While plenty of people pick out the house they want and then go to the lender for a mortgage, this is actually quite backwards. If you are hoping to purchase a home soon, getting pre-approved for a mortgage should be the first item on your list.
Quite simply, you get approved for your loan BEFORE you make the decision on what home you’re going to purchase.
Here are some reasons why this will make buying a house a much less painful experience with a pre-approval for your state in hand.
Establishing a Purchase Range
There is no sense in viewing homes you cannot afford. Getting a pre-approval will give you an idea as to how much you can reasonably purchase, so there will be no let-down later in the process. Having a range to use when house hunting will save you time and frustration, as well as save the time and frustration of homeowners and your realtor.
Your pre-approval amount will also tell you how large of a down payment you will need, which is largely dependent on how much you are approved to borrow.
Pre-Approval Problems: Finding Credit Problems First
Some people decide to buy a home and have one picked out, only to find out that their credit is destroyed and they don’t qualify for a mortgage. In another scenario, you may think you are prepared to buy and find out your score is only 20 points from being within prime range.
Getting a pre-approval first will tell you what you can reasonably expect to be offered from lenders. Then, you will be able to make your own decision about whether or not you want to focus on some credit repair before taking the plunge.
Mortgage Pre-Approval Allows You Buy A Home Quickly
If you are searching for the perfect house and find it without being pre-approved, another person can swoop in and buy it before you can get all of your paperwork in order. This is not uncommon at all, as many people find the house, make an offer and close within 30 days. If you want to be able to snap up the right house for you, having a pre-approval can help speed the process.
Getting a pre-approval for a mortgage is important because it will save you time and effort. If you need to do some credit repairs first or gather some documentation, you won’t have two realtors and a homeowner waiting on the process.
If you are serious about home ownership, having a pre-approval in hand will make it easier for everyone involved.