Why You Must Get Pre-Approved Before Buying A Home
If you have recently received a letter that said you are prequalified for a mortgage and started to shop for a home, you may have jumped the gun. There is a pretty big difference between prequalification and preapproval. A prequalification means that they took your credit profile.
Based on your credit profile, they thought that you fit the characteristics of someone that might qualify.
A pre-approval letter means that a lender has told you that they will give you this much money for a property.
The Importance Of A Preapproval
When you are shopping with a preapproval, everything will be easier during the homebuying process. You do not need to contend with a mortgage lender while also trying to find a place to live.
Once you know that you can get financing, you will know the kinds of areas that are even on the list of possibilities for you.
If you have a rather limited budget and you may have fewer choices to consider, then you first thought.
You Will Know What Your Budget Is
Once you get a preapproval, the lender will know you what amount they will approve you for.
Now, this does not mean that you need to find a home and purchase one for the full amount that they offered; this is just a maximum amount that they will give you.
You can use this information to shop for places that you actually can buy if you decide that you like them. You will know as you evaluate each property that you look at, you can afford it.
It is Easier To Pick Your Neighborhood
Finding a nice neighborhood is often a lot easier if you know what your budget is. Sometimes you might think that a particular neighborhood is out of your price range but be mistaken.
You would be surprised at the neighborhoods' quality that most people can afford to live in today.
It seems that we have much prosperity if evidenced by homeownership growth rates if anything.
Sellers Will Take You More Seriously
As you negotiate with a potential home seller, they will evaluate you as a potential home buyer. Most people do not like to waste their time with buyers who are not severe.
They are looking for someone who is serious and is ready to buy their home ASAP. If you have a preapproval letter to show them they know you can afford to buy the place, you decide to do so.
They will be far more likely to negotiate with you and haggle for a good deal.
Buying A Home Will Be Much Faster
One of the lengthiest parts of the mortgage process is getting the preapproval.
If you find a home that you love, you will want to buy it. When you have a preapproval letter, you can get started right away and begin scheduling your closing date.
People who fail to receive a preapproval letter will wait an excruciatingly long time for a mortgage application to be processed.
Depending on certain factors, this can take as many as three months. Getting a preapproval is a lot better for both the buyer and the seller.
Otherwise, everyone involved may end up wasting much time if the preapproval letter never arrives.
You Know Exactly What You Can Afford
The world's absolute worst feeling is scheduling a closing date on a property and getting excited for no reason. Suppose you had decided on a closing date for the property and are getting your preapproval letter.
You might wait a long time, confident that you will qualify; however, it will potentially be a rejection letter once the letter arrives in the mail.
In that case, what would you do and how would you feel? Chances are, it would not be an enjoyable experience.
Suppose you were to receive a denial letter. In that case, it will be a lot less heartbreaking if you have not already set your mind on a specific property.
There is no point in getting your hopes up before you get your preapproval.
Final Thoughts About The Importance Of Getting A Preapproval Before Buying A Home
Getting a preapproval is easier today than it has ever been. Mortgage lenders help finance homes more easily today, thanks to the Federal Reserve's monetary policy.
Mortgage rates are lower than they have ever been, so homeownership is more attainable for many people than ever before.
All you need to provide is some necessary information that your mortgage broker will be happy to share with you.
Thanks to strict banking regulations today, consumers are far more informed when they signed the dotted line today.