While leisurely shopping for a home may be enjoyable, there is one thing stopping you from owning the home of your dreams – a pre-approval letter. Otherwise known as proof of financing.
Getting pre-approved these days is a lot easier than people think, you can complete a pre-approval application in the same time it takes to brew a pot of coffee!
Here are a few reasons why future homebuyers benefit with them:
Be careful when estimating your own comfort level with a housing payment rather than immediately aiming for the top of your pre-approval amount.
The value of a pre-approval is clear, here are 3 things needed to complete the process:
1. Proof of Income
2. Credit Score
During the pre-approval process the lender needs your confirmation before pulling your credit scores. But it can be upsetting to learn that your homeownership future partially hinges on this hard-to-understand number. I recommend downloading CreditKarma for an estimate of your score, you can request your full credit report once a year here.
AnnualCreditReportis authorized by FACTA, signed into law by George W. Bush in 2003, to be the government required option to obtain one free credit report from each of the bureaus every 12 months.
So what credit score is needed to buy a house?
The answer is, it varies.
The typical minimum credit scores by mortgage type:
The lender will need to copy your driver’s license, social security number, and your signature allowing them to pull a credit report.
Once the process is over you will receive the pre-approval letter – you can find the amount you’re qualified to buy a house for on line 20.
The Bottom Line
Consulting with a lender before you start the home buying process can save a lot of headache later. Not only is it a simple process but it can be done anywhere.