The Chicago real estate market is less frenzied this year, and buyers may be tempted to take shortcuts in the home buying process. But there are three good reasons why a mortgage pre-approval remains essential!
1. A mortgage pre-approval will evidence any significant problems that exist with your credit. This gives you the opportunity to resolve credit problems before they stand in the way of your home closing.
2. With a mortgage pre-approval, you will know what home price fits your budget. If your approval falls short of the amount you’d like to qualify for, you can step back for a while and save more money for a larger down payment, or pay down debts, ect.
3. Your mortgage pre-approval shows you are a ready, willing and able buyer, with the means to complete the deal. This adds credibility to your purchase offer. A buyer with a mortgage pre-approval letter will be taken more seriously by a home seller.
Please keep in mind that a mortgage pre-qualification is not the same thing as a pre-approval. Here’s the difference: a mortgage pre-qualification is an informal estimate of your home buying power, based on unverified information you give to the lender. A pre-qualification only gives you a frame of reference for your potential home buying power. There is no commitment by the lender to actually loan you money!
A mortgage pre-approval takes you through a full application and underwriting process. In this situation, all of your employment, financial and credit information will be verified. You’ll need to provide copies of your last 2 years of income tax returns, plus 2 months of bank statements, a month’s worth of pay stubs, and authorize a review of your credit report.
If this sounds intimidating, remember that you’ll go through the process at some point anyway. It’s better to go through it up front, and have confidence in your purchase power!
StartingPoint Realty – serving first-time home buyers since 2004!
StartingPoint Realty proudly serves first-time home buyers throughout Chicago and the Northwest suburbs. Get an introduction to home buying by attending our free home buying seminar! There’s no sales pressure and no obligation. Space is limited, so please register your choice of location and date to reserve your seat!
Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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