Did you know that getting pre-approved for a mortgage loan could make the difference between getting that dream house and getting nothing but disappointment? Now that you know, it’s time for you to act.
First, let’s look at a few specific reasons why a mortgage pre-approval helps you get the home you want:
Reason Number One: It Gives the Seller Confidence in You as a Buyer
Think about it: are you more likely to trust a buyer who has the backing of a mortgage lender or one who does not? Mortgage pre-approval means that you have the means to purchase a seller’s property – which most likely means a smoother sales process than with someone who has not been preapproved.
Reason Number Two: It Gives You Greater Negotiation Power
Following from the above, it makes sense that you will wield a stronger hand in negotiations if you are a known quantity. It will also mean you can close more quickly, something a seller will typically seek in a buyer.
Reason Number Three: It Gives You a Known Range of Possibilities
You may be aware that you can’t afford that $2 million home in the hills, but how certain are you that you can afford a $300,000 home as opposed to a home that is, say, $50,000 more expensive? By getting preapproved, you’ll find out exactly how much you’re shopping for and what price ranges are but a dream.
Now let’s talk about the preapproval process. Here are the steps you should expect to go through:
Step Number One: Get Right with Your Credit
Is your credit score looking a little peaked? What about your monthly debt-to-income ratio? This is the time to get both looking as good as possible since lenders obviously want to see strong scores in both categories.
Step Number Two: Do Your Homework
Get to know the process. Do your research. Ask the experts for help. You don’t have to go through the process alone. When you do receive a mortgage offer, make sure you know exactly what it entails before pen ever touches paper. Remember the Truth in Lending Act, which mandates lenders to give you all the information you need for comparison-shopping.
Step Number Three: Don’t Feel Obligated to Spend it All
You may be preapproved for $500,000, but that doesn’t mean you need to use it all. Only borrow what you’re able to repay. If this is the case, be sure to ask the lender to adjust the approval letter to reflect the amount you intend to borrow.
Step Number Four: Find a Lender
It’s time to get this party started. Make sure to apply for more than one mortgage so that you can comparison-shop – and do your homework along the way.
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