IMPORTANCE OF PRE-APPROVAL
What is mortgage pre-approval?
A mortgage pre-approval is a key piece of the home buying puzzle. The pre-approval provides buyers with important information that helps with their home search. When you get pre-approved for a mortgage, you find out the maximum amount you can spend on a home, the monthly mortgage payment associated with your maximum purchase price and what your mortgage rate would be for your first mortgage term.
This is a step in the buying process that can even be done before you consult a realtor or home builder. Your mortgage pre-approval shows that you are a qualified buyer and it helps inform your house hunting options before you fall in love with a home you may not be able to afford.
Why is pre-approval important?
Put simply, mortgage pre-approval is important because it helps to take the pressure off your home search, helping to make it a stress-free, enjoyable and exciting process. A pre-approved mortgage helps you understand what purchase price you are qualified for before you begin your search; ensuring you don’t look at homes outside of your price range.
Remember, when you buy your home, it’s not just the purchase price you need to worry about. You need to make sure you can also comfortably afford all of the other costs associated with owning a home including property taxes and utility bills. For a first-time buyer, these added costs may surprise you! The pre-approval process helps clarify it all and ensure you don’t become house poor.
Mortgage pre-approval isn’t just important for you, but for the seller as well. Mortgage pre-approval is evidence that you’re serious about buying. Having a pre-approval letter assures sellers that you are a qualified buyer for the home you’re considering buying.
Now that you understand the importance of pre-approval, here are a couple quick tips to help you through the process of getting pre-approved:
- For your comfort and peace of mind, make sure to meet with a professional that you trust when you are looking to get pre-approved.
- If you’re ready to start searching for your new home, it’s best to begin the pre-approval process as early as possible.
- Before your pre-approval, it’s a good idea to clear up as much of your existing debt as possible. When you meet with a lender, your credit score and current debt will be reviewed.
- No two mortgage pre-approvals are equal. If you’re unsure after meeting with a lender, it’s always worth it to get a second opinion and see if you can find a better rate elsewhere. A pre-approval doesn’t mean you’re stuck with one lender. However it does mean that the rate you are offered by that lender will not change for 120 to 160 days.
- Find out of your pre-approval is firm or only subject to purchase rather than conditional to employment and credit checks.
Applying for a mortgage pre-approval is a totally free process that can save you a lot of time, stress and frustration down the road. Before you find your dream home, make sure to consult with your lender so you know what you can afford and what you should be looking for with your new home.