The Importance of a Mortgage Pre-Approval

The home buying process can be exciting, but also stressful. Getting a mortgage pre-approval prior to home shopping can dramatically increase your odds of acquiring the home you really want.

A mortgage pre-approval should be a home buyer’s first step when purchasing a home. The process is very similar to the actual mortgage process and will, in fact, eliminate a lot of time after you’ve chosen a home.

You will start by completing a mortgage application and preparing the necessary documentation for the lender. The lender will then pull and examine your credit report. Based on the information, the lender will determine how much you qualify for. You will receive a Conditional Commitment, which states the amount of funds that the lender agrees to lend provided that the conditions are met. While a pre-approval is an important first step, it is not the final mortgage approval.

Having a pre-approval letter to show to real estate agents and sellers when presenting an offer is proof of your financial standing and ability to proceed with the home purchase. During the pre-approval process, the lender will also discuss the most appropriate type of mortgage program that fits the borrower’s needs, whether it is a conventional loan or a government loan.

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The pre-approval is determined by putting the information given to the lender through automated underwriting. In most cases, the preliminary loan file goes through a pre-processing before the pre-approval is given. Since there is an actual examination of the documentation you provided, you will also receive a list of additional information that may be needed. You can then submit this information while house hunting.

Once you’ve signed an agreement of sale, processing the loan is faster since most of the work for the credit file has been done. The final process involves verifications, ordering and receiving the appraisal, ordering title documents, obtaining insurance, etc. The final underwriting is the last step before the loan file is sent for closing.

The pre-approval process is an important part of a home purchase. Since there is a lot of information involved in obtaining a mortgage, it eliminates many last minute problems that can arise.

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My name is Barbara Bottitta and I am a Realtor/Partner with Keller Williams Real Estate and team leader for the Barb Bottitta Team of Lehigh Valley Home Experts. Our team of professionals include a listing and closing specialist so that from the starting line to the dotted line you won’t find another agent or team that provides better service, works harder – or cares more – than the Barb Bottitta Team.  My husband, Lou, and I have lived in LowerMac for over 30 years; our grown children, Lisa and Matt (Tito) attended Emmaus High School and we feel fortunate that our grandson, Ethan, is growing up in the Lehigh Valley as well.