Applying for a mortgage pre-approval is a totally free procedure that can save you a lot of your precious time, stress & frustration down the road. Before you find your dream house, make sure to consult with an experienced lender so you know what you can afford & what you should be looking for with your new home.
🚨 Mortgage Pre-Approval Cautions
For almost any potential home buyer, the pre approval process offers substantial benefits. From a transaction standpoint, a lender’s support can strengthen any purchase offer that the buyer submits. And, for a buyer’s personal finances, the steps involved in pre approval can help a buyer to better grasp the implications of various payment amounts – both up front and on an ongoing monthly basis.
These pre approval benefits, however, come with some important conditions that buyers will want to note. The personal financial circumstances that form the basis for a lender’s willingness to extend a mortgage to a buyer can change with time. As a result, mortgage pre approvals will expire after a certain time period, such as 80 or 90 days.
If the buyer has not gone under contract at that point, a lender will probably need to run through the pre approval checklist again – using updated financial data as necessary. For these specific reasons, the pre approval doesn’t guarantee a loan or any particular terms. The mortgage that the lender ultimately extends will actually depend on the exact conditions at the time the customers needs the funds.
🤓 Importance of Getting Pre-Approved
Put simply, mortgage pre-approval is important because it helps to take the pressure off your home search, helping to make it a stress-free, enjoyable – exciting process. A pre-approved mortgage allows you to understand what purchase cost you are qualified for before you begin your online search; ensuring you don’t look at homes outside of your target price range.
Remember, when you purchase your home, it’s not just the buying price you need to think about. You need to ensure you can also comfortably afford all of the other prices associated with owning a house including property taxes & utility bills. For a first-time buyer, these added prices may surprise you! The pre-approval procedure helps clarify it all & ensure you don’t become house poor.
Mortgage pre-approval isn’t just crucial for you, but for the seller as well. Mortgage pre-approval is evidence that you are serious about purchasing. Having a pre-approval letter assures sellers that you are a qualified customer for the home you are considering buying.
🧐 Some Crucial Pre-Approval Tips
- Before your pre-approval, it’s a good idea to clear up as much of your existing debt as possible. When you meet with a lender, your credit score and current debt will be reviewed.
- If you’re ready to start searching for your new home, it’s best to begin the pre-approval process as early as possible.
- No two mortgage pre-approvals are equal. If you’re unsure after meeting with a lender, it’s always worth it to get a second opinion and see if you can find a better rate elsewhere. A pre-approval doesn’t mean you’re stuck with one lender. However, it does mean that the rate you are offered by that lender will not change for 120 to 160 days.