As a first-time buyer, you know that a mortgage will help you raise the funds you need to buy a new home. However, before this, there are other equally essential tasks you must do, such as getting a mortgage pre-approval.
A pre-approval is the first step that you must take if you’re seriously considering buying a new property. If you are not familiar with this, there’s no need to worry! We’ll be walking you through what it is and why it is important for your real estate purchase in the sections below.
What is Mortgage Pre-approval?
As you are about to undertake a huge investment, assessing prices can be quite overwhelming. In some cases, you may even be put off-track and lose a clear idea of your current budget and how much you’re willing to spend for this. This is where a pre-approval becomes extremely helpful.
Getting a pre-approval means having a loan officer look at your finances, which includes your income and assets as well as your debts and credit history. Using these pieces of information, they determine the amount of money you can borrow, the amount you have to pay each month, and the interest rate.
Being pre-approved indicates that you are a qualified buyer. This will help you make your buying process much easier as it can guide your house-hunting options.
Why is Pre-approval Important?
Here are some reasons why you must seek a mortgage pre-approval before scouting for houses:
It helps you understand what purchase price you are qualified for so you won’t have to spend time looking at homes outside your price range.
It helps make your home search a stress-free and exciting process.
It helps you anticipate other costs associated with homeownership and helps you avoid becoming house poor.
It lets sellers know that you are serious about buying.
With these pieces of information, you now have a basic understanding of what pre-approval is and how it can help your home buying process. To help you get pre-approved smoothly, here are some smart tips to follow:
1. Clear Up Your Debt
Since the lender looks at all aspects of your finances, it is best to clear up those that can negatively impact the pre-approval.
Before you start the process, you must first work on your debts. Clear as much of your outstanding payments, arrears, and other debts as possible. This will help you increase your chances of getting a favorable result once the lender looks at your credit score.
2. Begin the Pre-approval Process As Early as Possible
It’s a smart idea to start working out your pre-approval as early as possible, especially if you are working on a tight timeline. Get in touch with a professional you trust and seek their advice regarding the documents you must prepare to ensure a fast and smooth process.
3. Get a Second Opinion
If you have doubts after meeting with a particular lender, there’s nothing wrong with getting a second opinion. Getting a pre-approval does not necessarily tie you down with one lender. It’s a smart move to explore other options and see if you can find a better rate elsewhere.
Conclusion
Applying for a mortgage pre-approval is an essential step when purchasing a home. It saves you a lot of time and stress during the scouting stage and gives you a clear idea of your financial capabilities. On top of that, it is a completely free process.
It can be truly exciting to search for your dream home right away, but before you start exploring your option, it’s a smart move to consult with your lender first. This will make the process of finding your new home a truly pleasant and memorable one.
If you’re ready to find your dream home today in Genesee County, MI, we’re the ones to call! At Smith Street Homes, we bring a wealth of knowledge and expertise when it comes to buying real estate in the area. Get in touch today and take the first step of turning your dreams into an address!