The home buying process can be daunting. But there are several steps that you can take to prepare yourself and make the process less challenging. One of the most important steps that you can take at the start of your home search in the Vail Valley/Cordillera area is getting a mortgage preapproval letter from a lender. Let me explain why.
Preapproved vs. Prequalified, Why is it Important?
A question that buyers often have is whether they should get a mortgage preapproval or a prequalification letter and what exactly is the difference between the two? Preapproval and prequalification are often confused or even used interchangeably by some lenders. The real difference is the steps that the lender takes to verify your creditworthiness. There are many lenders in the Vail Valley/Cordillera area who can get you prequalified in just a few hours. Prequalification is a quick way to get an idea of what you can afford. But, it’s important to remember that this is just hypothetical. A prequalification is not a guarantee that you qualify for a certain amount, it’s simply a ballpark figure based on information that you provide but is not necessarily verified.
Preapproval is much more involved and will include an application and credit check. It’s the most accurate way to confirm how much house you can afford and what your monthly payments will look like. This preapproval letter assures everyone involved in the transaction that you can complete the purchase. It will specify how much money you can borrow and while not required, a preapproval letter is essential to a trouble-free home buying process. And many sellers won’t entertain offers made without a preapproval letter in place!
The Preapproval Process
What can you expect during the preapproval process? Expect surprises! Lenders will look at every detail of your finances and you will need to be prepared to answer questions quickly when they come up. Documents that you’ll need will include W2s, tax returns, and bank statements. You’ll also be asked to provide information on any assets you own, debt you owe and other records pertaining to divorce or bankruptcy if applicable.
As I mentioned earlier, this all can seem very daunting. But the good news is that getting preapproved assures that when you find the perfect home you’re ready to make an offer and won’t risk missing out! It also means that you know exactly what you can spend. You’ll save yourself a lot of time by shopping within your price range and sellers will know that your offer is a serious one and that you can secure the loan.
How Can I Help?
If you are just starting the home buying process I hope that you’ve found this information useful. Please reach out to me if you ever want to know more! I want to provide my clients with interesting and up-to-date information so they can make informed decisions. If you think that my expertise and positive attitude might be of service to you don’t hesitate to reach out and contact me.
Would you like more information on the Vail Valley/Cordillera area or the real estate market specifically? To receive my detailed monthly market report immediately, click here!
Robert Schilling
Coldwell Banker Global Luxury Specialist
Coldwell Banker Distinctive Properties
(970) 390-0705
[email protected]