In most cases, the home sellers always require potential buyers to have a pre-approved later for the negotiation to be taken to the next level. This is always to prove if the buyer can afford the home in terms of finances. But the big question remains if you should be pre-approved for a mortgage or not.
What is the fact about this matter? Let’s shed light on various things about this fact!
Facts About Pre-Qualification Vs. Pre-approval
Typically, mortgage pre-qualification is an essential estimate of how much an individual can afford on purchasing a home. However, pre-approval is more critical when it comes to negotiating the price of a given home. A mortgage pre-approval is a clear indication that the respective lender has checked the potential of the buyer and authorized a particular sum of money.
Many buyers are always on a better side after consulting and getting a pre-approval letter from the lender. This allows the buyer to carry out a discussion about different loan options with the lender. The buyer will then get to know the maximum amount of money he/she can buy to set the price range for the home purchase.
Necessities for Pre-approval
To be able to get a mortgage pre-approval, you require to have several things in addition to the two listed below.
- Certification of Assets
The lender always demands the investment account statement and bank statements to indicate that the borrower can make the required down payment.
- Proof of Income
This is a common requirement since the home buyer should produce his/her wage statement. The statement should incorporate details for the past two years' payment history to indicate a steady income flow.
When deciding whether or not bring re-approved is the right move for you, speak to your financial advisor who can help in making the decision.