good as possible before you apply. Pay off outstanding debts, make payments on time, and think very hard before opening any new lines of credit if you're planning on buying a home in the near future.
- Cash Reserves/Cash to Close – In addition to a down payment, lenders will want to see that you have the necessary cash for closing costs (cash to close), along with funds that will be available for any costs that arise after you close (cash reserves).
Ready to start shopping? Working with an experienced real estate team is the best way to simplify the purchasing process, and we'd love to help. Contact us at Sprague & Curtis Real Estate to buy and sell homes in the Augusta, ME area.