Buying a home in Florida, whether it’s a beachfront condo, a golf course villa, or a single-family home in a gated community, the process should begin with one important step, getting pre-approved for a mortgage. To submit an Offer to Purchase, in most situations the seller will require you to show Proof of Funds or a Pre-Approval letter if you plan to finance the purchase.
What Is a Mortgage Pre-Approval?
Mortgage pre-approval is a formal letter from a lender stating how much money you can borrow to buy a home. The amount is based on your credit, income, assets, and debt. It isn’t a guarantee, but it shows sellers and REALTORS ® that you are a qualified buyer. It means a lender has independently reviewed your financial documentation and credit report.
Key Benefits of a Pre-Approval
Know Your Budget
A pre-approval provides a definitive price range for your home search. You and your REALTOR ® will save time by focusing on properties you can realistically afford.
Stronger Offers
Sellers are more likely to accept an offer backed by a lender’s pre-approval than one without it. Some sellers will not accept an offer without details on how the buyer will purchase the property.
Uncover Potential Issues Early
The Pre-approval process allows you to identify and resolve credit or income issues before you move forward in the selection of a new home.
What You’ll Need to Get Pre-Approved
Lenders typically ask for the following documentation:
- Proof of income (two year’s worth of W-2s, pay stubs, tax returns)
- Credit report and Credit score (Lender will obtain this with buyer’s permission)
- Bank statements and other asset documentation
- Employment verification and/or other sources of income
- Identification (Government-issued ID, SSN)
Most lenders can issue a pre-approval within a few days, sometimes even faster with digital applications.
Pre-Approval vs. Pre-Qualification
Though they sound similar and are sometimes used interchangeably, a pre-qualification is more of an estimate, with the borrower providing information to a lender without proof. While a pre-approval is a deeper, verified review of your finances, both assets and liabilities, plus your credit score which determines the lender’s risk in providing you with a loan. In a competitive market like Florida’s, a pre-approval is almost always required by the seller in order to accept your offer.
Don’t Make Big Changes
Once you are pre-approved, avoid making large purchases, switching jobs, or opening new credit accounts. These could affect your approval status when it’s time to finalize the loan. A pre-approval is still not a commitment from the lender.
Mortgage Pre-Approval Tips
Salefish Properties recommends using a local lender so that the seller’s REALTOR can easily verify the Pre-Approval letter.
The lender that provides you with your Pre-Approval letter does not have to be the same lender that you use to obtain your mortgage. In other words, you are not committed to a specific lender just because they provided you with a Pre-Approval letter; you can still shop around to find a lender that has the best loan product and that you find easy to work with.
Pre-Approval letters are typically valid for 30 – 60 days, anything older may require an updated letter before submitting your offer.
Ready to Start Your Home Search?
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