Most people who want to buy a home cannot afford it. therefore mortgage were invented.
But in today’s real estate market, there is one important step to take before you start looking for a home – obtaining prior approval under a mortgage. Pre-approving a mortgage does not guarantee a home loan, but it is worth doing for these key reasons.
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1. This will help you avoid buying a home that is too expensive for your budget.
Housing prices are overpriced nationally these days. Low housing stock and competitiveness mortgage rates caused a surge in consumer demand, and this, in turn, created a situation where buying a house today costs much more than usual.
The great thing about getting pre-approved for a mortgage is that you will be given the loan amount you may be eligible for based on your income and the amount of money available for the down payment. And you can use this number to search for a house.
Imagine that you think you can afford to buy a home for $ 500,000, and once you get the pre-approval letter from the lender, you see that you are only eligible for a high enough mortgage to buy a home for $ 450,000. Suddenly, you’ve saved yourself the hassle of looking at homes that are out of your price range, not to mention the heartache of falling in love with properties that are out of your reach.
2. It can help you win the trade war.
Because housing inventory is so limited these days, many homes on the market bidding warwhen two or more buyers try to outbid each other in the hope that their proposals will be accepted. But price isn’t the only thing sellers look at when bargaining – they also want reassurance that a given buyer is likely to get mortgage approval. And having a pre-approved letter provides that peace of mind.
Let’s say you and another buyer want to buy the same home. If your offers are comparable in price, but you have a pre-approved mortgage and the other buyer does not, the seller will most likely go with you.
How to get pre-approved for a mortgage
Obtaining pre-approval for a mortgage pretty simple. First, check with several lenders to find out how much loan they will approve for you based on the information you provide. (Many lenders will at least give you an estimate, if not an official figure.) Then be prepared to provide certain financial information, such as recent payment receipts and bank statements, so that your lender can submit this pre-approval in writing after reviewing it. … Finally, be prepared to answer questions about your job – how long have you been in it and whether you are paid, hourly, or contracted.
If you have a pre-approval letter, it usually lasts 30 to 90 days. This gives you a good time to search for a home – and use this letter both to direct your search and to gain an edge in the competition.