MoneyWise: Become a Homeowner Fast with a Mortgage Preapproval

Are you looking to buy a house? The home market tends to be very busy this time of year, with buyers moving quickly to lock in deals. MSUFCU Chief Marketing Officer Deidre Davis joins us today to explain how a mortgage preapproval can give you an advantage as you look for your dream home.

What is a mortgage preapproval why should a buyer get one?

A mortgage preapproval is an agreement from a lender that gives you a rate and total amount they are willing to lend that you can use when you look for the perfect home. Lenders pull your credit report and look at your income, assets and debts to determine your home loan terms. A preapproval shows real estate agents and sellers you are serious when you make an offer because you have available financing.

What do you need to prepare for a preapproval?

There are three simple things you can do before you apply for a mortgage preapproval:

• Look at your credit report: You can get copies of your reports from the three credit bureaus — Equifax, Experian, and Trans Union — by visiting annualcreditreport.com. If you find any issues, including errors, address them before applying for a mortgage preapproval to avoid surprise problems.
• Compile your financial information: Make sure you have all of your financial account, tax, and personal information on hand before applying.
• Determine your debt-to-income ratio, or DTI: Look at your finances to see how much of your monthly income goes toward other debt payments. This percentage is used during the evaluation. Lenders like to see your DTI under 40%, so if you are above that, pay down some debt before starting the preapproval process.

How can MSUFCU help?

MSUFCU offers free mortgage preapprovals and a wide range of mortgage products, from a First-Time Home Buyer program to conventional or adjustable-rate mortgages with 60-day rate guarantees. The Credit Union also offers home improvement loans and home equity lines of credit for those interested in renovating or remodeling their existing homes. For more information, visit msufcu.org, use the MSUFCU Mobile app, call us at 800-678-4968, or stop by a branch.