Purchasing a home can be an exciting experience. It can also seem a bit overwhelming and confusing, especially if you’ve never done it before. The home buying process can be simplified if we take it step by step. And the first step to purchasing your home is to get pre approved with your mortgage lender of choice. Here’s why.
Getting pre approved sets your budget.
When you start working with a mortgage lender, they will have access to your financial information. They will look at your credit, your debt, your income and your other assets and liabilities and they will be able to tell you how much qualify for and what your budget is.
It’s important to know your budget before you go out looking for homes. There’s nothing worse than falling in love with a home and learning that it’s out of your price range. And there’s nothing better than finding out you can actually afford to buy a bigger and better home than you assumed you could.
Your mortgage lender will not only be able to tell you how much money you can afford but he/she can tell you what types of loans you qualify for. Maybe you qualify for buyer assistance or a zero down payment program. Or maybe you have to put 10 or 20 percent down. Knowing these things ahead of time will effect how you shop for your home.
Getting pre approved shows that you are really ready to make a real estate purchase. When buyers aren’t willing to talk with mortgage lenders yet, it shows a lack of commitment. Realtors work on commissions. They don’t get paid to drive around and show pretty houses to people who can’t buy them.
As a Realtor, I give the buyers that are ready, willing and able my first priority. They’re the ones I’ll adjust my schedule for. They’re the ones I’ll go the extra mile for. I’m not likely to drop everything I’m doing on a Saturday for someone that won’t show the same level of commitment. So if you want to show your Realtor that you are serious and ready to go, get pre approved with a mortgage lender.
Getting pre approved assures the seller.
In today’s market, it is expected that home buyers include their pre approval letter or some sort of proof of funds with their offer. Wanting to buy a home and being able to are completely different things.
Depending on the price point and neighborhood, homes are selling in weeks, days and even hours. Buyers need to be ready to pounce and ready to compete with other buyers to get the homes they want.
Conversely, if you’re a seller and you get multiple offers, which one are you going to go with? You’re going to go with the buyer who not only has comparable terms (sales price, contingencies and concessions), but who seems to be in a stable financial position with the appropriate purchasing power. A pre approval letter from your mortgage lender goes a long way in proving that.