It can be confusing to know where to start if you’re thinking of buying a new home, especially for first time buyers. Before you start browsing listings or going to open houses, it’s important to have a mortgage pre-approval. A pre-approval will help you to narrow your housing options and make you more competitive in the housing market. Here are some basic facts about mortgage pre-approvals that every prospective home buyer should know.

What is a Mortgage Pre-Approval?

A mortgage pre-approval is when a mortgage lender evaluates all your financial information to determine the maximum loan you qualify for. A pre-approval is the first step of the mortgage application process. It acts as a conditional agreement that once you find a property, your lender is willing to loan you the money to purchase it. Lenders evaluate the following criteria before agreeing to a pre-approval:

• Record of income from at least the previous two years
• Credit information
• Details about any liabilities such as outstanding student loans, car loans, or any other outstanding debts

What Are The Benefits of A Pre-Approval?

Mortgage pre-approvals make the housing-hunting experience easier by giving you a realistic idea of what you could purchase. If you know how much a lender is willing to give you, you’ll have a better idea of what homes fit your price range. Home sellers are more willing to negotiate and sell to people who have mortgage pre-approvals because they demonstrate that you can get the required financing, giving you an advantage compared to other potential buyers.

If you want to enter the house market on secure footing, a mortgage pre-approval is the best choice. Contact us at Team Levine to get more information about mortgage pre-approvals.