If there is one single piece of advice we always like to give to all prospective buyers it is, quite simply, to get pre-approved for home finance.
There are so many benefits to this approach.
Crucially, you are going to be very taken seriously by any seller as you are demonstrating your ability to purchase the home in question. Indeed if, as is increasingly happening in the Albuquerque area, you are in competition with other buyers, having pre-approval in your pocket can give you a vital edge. You will also benefit from a potentially more focused home search. Indeed, in many ways pre-approval defines your search criteria for you, as you know with far more accuracy what is affordable and, therefore realistic to view.
Perhaps we should emphasize at this point that there is a fundamental contrast between pre-qualification and pre-approval. Pre-approval is vastly preferable as it confirms that, all things remaining equal, you meet all the necessary criteria to borrow at a certain level. Pre-qualification, on the other hand, is little more than an estimation of the amount for which you might expect to be approved, based on information provided to the lender.
Essentially, therefore, pre-approval is a far more in-depth and formal assessment of your circumstances. It involves the completion of an official mortgage application (usually supported by an application fee), based on a whole host of data and documentation that facilitates an extensive check on your financial background and present credit rating.
Following successful pre-approval, you will receive a conditional commitment in writing for the exact loan amount. This is so persuasive with sellers and enables you to explore homes that you can afford from a position of power.
Here's a basic list of what you will be asked to provide in your pre-approval process (please note that precise requirements will vary from lender to lender) :
- Your social security number (and that of your spouse if you're applying jointly). This enables your lender to run an accurate credit check.
- Copies of your checking and savings account statements for the past six months.
- Documentation of other assets you may hold, such as stocks and bonds.
- A recent pay stub that confirms your earnings, supported by the name and contact details of someone who can verify you are still working for the company in question.
- A list of all credit card accounts with firm balances.
- Your last two years of income tax returns.
As always, we'd be delighted to advise you on any aspect of getting pre-approved, including introducing you to top local lending professionals.
Call us today - we look forward to speaking with you.