If you're planning to buy a home in 2016, here's what you need to know about the mortgage process. With significant home inventory shortages in many areas of the country, it's more critical than ever to be prepared with a solid mortage pre-approval when you're ready to make an offer on your dream home if you want a home seller to take your offer seriously; many sellers outright reject an offer without a solid mortgage pre-approval accompanying it. In a multiple offer situation, sellers with often give extra consideration to those offers with solid mortgage pre-approval letters from recognized lenders. Getting preapproved before you shop for a home also allows you time to fix unexpected errors on your credit reports.
If you're a first-time home buyer or if it's been many years since you went through the mortgage approval process, the infographic below provides important information about what you need to qualify in today's market and the five important steps you need to take to get approved. Keep in mind that a pre-approval is not a guarantee of a loan, but it can speed up the underwriting and loan approval process once your offer has been accepted.
And in case, you were wondering about the difference between a loan pre-qualification and a loan pre-approval: with a prequalification, lenders rely on information provided by you, the buyer, to estimate how much of a loan you could qualify for. With a preapproval, lenders verify the information you've provided to determine just how much they would be willing to lend to you based on your specific credit, income, assets, liabilities.