Knoxville Mortgages: 3 Key Benefits Of Getting Pre-Approved Before Your Home Search
To many first time buyers, the mortgage world is a vast, unexplored jungle.
When you start to think about buying your first Knoxville home, exploring your mortgage options is the first thing you should do.
Unfortunately, it’s not what many first time buyers do. Instead, buyers often jump headlong into the exciting abyss that is buying your first home. While this doesn’t always result in grievous calamities for every new buyer, it can cause many headaches along the way, causing more bumps in the road than necessary.
In this post, we’ll cover how to delve into the mortgage world as a first time buyer by getting pre-approved before starting your home search. We’ll also cover the importance of getting pre-approved and why a pre-approval is significantly better than just getting pre-qualified.
The Successful Road To Knoxville Mortgages Begins Here
You’ve decided to buy a home.
Where do you go from here?
The first and most crucial step after deciding you want to buy your first home is to speak with a loan officer.
If you don’t have a loan officer, here are a few tips for finding the right loan officer for you:
- Get recommendations from people you know (friends, family members, co-workers)
- Ask your Realtor (they often know some of the best in the business)
- Find someone who specializes in working with first time buyers (they’ll be more willing to educate you)
- Try to find someone who is local (which means it’ll be easier to get someone on the phone than someone 4 states away)
- Read reviews on Google, Yelp, or Facebook
A loan officer will be able to let you know how much you can afford. They’ll let you know what loan options you have. And, they can answer any of your questions about the mortgage process.
The knowledge you’ll get from speaking with a loan officer will be very helpful to your home search and here’s why:
- You’ll find out if you’re able to buy a home in the first place.
- You’ll get a price range, so you’ll be looking at homes that you can afford.
- You’ll know the loan type, so you won’t be looking at homes that may not qualify for that loan type. For example, if you’re using at RD loan, you may be tied to certain search areas.
Next: A Quick Check On Some Knoxville Mortgage Definitions
The terms pre-approval and pre-qualification often get thrown around interchangeably in the real estate world.
I’m going to tell you right now, these two things are not the same. So, let’s take a peek at the definitions.
Pre-Qualification: A pre-qualification is merely an estimate how much you can afford and how much a lender is willing to lend. A loan officer will merely take down your income, debts, assets and a potential down payment. With that information, they will be able to give you a ballpark of how much you can afford and how much your monthly payment will be. In a pre-qualification, there is no commitment between you and your lender and they require no documentation.
Pre-Approval: A pre-approval is similar to a pre-qualification in that you give similar information to a loan officer about your income, debts, assets, and a potential down payment. But, it goes a step further, your credit will be pulled and you’ll be asked to provide documentation for the information that you provided. The information that is provided during a pre-approval is verified, making a lender’s commitment to you to provide a loan much more solid.
Benefit #1: Your Information Is Verified
When you get pre-approved for a Knoxville mortgage, your information has been verified by your mortgage company.
So, why is this so important?
When information is given for a pre-qualification, it’s not always based on fact. That is not to say the buyers lie when the get pre-qualified. But, buyers can present information in a light that may be misleading to a lender.
When you get pre-approved, you eliminate the element of surprise that can happen with pre-qualification. A lender goes through pulls your credit, looks at your income, and verifies that based on that information, they can approve you for a loan. While this doesn’t guarantee loan approval, it’s still the very best you can do before you start looking at houses.
Benefit #2 – You Show that You’re A Solid Buyer
Another fabulous benefit of getting pre-approved versus pre-qualified is that you show that you’re a solid buyer.
After searching for countless Knoxville homes for sale, you’ve finally found the perfect home and it’s time to write an offer.
What do you think looks better to a seller, a pre-approved buyer or a pre-qualified buyer?
Obviously, the buyer that did a little more legwork prior to get pre-approved looks better to a seller. Even if a seller is not aware of the difference, their agent will likely explain the difference.
If a seller is debating a few different options when you write an offer, a pre-approval can help set you apart. It shows that you’re a strong buyer and that you have already verified that you’re capable of getting a loan.
Benefit #3 – You’ve Already Done Most Of The Heavy Lifting
When you get pre-approved for a mortgage, you’ll have already done a lot of the heavy lifting to apply for a mortgage.
When you get pre-approved for a mortgage, you’ll need to provide the following documentation:
- Two Years Worth of Tax Returns
- Two Years Worth of W-2s/1099s
- 30 Days Worth of Pay Stubs
- 60 Days Worth of All Bank Statements
This is a majority of the documentation that you’ll have to show when you apply for a mortgage. You may be asked to show a few more things depending on your income and the loan, but for the most part, you’ve already given your lender what they need.
Are you thinking about buying your first Knoxville home this year? Please let us know if there is anyway that Knoxville Home Team can assist you. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.Com or by phone at 865-696-9002. Kati can be reached at Kati@KnoxvilleHomeTeam.Com or by phone at 865-392-5880.
You can also start your home search off today on our Knoxville Home Search Page.