You know that at some point in your homebuying journey you will probably need to get approved* for a mortgage in order to buy a home. Did you know that you may be better off getting your mortgage approval sooner rather than later? If you’re a first-time homebuyer still weighing your renting vs. buying options, read on to learn why getting approved for a mortgage early matters to your homebuying process.
What does mortgage approval mean?
Home affordability is top-of-mind for many first-time homebuyers. So, when you want to know exactly how much house you can afford, a mortgage approval can help you figure out what you can spend on a home. After this process, your PrimeLending loan officer will provide you with a mortgage approval letter to prove that you have been approved for your home loan.
Is there a difference between qualification and mortgage approval?
Obtaining a mortgage qualification, often referred to as a pre-approval, is a good step to take in your homebuying process. This means that your lender has provided an estimate based on the initial information you have provided, but this does not mean you are guaranteed to get the funds.
A PrimeLending mortgage approval takes the pre-approval process a step further. An approval means that an underwriter has checked your credit, verified your assets, and established your employment history in order to approve you for a specific mortgage. With a mortgage approval, you can confidently set your mortgage budget.
Are there benefits of mortgage approval?
In addition to helping you set a budget for buying your home, getting approved for a mortgage offers other benefits to help you make the most of your homebuying process. When you’re approved for a mortgage, you can put in an offer faster. A mortgage approval can afford you the advantage of making a solid offer the same day you find your dream home.
Another benefit is that a mortgage approval will show sellers that you are a serious buyer. How? Your mortgage approval is proof to a seller that your offer is already backed up by PrimeLending.
How do I get approved for a mortgage?
To get approved for a mortgage you will need to start with an application for a mortgage. At PrimeLending, we offer an online mortgage application process to help simplify your application. The factors lenders consider when approving borrowers for a mortgage include:
- All of your monthly debts compared to your pre-tax monthly income, also known as your debt-to-income ratio (DTI)
- The loan amount divided by the appraised value of the home or loan-to-value ratio (LTV)
- Your credit history to see how you have repaid debts (e.g. credit card debt, auto loans, etc.) in the past
- Your credit score which estimates the likelihood you will repay the money you borrow
- Two years’ worth of W-2s, 1099s, child support, alimony, Social Security or other sources that prove your income
- Documentation that can prove at least two years’ worth of your employment history
Depending on your situation there may be additional documentation necessary to get mortgage approval. When you are ready to start your homebuying journey, we are here to help you along the way. Connect with your local PrimeLending loan officer to start your mortgage approval process.
*All loans subject to final credit approval and acceptable property. Conditions and restrictions may apply.
