Before you make a large purchase, you’ll want to ensure you have your finances in order. Naturally, lenders want to do the same. If you’re hoping to obtain a mortgage loan, it’s important to get pre-approved before putting an offer in on an attractive property. Use the following guide to learn why this is important and how the process works.

Why Is It Important to Get Pre-Approved?

In order to qualify for a mortgage loan, you need to prove to the lender that you make enough money to fulfill your payments, and that you’ve been responsible with credit and loans in the past. To get pre-approved, you’ll show the mortgage lender your financial history. If they do decide to pre-approve you for a loan, they’ll provide a letter you can show to the real estate agent selling the home. This will make the seller know that you’re both serious about purchasing the property and that you can, logistically, do so. This will make your offer more likely to be considered and accepted. If your approval is denied, you’ll have a detailed understanding of where you need to improve your financial report card.

What Information Is Considered?

First, you’ll need to fill out a mortgage application for the lender, which will include personal details such as your SSN. They can use this to perform a credit check, which will allow them to view your past habits when paying back lenders. They’ll also review your tax returns, employment history, assets, and existing debts.

How Is It Different From Pre-Qualification?

To get prequalified for a mortgage loan, all you’ll need to do is provide the lender with a summary of your current cash flow, including your income and debts. No hard credit check is involved. Using this information, they can calculate the loan they would be comfortable giving to you. While this allows you to understand where you stand, it won’t convince the real estate agent that you’re capable of and committed to the purchase. The pre-approval process presents a more in-depth assessment of your finances, including a credit check, a more concrete promise that the lender is willing to lend you money. Therefore, you can offer more assurance to the seller that you can afford their property.

If you’re hoping to get pre-approved for a mortgage loan in the near future, turn to Fairway Independent Mortgage of Chattanooga, TN. When you speak with one of their mortgage professionals, you’ll receive personalized attention and calculated guidance towards the right loan. Learn more about their friendly staff by visiting the website, or call (423) 708-5253 to schedule a consultation today.