The Importance of Getting Preapproved

How can you as a potential home buyer best prepare for a future home purchase? With mortgage interest rates still at near-record lows and home prices remaining moderate compared with their highs of the last decade, now is an excellent time to consider buying a home in Massachusetts. Whether it is your first purchase, a purchase of a larger home, or the purchase of an investment property, the better prepared you are the more successful your search will be.

One of the most important steps that you can take to prepare yourself to be a ready, willing, and able buyer is to obtain a mortgage prequalification or a mortgage preapproval from a mortgage lender or broker of your choice. These are determinations from a mortgage originator about what loan options you qualify for to purchase a home of your choice.  Both a prequalification and a preapproval are reviews of your income, assets, employment history, liabilities, and credit history.  Both establish the amount of the loan that you would likely be able to secure to purchase a home.  Either can be used to make your offer to purchase as attractive as possible to the Seller.  And during the prequalification and preapproval processes you will have a great opportunity to learn what the likely mortgage payments will be for the houses at various price ranges.  With this information you can assess what monthly mortgage payment makes sense for your budget.  

The terms preapproval and prequalification have started to be used fairly interchangeably. Typically the primary difference between the prequalification and the preapproval is that the preapproval includes a more formal review and approval of all of the relevant documents you would submit for a loan application, except an appraisal of the property. This may also include an underwriting review of those items. The preapproval may take longer to obtain, depending on the Lender or mortgage broker.  If you have a particularly involved financial situation, or if your credit report has some challenges, the preapproval will help to establish that these circumstances are acceptable.

The term pre-qualification is also an assessment by a loan agency for the Lender or mortgage broker. It is a certification that based on the information you have provided you are eligible for a particular loan amount. Depending on the mortgage lender, this might not include review of your financials or credit check. The primary advantage of the pre-qualification is that it can usually be completed the same day as your mortgage inquiry. 

Whether obtaining a prequalification or preapproval the most important objective is to work with a reputable local lender. The seller of the property and their listing agent will review your prequalification or preapproval lender when deciding whether to accept your offer. So get prequalified or preapproved! You’ll be a more educated, competitive, and successful buyer.

What to expect when you Apply for PreApproval

Before starting your house search, you'll need to get preapproved by a mortgage professional.  With the Applied Mortgage team, we complete preapprovals for free via phone, email, or we can meet in person.  Below is an outline of some steps you can expect during the prequalification process.

First, we want to hear your goals! You'll speak with your loan officer to provide an outline of what you’re hoping to be able to do.  Whether this is in person, via email, or on the phone, we'll gather some initial information from you such as: what type of house are you looking for, what town(s) do you plan to look in, are you working with a specific Realtor, will you be living in the property?  We'll also ask about your employment, asset, and credit history to get a general overall picture of your financial situation.  

After the initial consult, you’ll apply for a credit check.  This can be done using our application portal on our website or smartphone app.  Or you can complete the application with a Loan Officer over the phone or in person.  Find your Loan Officer here to apply online!

Next, your loan officer will ask you to provide copies of your supporting financial documents that will be required for your formal application.  We'll tailor the list to your specific situation depending on your employment, whether you own other properties, and what type of assets you're using for your down payment.  You can send us these items over our application portal (on your computer or smartphone), you can email them over, drop them off, or mail them to our office – whatever is best for you!

The following lists some common items asked for during prequalification:

• most recent paystub

• 2 years of W2s or 1099s

• 2 years of Federal tax returns

• drivers license or other form of identification

• 2 months of bank statements

• divorce documents if applicable

• if you own other properties: real estate tax bills, insurance statements, and mortgage statements for those properties 
  

Finally, review your credit check and financials to determine which mortgage programs meet your goals and your financial situation. We’ll prepare a sample budget for your review and set up a time to discuss what loan programs and loan amount you are qualified for. This is a time used to get as much education as you can on the various programs and which ideal home loans are available to you. Ask questions! This will prepare you to decide which price range and loan option is best for your specific situation and will help you know how to increase mortgage pre-approval amount. 

Once you are comfortable with the budget, price range, and loan program it is time for us to issue your PreApproval certificate.   The certificate states that you are qualified based on the financial information you have provided to make an offer on a home!  Your Realtor will use this when you decide to submit an offer to a seller – Happy House Hunting!!  

How to Apply!

1. In person 211 North St Northampton

2. Online LLaBonte.HarborOneMortgage.com

3. Phone Call 413-320-1641

4. Smart Phone App