Honest Realestate Agent

Posts Tagged ‘pre-approved mortgage’

Why get pre-approved?

There hasn’t been a better time to buy a home than right now – prices are at an all time low and the government has introduced incentives to first time home buyers. Before you start going to open houses and planning interior decor, you’re going to have to take the first step: getting pre-approved for a mortgage.

So why bother to get pre-approved? Maybe you should find the house first? Mortgage pre-approval has a number of benefits. The pre-approval process might reveal credit report errors you didn’t know about, that might hinder your ability to get credit. In addition, mortgage pre-approval will show you exactly how much house you can afford, so that you don’t fall in love with a home and then find yourself unable to get a mortgage.

Choosing a lender

Your lender will be your ally throughout the process of purchasing a home, so it’s important to choose the banker and the lending institution that are right for you. Typically, most people start with their own banks or credit unions, although there are plenty of other options out there. If you can’t get the best terms on a loan from your own bank, a private mortgage lender could help. These companies exist pretty much only to make mortgage loans, and therefore have access to specialized lending programs you can qualify for.

Meeting with the lender

When you call to schedule a meeting with your chosen lender, the office will let you know what kind of documentation you’ll need to bring in. Depending on what the lender’s requirements are, you might need to bring in tax returns, pay stubs, and other evidence of income like child support or investment returns. Along with the documentation you’ll need to provide, your lender will be getting a copy of your credit report. In many cases, the meeting will conclude with the lender telling you how much you can qualify for.

Taking the next steps

If you’re satisfied with the mortgage amount your lender prequalifies you for, your next step is to start looking at houses. Your realtor will use your pre-approval to identify houses that you can afford and as a negotiating tool with sellers and listing agents.

If, on the other hand, you feel that you should qualify for a larger mortgage, ask the lender what you can do to improve your financial position. Your credit score, if it’s low, might be what’s holding you back from getting the mortgage amount you desire. If this is the case, paying off balances on some of your credit cards might bump your score up to where you qualify for a larger mortgage. Or, if the credit report your lender obtains has errors, you may want to get them corrected before proceeding with your search for a home.