Do not even try to contact a real estate agent requesting to show you a house you like if you are not pre-approved yet! Can you view a house without a preapproval letter? Certainly! If it’s an open house! )) Things and standards in real estate of post-Covid era changed a little bit. Lot’s of sellers agents are showing the properties, even open houses by appointments only. In some areas you can’t hold traditional open house and interact with a big crowd of potential homebuyers and their agents. Believe it or not, it’s the law. Significantly reducing the number of potential clients agents have to market open house events “By appointment only” making sure that this is not against their local guidelines; that’s why they prefer deal with qualified customers.

Does pre-qualification letter mean I’m qualified and pre-approved?

This is a good first step, but it typically won’t carry as much weight as a preapproval because a lender hasn’t yet verified your information. Going beyond a prequalification and getting preapproved by a loan officer is a critical step to showing you’re serious about buying a house. After lenders, or their underwriters review your income, assets, credit history, debt to loan ratio, etc they will issue a pre-approval letter, which is basically the stamp of approval that you have the money, credit history and other credentials to purchase a house up to certain price.

How getting mortgage pre-approval helps you buy a home?

When sellers accept an offer, they want the deal to go through as fast as possible (key word is “possible”). However, if the buyer isn’t pre-approved for a loan, and doesn’t have enough cash to execute a contract to purchase, the whole deal will fall through. If the loan doesn’t get approved, the buyer most likely will be unable to finance it using own funds..

That’s why some home sellers won’t allow buyers to tour their home without pre-approval, and some real estate agents won’t take buyers on tours until they’re pre-approved.

The Paperwork You Need To Get Pre-Approved:

When you’re buying a home, gathering the paperwork for your mortgage before you apply is not just a great idea, it’s crucial factor! Tracking down documents can take time, but doing it before you need them could help you get to the closing table faster.

A mortgage application typically requires a paper trail to verify:

• Income and employment: Pay stubs from the past 30 days showing your year-to-date income. Two years of federal tax returns. Two years of federal tax returns
• Assets and debts: 60 days or a quarterly statement of all of your asset accounts, which include your checking and savings, as well as any investment accounts such as CDs, IRAs, and other stocks or bonds
• Credit history.
• Identity: Two forms of government ID, and Social Security Card
• Rental history: Residential history for the past two years, including landlord contact information if you rented
• Other information, such as divorce, bankruptcy or gift funds.

The first step in applying for a mortgage is completing a standardized form called the Uniform Residential Loan Application. Each borrower has to complete this form, which asks for personal and financial details. Lenders use this application to determine your eligibility for a mortgage.

The lender will request a few documents to confirm that you can pay back the amount you want to borrow.

When lenders check a borrower’s income, they’re looking for stability and consistency to make sure the borrower can afford the mortgage payments. The list of requested documents see above.

Having your credit checked is a big part of applying for a mortgage, though you won’t actually submit copies of your credit reports from Credit Karma or other bureaus. Instead, the lender will ask for your permission to check your credit history.

But if late payments, collections, judgments or other derogatory marks show up on your credit reports, the lender may ask for a letter that explains these items.

The lender will also check your credit score, and your score will influence your interest rate.

For every loan program, Checko says, “There’s a minimum credit score that you’ll need to qualify. The interest rate is on a scale corresponding to your credit score.”

Generally, having a higher credit score will mean getting a lower interest rate.