Step 2: Getting Pre-Approved for a Mortgage Loan

Ten Steps to the Successful Completion of the Home Buying Process

Step 1:       Preparing Your Finances 

Step 2:       Getting Pre-Approved for a Mortgage Loan    

Step 3:       Hiring a REALTOR®

Step 4:       Looking at Homes       

Step 5:       Choosing a Home

Step 6:       Making an Offer on the Home

Step 7:       Getting the Mortgage Loan

Step 8:       Getting Insurance

Step 9:       Closing the Loan

Step 10:    What’s Next?  Protecting Your Investment 

Step 2:       Getting Pre-Approved for a Mortgage Loan

According to the National Association of REALTORS®, nearly nine out of ten buyers do not have enough cash to purchase a home without mortgage financing.  As a result, nearly all buyers will need to obtain a mortgage loan to complete their home purchase.

Before you start looking for homes, you will need to find out whether you are able to obtain mortgage financing and what homes are within your price range.  In order to do so, you will need to obtain a pre-approval for a mortgage loan.  A mortgage lender’s “pre-approval” is basically a time-limited commitment to fund your mortgage loan up to a certain amount and at a certain interest rate.

In order to obtain a pre-approval, you will need to submit certain information to a prospective lender that will allow them to judge your creditworthiness and provide you with a maximum loan amount and an interest rate on your home purchase.   It is important that you obtain a pre-approval before you start looking for homes since this legitimizes you as a serious buyer and lets you know what price range to look for in potential homes.

As you are seeking a pre-approval, it is very important that you do not leave out or misrepresent any facts that are required on the mortgage loan application.  This will only distort your true ability to purchase a home and qualify for a loan and can lead to difficulties later on in the loan process.

Once you are ready to move forward, there are many different types of financial institutions that can assist you with the process, including banks, credit unions, financial institutions and certain governmental housing programs.  If you shop around between multiple potential lenders, you should be able to find a suitable mortgage product at the best interest rate.

For a more detailed discussion on potential financing options, please refer to the Financing Options or Financial Assistance Programs sections of this website.