It’s an exciting time to house-hunt, but you aren’t sure where to start. Looking at first-time homebuyer programs seems overwhelming, and you don’t know what preapproval means. Fidelity Federal is here to help.
A preapproval is a letter from your bank or other lender stating they are willing to tentatively lend you up to a specific amount of money for your home purchase.
Don’t worry! It’s not as daunting as you might think. We’ll take you through the five critical ways a preapproval aids a home search. We’ll also talk about the Welcome Home Program that might be available to you, with a grant that has helped many first-time home buyers.
So, let’s get started.
What Is a Preapproval?
A bank preapproval is an excellent step to buying your first home. It’s essentially a mortgage application, but it gives you the knowledge to make an intelligent home purchase before signing the dotted line. Below are the documents you’ll want to collect.
Documents You Need for Preapproval:
- Verification of Employment: A tax return, W-2 or pay stubs work nicely.
- Proof of Income: Pay stubs work well for double duty.
- Asset Verification: These can be checking or savings accounts, IRA documents or investments, such as mutual funds or stocks.
- Credit Report: A copy of at least one credit report should do, and you can get a free copy of your credit report once every year.
- ID: Your driver’s license should suffice.
- DTI: This is your debt-to-income ratio. Add up all your monthly payments (debt), then divide that by your gross monthly income.
Don’t Start Your Home Search Without It
Fidelity Federal will take your information and provide a loan estimate within three business days. The loan estimate gives you many details about the loan you’re requesting. Check the numbers to ensure they’re as you discussed with us; if not, just ask.
You can begin your search once you know how much you’ve been preapproved and you understand the timeline. And by waiting, you can narrow your search to the homes that are right for you.
The 5 Ways a Preapproval Jumpstarts Your First Home Search
OK, you have the preapproval process and your letter in hand. You may wonder how that helps you. Car dealerships talk about preapproval, but it’s not what happens when you get there. How does mortgage preapproval help?
Let’s look at the five ways it helps:
- Preapproval – NOT Pre-Qualification: Some lenders may use the term prequalification to attract customers, but a reputable bank won’t. A pre-qualification is an estimate without income, debt or credit score documentation. But a preapproval means your bank has already verified essential information and approved a specific loan amount that usually stands for 30, 60 or 90 days.
- A Preapproval Carries Weight: Imagine a scenario where you want to make an offer on that house, but other offers are on the table. If those other offers don’t have a pre-approval letter, guess who that seller will turn to? That letter shows the seller you have the financial teeth to close the sale.
- How Much You Can Afford: Knowing your market saves time, frustration and possibly embarrassment during home-buying. It also gives you confidence going into the homes you know you CAN afford.
- Negotiation Time: Since a pre-approval letter shows a seller that you have the financial capability to buy their home, they may be willing to take a lower offer from you than a higher one from someone else who has nothing to prove that ability.
- The Real Estate Agent: Did you know that some agents won’t work with clients unable to produce a preapproval letter? They run all over town and country to find clients the home they want. If an agent does all that and their client can’t purchase the house, they could’ve spent their time better on someone with a preapproval.
The Welcome Home Program
Were you aware additional funds may be available for your first home purchase? The Welcome Home Program is a first-come, first-served grant and can offer up to $20,000 for non-veterans and up to $25,000 for honorably discharged veterans and active-duty military personnel, members of the US National Guard, Military Reserves, or surviving spouses of military personnel. Many Ohio homebuyers have benefitted from this grant to turn their dream into a dream home.
We can review the guidelines to see if you qualify for a Welcome Home Grant as a first-time homebuyer. But if you don’t, Fidelity Federal offers various mortgage loan options you may be eligible for. We’re here to help put you in the best position to own a home you’ll love without harming your financial future.
What to Do Next
Fidelity Federal Savings and Loan offers multiple mortgage programs when you’re ready to turn that preapproval into a mortgage. Our loan professionals work hard to ensure you get the right mortgage for you now and in the future. We don’t use phone centers. You’ll have a loan officer originate, underwrite and close your loan. It’s a personal touch we’re proud of
Our lending team stands ready to help you get the home you deserve and the mortgage you’re comfortable with. After all, our customers are what matters, not how many loans we service. Call us at 1-866-694-0505 or contact us online and start your home-buying journey today.