Once you find out just how much you can spend on a home, you'll then know which properties you can start looking at. In fact, real estate agents for the most part won't even begin showing you homes until you have submitted a pre-approval statement. There are some lenders who may provide you with a pre-qualification statement before analyzing your credit report, but it's actually recommended you obtain a pre-approval letter instead because they're much more reliable. If you will soon be applying for a mortgage loan in order to buy a home, you'll want to be aware of what all should be included in your pre-approval letter. To become a better informed home buyer, take a look at all of the details your pre-approval letter should contain.
Pre-approved Loan Amount – Of course every pre-approval letter will let you know the loan amount that you could possibly receive from the lender.
Dates – Your pre-approval letter should have the date it was given to you and the date that it expires. If the document is older than 30 days or so, the lender might find it necessary to draw up an entirely new letter.
Terms – Most pre-approval letters will clearly state that the home must have a clear title which can be easily transferred and that it must be appraised for at least the selling price.
Loan Conditions – Your pre-approval letter will also contain information regarding the type of loan program you have been approved for. This will lay out any conditions you need to meet in order to qualify for the loan such as your most recent bank statements, information from your employer, a certain down payment amount or verification of your rental history.
Interest Rate – The letter should also let you know the current interest rate on mortgage loans. It's important to remember that while this interest rate can give you a good estimate, it's likely a floating rate. This means that the rate is subject to change at anytime without any notice.
Payment Information – Pre-approval letters also inform buyers of what the payment process will be like if they are approved for the specified loan amount.
Contact Details – Every pre-approval letter should also feature all of the contact information for your mortgage lender in case you have any questions or concerns regarding lending.
Keep in mind that in some states such as Texas, a pre-qualification or pre-approval letter is required and must adhere to the laws and regulations set by the state. If you live in one of these states, make sure your lender provides you with the right documentation to avoid any confusion or issues that could delay your purchase. When picking up your pre-approval letter, you may also want to ask your lender for a copy of the “Good Faith Estimate” (GFE) in order to get a better idea of what the closing costs might be. All of this information put together can best prepare you to begin the process of finding the perfect home to call your own.
About Hamid Ali
Speak Your Mind