So you’ve decided you want to buy a house – congrats! You’ve budgeted carefully and crunched the numbers to get a sense of what you can afford but, before you spend valuable time searching for your perfect dream home, there’s one more crucial step you ought to consider: getting a pre-approval letter.
You might be saying to yourself “A pre-approval what?” and, if so, you aren’t alone. We understand that the homebuying process can be more than a little confusing, and that’s why we’ve answered four of the most common questions about the all-important pre-approval letters below:
1) What’s a pre-approval letter and why should I get one?
In short, a pre-approval letter is a letter from a lender that, based on your financial history, gives you an idea of the mortgage loan amount you’ll qualify for. Typically, the lender will review things like your credit report, credit score and income in order to determine the amount they’re willing to lend you. This, in turn, allows you to shop within the appropriate price range for your budget, while also showing brokers and lenders that you’re a serious buyer.
2) Why is it important to understand how much I can afford?
Imagine the scenario: you’ve found the house of your dreams and, based on your preliminary calculations, you are so ready to put in an offer. But hold off on picking out paint colors for now, champ. Sometimes, even the savviest applicants overestimate what they can afford and are disappointed to learn that lenders have a distinctly different view of what’s manageable. No one likes nasty surprises, and we’re sure you’d prefer to save yourself the heartache of falling in love with a home, only to have your dreams quashed. That’s why it’s good to get a realistic sense of how much home you can afford, how much of a down payment you will need, and how much your monthly payments will be going forward. Having this information will help you to map out a clear budget for the future.
While some mortgage calculators claim to provide this information during the initial information-gathering process more often than not they’re not particularly accurate since they rely on ballpark pricing and fees - which means guesstimates and no real numbers.
Our mortgage calculator cuts the “estimates” B.S. and gets right down to business. Think of the platform like a one-stop-shop, where you can use a variety of tools to view the current rates. We have options ranging from the country’s largest mortgage lenders to well-known smaller and local lenders, which helps us provide you with the most up-to-date and competitive rates. And best of all? It won’t cost you a dime.
3) How can a pre-approval letter expedite the home-buying process?
A pre-approval letter shows sellers that you are serious about buying a home, and moreover that lenders are willing to cough up the money. When the time comes to bid on a property that you love, sellers will take your offer more seriously if you include your pre-approval letter with your offer to buy their home. The seller wants to know that you can afford to buy the property and that they are not wasting their time by negotiating with you.
4) Where can I go to make this process simple?
At Simplist, we make the process of getting pre-approved quick and easy. Our advanced technology means that, in the time it takes to get your favorite coffee from the barista, you could have a pre-approval letter ready to go. How does it work? Our digital process is simple: you give us some basic information about yourself, your income, and the type of property you’d like to buy. We then run a soft-credit check to ensure everything is looking good and, if it all checks out, our platform will generate that pre-approval letter in less than 10 minutes. (Don’t worry – that soft-credit check we run won’t impact your credit score!).
Once you’ve identified the property on which you’d like to make an offer, you can also customize your pre-approval letter to reflect the commensurate purchase price and loan amount. With Simplist, you can feel empowered to confidently and quickly make an offer on your dream home.
The home-buying experience can be daunting and too often, home-buyers embark on this journey only to find themselves quickly feeling frustrated and lost, not knowing where to turn to help navigate the process. With Simplist, you’re never alone – we’re here as your guide to make the process as stress-free and simple as possible. We look forward to getting to know you, learning your story and helping to write the next, exciting chapter!