When you're scrolling through beautiful homes online, it's tempting to jump in, make an offer, and let the bank handle everything. But real estate doesn't work that way. If you dive into the home-buying process without getting pre-approved, you're setting yourself up for heartache, disappointment, potential scams, and wasting your time. Why is pre-approval so crucial? It acts as a barrier against all these potential issues!
Here's why getting pre-approved
is a must and how to do it:
Difference between Pre-Qualification and Pre-Approval:
Pre-qualification and pre-approval are not the same. Pre-qualification is the bank listening to what you say without evidence. It's a weak way to get offers accepted and doesn't offer the protection that pre-approval does.
Documents Needed for Pre-Approval:
Gather your financial documents—W-2, transcripts, 1040s, bank statements, IDs, paystubs, and any proof of yearly income. These documents help the bank understand your affordability and eligibility for different programs based on your income.
Credit Score Check:
The bank checks your credit score to determine your debt-to-income ratio and the interest rate you'll get on your mortgage.
Why is the above important?
Heartache:
Without pre-approval, falling in love with a property might lead to heartache if you later find out you don't qualify for the needed amount or the type of financing the seller accepts.
Disappointment:
Not getting pre-approved means facing surprises and negativity throughout the home-buying process, causing stress and disappointment.
Scams:
Scams are more common in "rent-to-own" homes. Sellers may create their own rules, asking for a large non-refundable down payment and monthly rent. Pre-approval protects you from falling into such deals.
Waste of Time:
Pre-approval sets clear expectations. You know what programs are available, how much money you need, and the rules. It prevents wasted time by guiding you, even if you're not ready to buy immediately.
I sincerely hope that you enjoyed this blog and that it taught you something you did not know about real estate! See you in my next blog!🏡✨
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