How to Get Pre-Approved for a Mortgage

Purchasing a home is often an exciting event in a person’s life, but it can take a lot of time and energy. People who want to streamline the process often opt for mortgage pre-approval. Lowder New Homes provides new construction homes in Central and East Alabama. Here, our team explains the ins and outs of the process, how to get pre-approved for a mortgage, and why it can make a big difference.

What Does Mortgage Pre-Approval Mean?

Before buying a home, you need to find out how much home you can really afford. While occasionally homebuyers have the full amount on hand to purchase a home, in most cases, prospective homebuyers will need to turn to lenders to get a loan for a large portion of the cost. This loan is known as a mortgage.

Pre-approval is designed to help streamline the loan process. A mortgage pre-approval involves a thorough evaluation of your credit history, credit score, income, and assets, as well as any debts you have. The lender doing the pre-approval will thoroughly assess these factors to determine how much money they are willing to allow you to borrow to purchase a home.

Getting pre-approved is helpful for several reasons. First, you’ll be able to see how much you can borrow and the mortgage rate you may qualify for based on your current and past finances. This helps potential homebuyers get an idea of how expensive a home they can afford. Pre-approval also helps show sellers and real estate agents that you are serious about the process. This will make it easier to work with them and let them know that you have a way to secure the necessary capital.

What Does the Pre-Approval Process Entail?

Those looking to get pre-approved for a mortgage will be happy to know that the process isn’t very difficult. It involves the following steps:

1. Find Out Your Credit Score

Pre-approval starts with an honest evaluation of your finances. You should get a free copy of your credit report from any of the three major credit bureaus and review it. This will help you view your credit score and give you time to improve it before reaching out to any potential lenders.

2. Collect the Documents You’ll Need

Your pre-approval application will require specific financial documents to help lenders determine how much they’re willing to offer you. These include pay stubs, W-2 forms, bank statements, and previous-year tax returns. Individuals who are self-employed or have earned income through nontraditional means should gather any paperwork that can verify their income.

3. Research Lenders

Next, you’ll need to research the lenders you’re considering. To do so, compare their rates, terms, fees, and other factors to decide which you want to submit applications to. You can also gather referrals from people you know or read online reviews and testimonials for more insight.

4. Complete Your Applications

Once you’ve made your decision, complete the pre-approval application with the necessary information. Keep in mind that lenders will run a credit check to review your finances. Credit checks for a mortgage pre-approval may be counted as a single inquiry if done within a short period, so it’s best to apply to several lenders at once.

5. Receive Their Decision

Once the lender has had time to review your documents and credit report, they’ll make their decision. If approved, you’ll receive a pre-approval letter that shows you the loan amount you have qualified for, as well as the interest rate the lender is willing to offer and any important conditions you need to know regarding a potential mortgage.

It is important to keep in mind that pre-approval for a mortgage and an actual loan are two different things. In most cases, if your financial situation remains the same, you will be offered the mortgage when the time comes, but it isn’t necessarily a guarantee.

How Long Does It Take to Get Pre-Approved for a Mortgage?

The mortgage pre-approval process varies in terms of how long it takes, depending on a few factors. Assuming you don’t need time to improve your credit score, you can expect the first two steps above to go rather quickly. There are ways that you can get a free credit report instantly online, meaning you’ll just need to gather the necessary documents.

Researching lenders can typically be done quickly as well, so most of the time the process takes is spent waiting to hear back after filling out your applications. In most cases, you can expect the process to take anywhere from a few days to a few weeks. The length will depend on the lenders you choose and the complexities of your financial situation.

Why You Should Turn to Lowder New Homes

The team at Lowder New Homes understands that buying a home can be stressful, so we aim to make the process as simple as possible. That’s why we have partnered with our Preferred Lenders. These lenders all participate in our buyer incentive program, and they work hard to tailor your mortgage to your personal needs.

We’re also here for you in more than just the financial aspects of the homebuying process. Our experience as high-quality home builders has helped us build a strong reputation in our communities, leading to several awards for our work and our commitment to our customers. We are proud to provide a wide range of different floor plans, as well as other customizable options, to help homebuyers find exactly what they’re looking for.

We believe that newly constructed homes offer advantages that homebuyers shouldn’t ignore. Whether you want entirely new appliances, the energy-efficient aspects that modern homes offer, or the longevity they provide, the homes we’ve built in our communities won’t leave you disappointed.

Let Us Get You in Your New Home Today

If you are looking for a new home in Central or East Alabama, look no further than Lowder New Homes. We have beautiful homes available in Opelika, Auburn, Montgomery, Lake Martin, Pike Road, and Millbrook. Our team consists of passionate professionals in all roles, from leadership to agents to design and construction teams. We are happy to help prospective homebuyers in any way we can, including answering your questions regarding mortgage pre-approval. If you are interested in learning more or want to meet with a member of our team, contact us today.