When beginning your search for a new home, having a mortgage pre-approval letter allows you to accurately determine the price range for homes you can afford. Pre-approval also demonstrates to sellers that you’re committed to purchasing a home. We’ve compiled a handful of tips to help you obtain and maintain your mortgage pre-approval letter.
Maintain Accurate Records
Maintain accurate financial and residential records to ensure that you have the proper documentation to apply for a mortgage loan. These records include W-2s, tax returns, bank statements, investment statements, residential history, landlord information, and other credit-related documentation.
Review Your Credit Report
Review your credit report by requesting one through a credit checking service, which you can find online through reputable sources. Once you receive your credit report, you can identify and dispute credit report errors that may affect your eligibility for a mortgage pre-approval.
Improve Your Credit Score
You can improve your credit score by refraining from opening new credit lines, keeping existing credit cards open, lowering your credit usage, and paying your bills on time. Your credit score affects your eligibility for certain mortgage loan types, terms, and limits, so it’s important to improve your credit score before applying for a mortgage pre-approval.
Evaluate Your Loans
Evaluate your loans and outstanding balances to accurately gauge your debt-to-income ratio and determine how much of your income goes into repaying those loans. You may have payments for your student or auto loans, for example, that can influence your mortgage loan limits.
Contact a Mortgage Lender
Contact a mortgage lender to gain a better understanding of your financial situation and chances for mortgage pre-approval. Lending experts can provide you with recommendations specific to your situation and help you determine your available mortgage options.
Plan Your Home-Buying Timeline
Plan your home-buying timeline to align with your mortgage pre-approval letter so your loan letter remains valid as you consider your home options. Most mortgage pre-approval letters are valid for an average of three months.
Set a Comfortable Price Range
Set a comfortable price range to help you narrow what houses to consider buying and estimate your long-term costs. Having your mortgage pre-approval amount in mind, you can calculate your potential mortgage payment to plan and budget accordingly.
Maintain Low Credit Balances
Maintain low credit balances on your accounts throughout the entire mortgage pre-approval process. This ensures that you can keep your pre-approval. Once you receive a pre-approval letter, some lender terms may require or prefer you to keep your credit usage under a certain percentage.
Understand Your Mortgage Loan Terms
Understand your mortgage loan terms to ensure that you comprehend the limits and rules of your mortgage pre-approval. Having a thorough understanding of your agreement allows you to maintain compliance with the terms.
Adjust the Pre-Approval Amount
Adjust the pre-approval amount on your letter before presenting it to the seller by contacting your lender. This is important when you don’t need the full pre-approval amount for a house that’s under your budget.
At The Tuttle Group, we offer different mortgage loan types and services to help you find the right loan to suit your home-buying needs. You can contact us to get more information on our available programs and resources as you prepare for the mortgage pre-approval and home-buying process.
