What is a Pre-Approval Letter?
What is a Pre-Approval Letter? Are you in the market to purchase a home? Let me give you an “Insider Tip” on buying a home, a pre-approval letter is the first step to Home Buying. Hi, this is Fawn Bertram with Homes by Fawn and Hawaii Life Real Estate.
So you’ve made the decision of purchasing a home. Congratulations, this is a very exciting time. You start looking online for homes for sale and see the perfect one. Now what?
The very first step to do when purchasing a home is to get pre-approved. A pre-approval letter is the completion of a mortgage application in which a lender has verified all the necessary documentation to perform an extensive check on your financial background and current credit rating. This sounds a little scary but it’s not.
To start the pre-approval process, you would contact a lender. A lender will be able to tell you what you’re pre-approved for to purchase a home, what your monthly payments would look like, what your down payment would be, what the interest rate is, what loan programs are available and anything else that is related to financing.
What Does a Lender Need?
A lender will ask for 2 months of bank statements, 2 months of pay stubs, and 2 years of taxes to start off with. They will pull your credit and look at your debt to income ratio. They will plug this information in and tell you what you’re pre-approved for.
When placing an offer here in Hawaii, a pre-approval letter accompanies the purchase contract. Sellers will want to know you are serious about your offer and your finances have been verified.
Who Should You Contact?
Who should you contact? It’s always best to shop around for a lender. Each lender is going to offer different rates and terms, different incentives, and different loan programs. If you would like a list of top lenders in the area, please click on this link.
If you have any questions please feel free to reach out to us. We can’t wait to hear from you. Fawn Bertram with Homes by Fawn. We’re here to provide you with a smarter approach to real estate. Have a wonderful day!