When you’re searching for the perfect Midland home for sale, being preapproved for a mortgage loan can make a huge difference in whether a seller accepts your offer. Here’s what you need to know.
Why Mortgage Preapproval Makes a Huge Difference in Your Offer
First things first: Preapproval is different from prequalification. Mortgage prequalification is simply a lender saying, “If your financial picture is the same as we think it is, we’ll probably approve you for a loan in this amount.” Preapproval is more serious; it’s a lender saying, “Send us your financial documents and let us check your credit; then, if your finances are in order, we’ll extend you an official offer to borrow this amount of money.”
But why does that matter when you’re thinking about buying a home?
Because it shows you exactly how much house you can afford – and it shows sellers that you’re a qualified buyer.
Related: 3 mortgage myths it’s safe to ignore
Finding Out How Much You Can Afford With Mortgage Preapproval
When a lender reviews your financial documents, such as your W-2s, tax returns, bank account information and pay stubs, and then reviews your credit report, it’s able to weigh its risk in lending you money. Your lender will make sure the math is right and then tell you how much money you qualify to borrow.
When you have that figure, you can look at Midland homes for sale in that price range.
Pro Tip: You never have to borrow as much as the lender is offering you. For example, if you qualify for a $450,000 mortgage loan, you may find a home for $300,000 and only borrow that amount. You’re not obligated to take the full amount (though most people do, and don’t think twice about it).
Showing Sellers You’re a Qualified Buyer
When you find a home you love and make an offer, you’re asking the seller of that home to take it off the market. If the seller does so, the home is unavailable to other buyers; the seller is banking on you being able to buy it.
Sellers are far more likely to be compelled to take their homes off the market for preapproved buyers. Preapproval from a lender shows that you can afford the home and that you’re likely to buy it if you say you will. (And on the other side of the coin, if you’re not preapproved, the seller has no way of knowing whether you could even get a mortgage for it.)
Related: 5 tips to improve your credit score
How Do You Get Mortgage Preapproval?
Before you start house-hunting, you should talk to several lenders to find out which one will offer you the best terms and rates on a mortgage loan. Then, when you settle on the lender that offers you the terms you want, your lender will ask you to fill out an application form and provide supporting documentation. Your lender is likely to ask for things such as:
- A credit report authorization
- Employment information
- Tax returns
- W-2s or comparable forms
- Pay stubs
- Bank statements
Your lender will give you a specific list of what it needs. From there, your lender will let you know whether you’re preapproved for a mortgage loan.
As long as your financial situation doesn’t change much between the time your lender preapproves you and the time you sign your closing documents, your lender will most likely officially approve you for a loan to purchase the home.
Are You Buying or Selling a Home in Midland, Texas?
Use our site to search homes for sale in Midland and all of our surrounding areas. Unlike the “big name” sites out there, our site is directly connected to our local MLS and is updated faster. By creating a property manager account you can stay on top of the newest homes for sale and get price change alerts so you can stay ahead of other buyers and beat them to the best deals!
In the meantime, check out these 1-click searches:
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