First 5 Steps To Accepting A Mortgage Loan

Pre-Approval Process

Before a buyer does anything else in the buying process, they must find a lender and get pre-approved. There are several reasons for this. The most important is so the buyer knows how much they can afford. A lender might have a different idea of what is affordable based on credit scores, debt-to-income ratio, and a down payment. If the buyer is positive they can afford a 300,000 dollar mortgage, but the lender decides the maximum amount they’ll lend the buyer is 280,000 dollars, it’s helpful to know that before they put in an offer on a home.

The second reason a pre-approval is necessary pertains to the shopping process, as many sellers and realtors will not work with a buyer without a preapproval. For one, preapproval letters tell realtors and sellers the buyer is serious and not just someone who is out to waste their time. Second, a seller might not accept an offer from a buyer without a preapproval if there are multiple offers. They want a sure thing, and a buyer with a preapproval is a safer option.

Continue reading to learn about choosing a mortgage.