House hunting? Be prepared with a pre-approved mortgage loan.
Many home buyers miss out on one of the most important steps in the home buying process. No matter what type of real estate market, a good Realtor will tell you that it is a good idea to be pre-approved for a mortgage loan before the house hunting begins.
A pre-approved mortgage loan is a lender's actual commitment to lend to the home buyer, with specifications on the exact loan amount. To become pre-approved, consumers must provide personal financial information, such as income, debts and assets, to an underwriter. After a home buyer applies for the loan, the lender will most likely approve the application with certain caveats. As the lender is committing to the loan amount and interest rate up front, the buyer knows they have their financing in place before begin shopping for a home. Advantages of having a pre-approved mortgage loan include:
Establishing an advantage in a competitive market. A pre-approval letter gives you an edge in a multi-offer situation. Sellers prefer working with potential buyers who are pre-approved; they do not want a deal to fall through because the purchaser cannot get sufficient financing. An offer with a mortgage pre-approval letter carries far more weight than an offer with only a pre-qualification letter or no letter at all. In fact, sellers often accept offers of lower dollar amounts from pre-approved buyers over buyers who have not been, despite higher offers. With pre-approval, the home sellers are more confident the deal will go smoothly.
Finding the best possible type of loan. Working with a mortgage agent before looking at houses would give you plenty of time to decide what category of mortgage product works best for your financial goals. Once you decide on the kind of loan you want and you are pre-approved for it, you then focus with your Realtor (pick me!) on finding your dream home.
Establishing the price range. Getting pre-approved for a mortgage enables you to determine, prior to house hunting, how much money you qualify for, thereby establishing a price range. You and your Realtor can then focus on looking at appropriate homes.
Seeking comfort with the loan amount. By taking the time to seek pre-approval, you select a comfortable loan amount. In many cases, buyers may qualify for mortgages that are more expensive than what they feel comfortable committing to for the long-term, merely because it works on paper. It is important for you to purchase a home you can afford.
I have a number of lenders that I have worked with successfully that I can put you in contact with if need be. Do not hesitate to get in touch with me about this...or anything else.
Happy New Year!
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