Financing

Getting Pre-Approved and Avoiding Financial Stress

Buying a home will probably rank as one of the biggest personal investments you will make. Being organized and in control will contribute significantly to getting the best home deal possible with the least amount of stress. In the past, buyers could go house shopping and get pre-approved for financing after they had found their dream home. However, in today’s market, that has proven to be one of the least effective methods for landing your dream home.

Before speaking with a lender, know what monthly dollar amount you feel comfortable committing to. Then when you discuss mortgage pre-approval with your lender, it will be easier to determine what value of home you can afford and how much your monthly payment will be. Do not put yourself in the position where you will be paying more each month than you intended simply because the “dream” house requires it.

Most lenders can pre-qualify you for a mortgage over the phone. Based on general questions about your income, debt, assets and credit history, lenders can estimate how much mortgage you qualify for. However, being pre-qualified and pre-approved are different things. Pre-approval means that you have applied for a mortgage; you have filled out the mortgage application, received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know exactly what the maximum loan amount will be.

A pre-qualification letter is not verified and, in essence, does not count for much if you are competing with other buyers who are pre-approved. When you are pre-approved, you and the seller know exactly how much house you can afford. It gives you credibility as an interested buyer and lets the seller know immediately that you will be approved for a loan to buy their property.

In addition to being pre-approved, it’s important to be pre-approved with a legitimate lender. Legitimate lenders include banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers and online lenders.

Some lenders to avoid: those who lose a form or misplace a file; those who gather information from you in an unorganized manner; those who are not informed about interest rates, points or costs; and those who cannot provide you with the right information.

Do your research on the types of mortgages available to you and find the one that best suits your needs. Some examples of factors to consider include:

  • What type of market are you in? Are the interest rates falling or rising?
  • Do you want a fixed mortgage rate, where you will always know what your payment is going to be?
  • What are your long-term goals? Do you intend to resell the property? Do you only need the mortgage for a short time?

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  • Give us a call so we can connect you with a professional that best fits your needs.

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