Reasons Why You Need To Get Preapproved For A Home Loan
September 2nd, 2010 Posted in Mortgage InfoWhen it comes to shopping for a new property, the most crucial step in the process is to get prequalified for a mortgage loan. Since the mortgage industry is constantly changing underwriting guidelines, it is hard to know if you are approved for a mortgage without submitting an application. By getting prequalified for a mortgage first, you are taking the guess work out of the equation.
Many Real Estate Agents want to know that their clients are preapproved for a mortgage loan before starting the house hunting process. Some Realtors go as far as not working with anyone who is not preapproved first. It is crucial for the future homeowner to know that getting prequalified first is the most important step in the home purchasing process.
Why get preapproved now? For starters, completing a mortgage application will let you know where you stand today. If there is a credit error, you still have time to correct the issue. A preapproval will also let you know what down payment is required, what your monthly mortgage payment will be and the maximum sales price of a home you qualify for. These are important things to know when searching for a home.
Credit Issues
Many customers do not know what items are on their credit report until it is too late. By completing a mortgage loan application first, if there is any negative or incorrect information on your credit report, you will have time to repair the issue. Many credit repair companies take up to 45 days to correct inaccurate information. It can take up to 3 to 6 months to get all three bureaus to update with the correct information, so by starting the prequalification process first, if there is an error, you will have time to fix the problem.
Know Your Down Payment Requirement
A preapproval will let you know the required down payment to purchase a property. Since there are several different mortgage programs from FHA home loans to conventional home loans with each requiring a different amount for a down payment, it is crucial to know how much money you will need for the home closing. This will also give you time to prepare for the closing by saving money for the down payment.
Know Your Monthly Mortgage Payment
Preapprovals also give you an idea of what your monthly house payment will be. This will help you set up a budget and prepare for the home payment. Also, a loan consultant can assist you with mortgage options that can affect the monthly payment.
Know What Your Can Buy
The most important part of the prequalification is knowing how much you can purchase a property for. You need to know what the maximum sales price of a home you qualify for. This way, you only are searching for houses that you can afford.
Let The Seller Know You Are Serious
By getting preapproved for a loan first, you are letting the seller know you are a serious buyer. If there are two offers to purchase a property and one offer has a preapproval letter, the seller is more than likely going to accept the offer with the preapproval letter. By being a preapproved buyer, you set yourself apart from those that wait until the final moments to get approved for a mortgage.
By talking with a loan officer and getting preapproved today, you will have a better understanding of where you stand in your home buying process.
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