Financial expert Vivian Tu shared her top hacks for homebuyers in a recent TikTok. What’s the hint? Bring your mortgage pre-approval letter to your next open house. Here’s what it is and how it can help you.
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Next, check out some expert tips on how to get pre-approved.
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A pre-approval letter is a document from your lender that tells you how much money you can borrow to buy a home. Sellers like to see these documents because they show you are a serious buyer with the financial resources.
Mr Tu said the real estate market could soon become more competitive for buyers as mortgage rates fall. Bringing your pre-approval letter to your next open house will help you stand out to sellers. That may be what you need to acquire your dream property at a fair price.
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That being said, you should know that there is nothing binding about a pre-approval letter. Lenders typically make loans based on the information you provide, which is not always accurate.
The good news is that you aren’t promising anything either. You can successfully submit your pre-approval letter at multiple open houses. This is just a way to show that you have the means if you decide to buy a home.
Obtaining a pre-approval letter is a relatively simple process. You’ll likely need to provide details about your income, expenses, and credit history. Your lender will review your information and tell you if you qualify for a mortgage and how much.
However, each lender has a different way of doing this. Some may request more information or proof of income before delivering the letter. Some people ask for very few details to get your business.
The important point is that the accuracy of a pre-approval letter depends on the information taken into account when creating it. For example, it may be okay to expand your income when applying for pre-approval. However, it will be discovered and corrected when you apply for the actual mortgage.
When you apply for pre-approval, several things can happen. Sometimes it’s approved for an amount that fits your budget, sometimes it’s approved for less, and sometimes it’s rejected. All of these pose a variety of potential problems. For example, even if you’re approved, it doesn’t mean you have to spend the full amount. Checking your budget is essential to knowing how much home you can actually afford.
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If you were approved for less, you may need to talk to your lender to find out why. They can tell you what needs to be fixed before you can qualify for the full amount you need to buy the home.
In some cases, your request for pre-approval may be denied. That doesn’t necessarily mean you can’t buy a home. But today, it shows that there are some issues that prevent you from getting a traditional mortgage. The next step is to find that problem and solve it.
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This article originally appeared on GOBankingRates.com: Money Influencer Vivian Tu: Top Hacks When Considering Buying a Home
