Advantages of a Pre-Approval
Getting pre-approved can be a vital step to the home-buying process! Pre-approval means that a lender has stated (in writing) that you do qualify for a mortgage and what amount, based on your current income and credit history. A pre-approval usually specifies a term, interest rate and mortgage amount and is typically valid for a brief period of time, assuming various conditions are met.
In order to get pre-approved, you must submit and verify your financial history and Get A Better Mortgage can walk you through this process and assist in finding the mortgage that best suits your needs. We will need to collect your income documentation upfront. Not only will getting pre-approved help speed up the process when you do find that perfect home, but it also helps determine the most accurate budget to fit your needs and the actual home price you can afford.
In fact, pre-approval can help you to determine three very important things:
1. The maximum amount you can afford to spend
2. The monthly mortgage payment associated with your purchase price range
3. The mortgage rate for your first term
Not only does getting pre-approved make the search easier for you, but helps your real estate agent find the best home in your price range. Temptation will always be to start looking at the very top of your budget, but it is important to remember that there will be fees, such as mandatory closing costs, which can range from 1 to 4% of the purchase price. Factoring these into your maximum budget can help you narrow down a home that is entirely affordable and ensure future financial stability and security.
While getting pre-approved doesn’t commit you to a single lender, it does guarantee the rate offered to you will be locked in from 90 to 120 days which helps if interest rates rise while you are still shopping. If interest rates actually decrease, you would still be offered the lower rate.
Another benefit to pre-approval is that, when it comes time to purchase, pre-approval lets the seller know that securing financing should not be an issue. This is extremely important for competitive markets where lots of offers may be coming i