You find yourself looking at houses online. You have decided it’s finally the right time for you to buy a home. What’s your next move after contacting your favorite Realtor?
Check your credit reports – It’s a good idea to check your credit reports before shopping for a home or a mortgage. Did you know the top three credit reporting companies are required by the FTC to give you a free credit report every twelve months if requested? It’s a good idea to check your credit reports for any errors or credit issues that may need to be cleared up before getting started on your house hunt. Make sure your information is accurate and up to date as this will determine if you will be approved for a loan and the interest rate you will pay to borrow money.
Get pre-approved – If you are a serious buyer, the next step is for you is to get a pre-approval for a mortgage. The lender will actually check your credit history and verify your income to determine the maximum amount of loan you qualify for. This is a must-do before making any offer on a house! The lender will also educate you on the types of loans and loan programs that are available and if you meet the guidelines. You will receive a pre-approval letter from the lender to include with any offers you make. This will help prepare you to make your very best offer when you do find your dream home!
Why is it important to get a loan pre-approval before you start shopping for a home?
Clout during the negotiations! When considering any offers but especially multiple offers, the seller will look more favorably on a buyer who has already been pre-approved for a mortgage. Being pre-approved will give you an advantage in negotiating with the seller. The seller will feel confident that you will be able to get the financing you need to close on the sale. More and more often, sellers will not even consider looking at an offer without a pre-approval letter!
Is pre-qualified the same as pre-approved? No it’s definitely not the same! Pre-qualified is generally just talking it over with the buyer and gathering information. Pre-approved means the lender actually runs the credit report and verifies the income.
Does a pre-approval letter mean you have the loan? Not yet, but it’s a great start! Before final loan approval you may be asked to meet some conditions or submit more documents to underwriting before you receive the final loan commitment. Most buyers are warned by their lender and Realtor not to make any large purchases like cars, furniture or appliances or make a job change before the closing as this may affect or delay your loan approval!
Get pre-approved and arm yourself with the tools you need to have the edge over your competition when making an offer on your dream home!
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