You are an aspiring home buyer and you’ve gone through the whole pre-approval process. Fortunately, you have been pre-approved. However, since you are a first-time homebuyer, you are not conversant with these things and want to know what does a mortgage pre-approval letter look like? While it can be difficult to point out how it will look like, here are details that your pre-approved letter should contain.
- The Expected Buying Price
Since you will be using the letter on your house bidding process, the letter will have to indicate the expected buying price on the letter. This means that the price amount is the highest lease that you can qualify for.
- Loan Amount
This is the buying price that the seller and the buyer agree upon subtracting the cash you intend to put down. For instance, if the buying price is $300000, and you intend to put down twenty percent, which is equivalent to $60000, the loan amount will be $240000.
- Loan Program
The letter will also include the type of loan that you’ve qualified for. For instance a twenty or thirty-year fixed rate mortgage or variable mortgage.
- Loan Term
This is the life or extent of the loan
- Total Monthly Mortgage Installment
This takes into consideration the interest and principal, private mortgage coverage, homeowner’s association fee, and homeowner’s insurance. Additionally, the cost and maintenance of utilities should be factored into the monthly installments.
- Interest Rate
This is the mortgage interest rate you qualify for. Here the better the credit record, the better the interest rating hence less money spending over time.
The last part of the letter differs from one lender to another, therefore it is upon you to understand what your pre-approval is based on.
Although the entire pre-approval process can be overwhelming, it can help a borrower prepare for a smooth home buying experience. Besides, it will also grant extra support and some confidence in the entire process.
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