Before you ever start looking for your new home you should always get pre-approved first. Some people get prequalified thinking that thats all they need. Prequalification will not get you a mortgage. When you are prequalified it is basically saying that the lender will give you a load IF after checking your credit history, employment history, down payment source and etc. Many buyers go out and find their “dream house,” sign a contract, and then go out searching for loans. When the lender comes back and says that they are not approved for the loan, the seller will reject the contract and the buyer will be out of a dream house.
When a buyer gets pre-approved then they know just how much house they can afford in Bethany or Sprague before they start looking or getting involved in negotiations. Homeowners will be much more willing to accept a contract offer with a pre-approval letter attached. The seller will be much more comfortable with this offer as they know the buyer has the ability to afford such a house and the seller won’t be tied up for weeks hoping the buyer can get approved.
When a buyer goes to get pre-approved they will need to bring certain items: bank statements, most recent paycheck stubs and last two years of W-2 tax forms. They will also do a credit check. Once the buyer is pre-approved he/she will receive a pre-approval letter which says that the lender agrees to loan the buyer a certain amount of money.