What Lenders Look For When Going From A Preapproval To An Approval
Once you find a lender who offers you a preapproval for a loan, you can begin shopping for a home to buy, but it is important to understand that the preapproval you received is not a guarantee that you will get a loan when you prepare to close on a house. The lender you are working with will have to evaluate a number of things in order to actually approve your loan, and here are three of the top things you should expect your lender to look for when trying to switch your preapproval to an approval.
The home's value
One key thing lenders always look at when trying to approve loans is the value of the house a person is trying to buy, and that is why all lenders require an appraisal before they issue loans to people. An appraisal will tell your lender exactly how much the home, that you want to buy, is worth right now, and this amount could affect your ability to get a loan. If, for example, you want to pay $180,000 for the house but the appraisal says it is only worth $150,000, your lender may have some concerns loaning you enough money to pay the price you want to pay for the home.
Your credit score and financial situation
Secondly, when you got preapproved for the loan, the lender would have checked your credit and evaluated your financial situation. To do this, lenders calculate ratios and examine debt loads, and they may do a variety of other steps too. The purpose is to make sure a person qualifies for a loan and is creditworthy to repay it. As long as your financial situation and credit have both remained the same or improved, you should still qualify for the loan. It is important to know that your lender will reevaluate all these things when trying to approve a loan for you, even though they were done in the preapproval process.
Your job
The other important thing to know is that your lender will verify your job and income once again before approving your loan, even though the lender already completed this step during the preapproval process.
It is very important for you to try to protect your job, credit, and finances after you are preapproved, as these factors can affect your ability to qualify for a loan. To learn more about home loan purchases, contact a lender today.